There have only been two previous ‘halving’ events in Bitcoin’s history. The event is written into the code of the digital currency and happens roughly every four years.
The next one is expected to take place in May 2024.
As well as being traded, Bitcoins can be generated (known as ‘mining’) through using computational power to solve complex mathematical puzzles. When a halving occurs, it means the rewards for mining are split.
Whereas mining a ‘block’ of Bitcoin would previously earn you 12.5 coins, now you’ll only get 6.25.
The are only a finite number of Bitcoins available and the halving is set to continue until all 210,000 blocks of Bitcoin reach zero in two decade’s time.
The reason for the finite amount of Bitcoin (there will only ever be 21 million in existence) is because unlike regular currency there is no central bank or government that can regulate the amount.
Cryptocurrency advocates say this finite number is what gives Bitcoin its value.
The halving comes at a time when Bitcoin prices were climbing. The digital currency has gained more than 20% in value since the start of the year, however the halving event has caused that value to fall.