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The Bitcoin Halving : Does History Repeat?

You might have recently heard about the Bitcoin Halving, a term that generates considerable excitement in the crypto community and curiosity among accountants and financial planners. This event is not only a cornerstone of Bitcoin's operation but also a catalyst for market movements. Let's explore the Bitcoin Halving and its historical impact.

What is the Bitcoin Halving?

The Bitcoin Halving is an integral event in Bitcoin's lifecycle, occurring roughly every four years. It signifies a reduction in the mining reward – the number of Bitcoins miners receive for adding a new block of transactions to the blockchain. This reduction in reward happens every 210,000 blocks and is a deliberate design to control Bitcoin's supply and uphold its value.

The event is most significant as it marks another drop in the rate of new Bitcoins produced as it approaches its finite supply. It is expected this will continue through to 2140 of which time the proposed limit of 21m coins is reached.

Historical Price Impact and Past Halvings

The Bitcoin Halving has historically influenced Bitcoin's market price, primarily due to the decrease in the supply of new Bitcoins. Notable past halvings in 2012, 2016, and 2020 have each been followed by significant price hikes.

  •          2012 Halving: Triggered a bull run, with Bitcoin reaching around $1,200 AUD.
  •          2016 Halving: Led to a price surge, peaking at nearly $25,000 AUD.
  •          2020 Halving: Culminated in Bitcoin reaching its all-time high of about $91,000 AUD.
  •          2024 Halving: estimated to occur on 20 April 2024 triggering another all-time high?

It's essential to remember that past trends don't guarantee future outcomes and we cannot predict the future but this is the exact reason the crypto community is so keen on the halving event to see what happens in this fifth iteration.

The Mechanics of Halving

The halving process reduces the block reward for miners. Initially set at 50 Bitcoins, the reward has halved several times – to 25 Bitcoins in 2012, 12.5 in 2016, and 6.25 in 2020. The upcoming 2024 halving will further reduce the reward to 3.125 Bitcoins, emphasizing Bitcoin’s scarcity.

Ripple Effect on Other Cryptocurrencies

Post-halving, Bitcoin's price surge often leads to increased values in other cryptocurrencies, like Ethereum (ETH), Ripple (XRP), Cardano (ADA), and Solana (SOL). This trend underscores Bitcoin's influential role in the broader crypto market.

Anticipating the 2024 Halving

The next halving is estimated to occur around 20 April 2024, a date that many in the crypto space are watching closely. For the latest estimates, you can check the Halvings section of the Bitcoin Clark Moody Dashboard.

Implications on your tax from the Halving

The halving event itself doesn’t cause any tax implications as long as you continue to hold said coins.  If you are thinking of offloading before the end of the financial year, this event could significantly impact your tax results, so reach out to the team at Consensus Layer as we can help run scenarios to estimate your taxable positions.

In the meantime, simply interested in busting some crypto tax myths, or need to know the different crypto Airdrop tax treatments? Have a look at our other articles below.

Navigating the Crypto Tax Maze: Myth vs. Reality

Received an Airdrop: What does this mean for your tax?

Need Crypto Expertise? Contact Us!

Crypto enthusiasts, our door is wide open for you as always to support you directly with all things crypto. 

However, if you're an accountant or financial planner looking for support with crypto clients, schedule a complimentary meeting with Brisbane’s best crypto accountant, David Fam, at Consensus Layer book-appointment/.

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