The recent Bitcoin halving took place just a few hours ago at block number 840,000, marking the fourth occurrence of this significant event. The halving is a crucial economic mechanism that directly affects the supply of Bitcoin (BTC), ultimately creating scarcity for the digital asset.
During the fourth halving, the block issuance rewards were reduced from 6.25 BTC to 3.125 BTC per mined block. This effectively cut Bitcoin’s issuance rate in half, demonstrating the importance of the halving in regulating the market and ensuring scarcity. Karim Chaib, the CEO of crypto platform Dopamine App, emphasized the significance of this mechanism, stating:
“The halving is hard-coded in Bitcoin’s code base, which happens every 210,000 blocks mined, which equates to roughly every four years.”
The first halving event occurred in 2012, reducing the issuance rate from 50 BTC to 25 BTC per mined block. Subsequent halvings took place in 2016 and 2020, further decreasing the issuance rate to the current 3.125 BTC. This predetermined scarcity sets Bitcoin apart from traditional store-of-value assets, according to Chaib:
“Bitcoin’s economic design and halving mechanism are effective mathematical methods to make Bitcoin a deflationary asset, which makes it the first reliable alternative to gold.”
Indeed, Bitcoin has shown impressive performance compared to gold in recent years. Over the past year, Bitcoin’s price has risen by 122%, while gold has only increased by 19%. Furthermore, in 2024, Bitcoin has already experienced a 51% year-to-date increase, compared to the 15% increase in gold’s price, according to TradingView data.
This data highlights the growing appeal of Bitcoin as a store of value asset, particularly in the digital age where more liquid assets are sought after for faster transactions. Jonas Simanavicius, co-founder and CTO at Syntropy, explained:
“Precious metals and real estate have long been considered the best store of value assets, but the digital age is calling for more liquid assets for quicker movements, which will ultimately benefit Bitcoin.”
As the Bitcoin halving continues to shape the supply and scarcity of the digital asset, it is evident that many BTC miners are recognizing its long-term value. Despite the halving, the top five Bitcoin miners have chosen not to sell, further emphasizing the confidence in Bitcoin’s future.