Understanding Halvings and the Final Horizon.
Bitcoin, the pioneering cryptocurrency, operates under a unique protocol that regulates the issuance of new coins through an event known as "halving". This mechanism, encoded in its original design by Satoshi Nakamoto, halves the reward that miners receive for each block of transactions verified and added to the blockchain.
Halvings occur approximately every 4 years, or more precisely, every 210,000 blocks mined. Their main purpose is to control inflation and limit the total supply of Bitcoin to 21 million coins. Historically, these events generate significant interest in the market, often preceding or accompanying periods of volatility and price appreciation.
To date, Bitcoin has experienced 4 halvings: in 2012, 2016, 2020, and the most recent in April 2024. Each halving reduced the reward per block from 50 BTC to 25 BTC, then to 12.5 BTC, then to 6.25 BTC, and currently to 3.125 BTC.
When will the last Bitcoin halving occur?
Predicting the exact timing of the last halving requires an estimate based on the average block creation rate. Since each halving occurs every 210,000 blocks, and the total supply is limited to 21 million BTC, we can approximately calculate when the last Bitcoin will be mined.
Considering that the reward per block is halved at each event, the issuance of new coins slows down exponentially. It is estimated that the last Bitcoin will be mined around the year 2140. At that time, the reward per block will be so small that it will be considered insignificant, and miners will primarily rely on transaction fees for sustenance.
While the year 2140 may seem far away, understanding the halving mechanism is crucial to understanding the economy and inherent scarcity of Bitcoin. This deflationary process is one of the distinctive features that has contributed to its value proposition as a unique digital asset.
