Bitcoin has experienced significant fluctuations in recent years, with its price rising and falling dramatically. After hitting a low of $16,000 (£12,300) in 2022, Bitcoin surged past $100,000 (£77,200) in December 2024, before dropping again to $79,000 (£61,000). One of the key factors driving these price changes is the event known as “Bitcoin halving.” This event, which occurred most recently in April 2024, has played a crucial role in Bitcoin’s price movements and is expected to continue shaping its value in the coming years.
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Bitcoin halving is a process that occurs approximately every four years and is designed to reduce the rate at which new Bitcoin is created. During a halving event, the reward given to miners for adding new blocks to the blockchain is reduced by 50%. This mechanism is built into Bitcoin’s system to prevent inflation and control its supply, making it more difficult and expensive to mine the cryptocurrency. Personal finance expert Aaron Peak explains that this reduction in mining rewards can have a significant impact on Bitcoin’s price, as fewer new coins are introduced into the market, potentially driving up demand.
The halving event is particularly important because it slows the creation of new Bitcoin and has historically led to price increases. As Peak points out, when the supply of new coins is limited but demand remains strong, the price often rises. He compares the process to gold mining, where a sudden increase in difficulty to mine gold would likely lead to a rise in its value. However, he also cautions that past performance is no guarantee of future price increases, as Bitcoin remains notoriously volatile.
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The next Bitcoin halving is expected to take place around 2028, although the exact date depends on how quickly miners are able to create new blocks. With only 21 million Bitcoin ever set to exist, halvings will continue until 2040, when the final Bitcoin is expected to be mined. This process is built into Bitcoin’s code and is similar to how central banks control the money supply, although it is entirely decentralised and cannot be changed by any external authority.
