The Banking Executive Magazine - March 2024 Issue

What Affect Bitcoin Price and scarcity is one of the reasons why Bitcoin is sought after by mil- lions of people. But scarcity is not the only reason why Bitcoin halving is important, and there are other ele- ments that make the halving an event closely followed. As of March 2024, Bitcoin has al- ready gone through three halvings: • On November 28, 2012, the re- ward dropped from 50 to 25 Bit- coins per block. • Then on July 9, 2016, it went down again from 25 to 12.5 Bitcoins per block. • And most recently, on May 11, 2020, it halved from 12.5 to 6.25 Bitcoins per block. • Since Bitcoin blocks are mined about every 10 minutes, the next halving is projected to occur around the third week of April 2024, lowering the mining reward to 3.125 Bitcoins per block. BITCOIN MINING Bitcoin uses a proof-of-work (PoW) system to validate transaction infor- mation, called this way because solving the encrypted hash takes time and energy, which acts as proof that work was done. In this system, individuals use computers or special- ized mining rigs to join the Bitcoin network, acting as both transaction processors and validators. Once a block is filled with transac- tions, it is closed and sent to a mining queue, where miners race to be the first to solve the block's crypto- graphic puzzle. When the miners confirm the legitimacy of the trans- actions in a block, they open a new one and receive a reward for their work. This process creates a chain of blocks containing information, creat- ing what we know as the blockchain. With each halving event, the reward for these network contributors is slashed by half, slowing down the pace at which new Bitcoins are in- troduced into circulation. For con- text, as of March 2024, more than 19 million Bitcoins have been mined, meaning there are approximately 2 million Bitcoins left to be virtually mined. BITCOIN ETF A Bitcoin ETF (Exchange-Traded Fund), is a type of investment fund that tracks the price of Bitcoin and trades on traditional stock ex- changes. Essentially, a Bitcoin ETF allows in- vestors to gain exposure to Bitcoin without needing to directly hold the cryptocurrency. Instead, they can buy and sell shares of the ETF through their brokerage accounts, just like they would with any other stock. ISSUE 183 MARCH 2024 the BANKING EXECUTIVE 11