What Is Bitcoin Halving?

1. What Is Bitcoin Halving?

Bitcoin halving is when the reward for Bitcoin mining is cut in half and takes place every four years.

The halving policy was written into Bitcoin’s mining algorithm to counteract inflation by maintaining scarcity. In theory, the reduction in the pace of bitcoin issuance means that the price will increase if demand remains the same.

At the moment, Bitcoin has an inflation rate of less than 2%, which will decrease with further halvings, says David Weisberger, CEO of trading platform CoinRoutes. That’s looking pretty good compared with the 4.1% annual inflation that Australian recorded for the year to 2023.

“Bitcoin’s production scarcity is what defines its finiteness, and when reward goes down, supply is constrained,” says Chris Kline, chief operating officer of Bitcoin IRA. “Increasing demand at a time when supply is constrained has a positive impact on price, which can make bitcoin alluring to investors.”