It’s important to understand Bitcoin’s 4-year cycles and when the halving years happen. The cycles have a significant impact on the price of Bitcoin.
Bitcoin Halving
Bitcoin has a programmed 4-year cycle and it’s important to understand that this cycle is based on mining. Miners are computers that solve complex math problems to verify transactions, which creates new Bitcoin blocks. Every time a miner creates a new block, they are rewarded with Bitcoin.
Every 210,000 blocks, which takes about 4 years to produce, the number of Bitcoin rewards that miners receive gets cut in half. Here is how much Bitcoin miners received for each cycle:
- From 2009-2012, miners received 50 Bitcoin per block
- From 2012-2016, miners received 25 Bitcoin per block
- From 2016-2020, miners received 12.5 Bitcoin per block
- From 2020-2024, miners received 6.25 Bitcoin per block
Every 4 years, the production of Bitcoin gets cut in half. In 2021, 900 Bitcoins are being produced per day. When the next halving occurs, there will be 450 Bitcoins produced per day. At this rate, all Bitcoin will be mined by 2140.
Historically, the price of Bitcoin has risen significantly the year after the halving.
- In 2013, the peak price was $1,100 USD
- In 2017, the peak was $20,000 USD
As Bitcoin demand increases, this will cause the price to go up because of the limited supply.