The fourth-ever occurrence of the Bitcoin halving took place a few hours ago at the 840,000th block. This event is widely recognized as the most significant economic mechanism that affects the supply of Bitcoin (BTC) and creates scarcity for the asset.
During the Bitcoin network’s fourth halving event, the rewards for mining a block were reduced from 6.25 BTC to 3.125 BTC, effectively cutting Bitcoin’s issuance rate in half.
According to Karim Chaib, the CEO of crypto platform Dopamine App, the halving is a critical mechanism for Bitcoin’s scarcity and market valuation. He explained that the halving is programmed into Bitcoin’s code and occurs every 210,000 blocks, which is approximately every four years.
The first halving occurred in 2012, reducing the issuance rate from 50 BTC to 25 BTC per mined block. The following two halvings took place in 2016 and 2020, further reducing the issuance rate to the current 3.125 BTC.
Chaib emphasized that this predetermined scarcity sets Bitcoin apart from traditional store-of-value assets. He stated that Bitcoin’s economic design and halving mechanism are effective mathematical methods that make it a deflationary asset, positioning it as a reliable alternative to gold.
Jonas Simanavicius, co-founder and CTO at Syntropy, supported this notion, explaining that Bitcoin’s price has seen significant growth compared to gold. In the past year, Bitcoin’s price has risen by 122%, while gold’s price increased by 19%. Year-to-date, Bitcoin is up over 51%, while gold’s price has only increased by 15%.
Simanavicius also noted that while precious metals and real estate have traditionally been considered the best store-of-value assets, the digital age is now seeking more liquid assets for faster transactions. This shift in preference is expected to benefit Bitcoin.
Despite the halving, the top five BTC miners have chosen not to sell their Bitcoin holdings, indicating their confidence in the asset’s long-term value.