What is Bitcoin halving and when will it happen?

While Bitcoin has reached record highs over the past months, some projections have it crossing the $100,000 mark after the upcoming ‘halving’ event.

In an April 8 report, Bitfinex analysts predicted bitcoin‘s price would increase by around 160 percent in the 12-14 months after this year’s price. halvingwhich they said could print bitcoin to a high of over $150,000.

“This current cycle stands out from all the other previous cycles as the bitcoin price has already reached a new all-time high – even before the halving. This anomaly can be interpreted as a bullish indicator, but it also introduces a level of uncertainty in the market dynamics,” the report said.

But what is halving and why will it affect the price of the cryptocurrency?

In short, the upcoming Bitcoin ‘halving’, a change in the token’s underlying blockchain technology is designed to reduce the rate at which new bitcoins are created.

Here is a simple explanation:

What is Bitcoin halving and why is it important?

Bitcoin halving is a technical event that occurs approximately every four years, which cuts the reward for mining new Bitcoin in half. This is crucial because it ensures scarcity in the supply of Bitcoin and protects against inflation.

When is the next Bitcoin halving event?

The next Bitcoin halving event is expected to take place on April 19 or April 20, reducing the mining reward to 3,125 Bitcoin. This process will continue until around 2140, with a total of 29 more halving events expected according to data platform CoinGecko.

But this time the market is divided on whether bitcoin could be in for another meteoric rise.

What Happened After Previous Bitcoin Halving Events?

Historically, Bitcoin halving events have led to significant increases in the price of the cryptocurrency.

After previous halvings, Bitcoin’s price has risen, indicating greater investor interest and confidence in its value.

Previous bitcoin halvings in 2012, 2016 and 2020 were followed by massive rallies in its price: a year after the May 2020 bitcoin halving, bitcoin BTC= was up more than 545 percent.

However, David Mercer, CEO of LMAX Group, which operates an institutional crypto exchange, is among the skeptics who do not see the upcoming price projections becoming reality. “The view of the adult market is as follows: 2012, 2016, 2020, the halving preceded a massive bull run, so the evangelist will tell you, 2024 is going to be the same. We don’t think so.”

The reason? Some analysts say the impact of the halving could have already been priced in Bitcoin‘s recent move skyward.

Bitcoin peaked at $73,803.25 in March, and has risen more than 60 percent since Jan. 1 as investors cheered their new location in the U.S. bitcoin exchange-traded funds (ETFs) and betting on the entry of new institutional money into the asset class.

The bitcoin ETFs “brought in a tremendous amount of interest and net new inflows bitcoin preceding the halving event, whereas in the past we have seen price levels directly after the halving event brings in that new flow,” said Thomas Perfumo, head of strategy at crypto exchange Kraken.

How Long Will Bitcoin Mining Continue?

Bitcoin mining will continue until around 2140, when all 21 million Bitcoins are expected to be mined. After this point, the network will stop creating new bitcoins, but miners can still earn income from transaction fees.

Will miners experience losses after the reward is halved?

While the reduction in block rewards may affect miners in the short term, Bitcoin’s price is expected to rise after halving events. This increase in price usually compensates miners for the reduced block rewards, ensuring profitability.

In addition, external events such as the US Federal Reserve’s expected rate cut this year could boost risk assets such as cryptocurrencies.

“You have a simultaneous inflow of new money into the asset class, finally, by way of the ETF … then there’s also the Fed, indicating that they intend to ease monetary policy later this year,” says Ravi Doshi, Head of Markets at FalconX, a crypto prime broker.

“If we assume that inflation prints remain subdued, you have this recipe for significantly higher prices.”

How Does Bitcoin Halving Affect the Environment?

Bitcoin mining consumes significant amounts of energy, raising concerns about its environmental impact. With each halving, competition among miners increases, leading to the adoption of more energy-efficient mining equipment.

While halving may contribute to minor improvements in energy efficiency, it does not fundamentally address Bitcoin’s environmental impact.