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The Impact of Bitcoin’s Reward Halvings

Greg Cipolaro

July 28, 2021

Every 210,000 blocks, roughly every 4 years, the Bitcoin protocol reduces the number of new bitcoins it produces by 50%. This event, called a halving, is an essential function of the asset’s fixed supply, which reaches a ceiling of 21M in the year 2140. These halving events are rare and have only occurred three times in Bitcoin’s history. This report analyzes those halving events, and the impact they have had on price.

Bitcoin’s fixed supply and declining annual growth are important financial properties that should make it a hedge against inflation. Unbacked fiat currencies and even precious metals like gold have supply growth that can be described as exponential (for example 2% per year), are uncapped (theoretically even gold), or in most cases, both.

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