Crypto shares gained in premarket trading. Riot Platforms rose 8%; CleanSpark, Marathon Digital rose about 6%; The9, Bit Digital rose about 5%.
The next bitcoin halving is expected to occur around April 20, 2024. At this time, the amount of bitcoin created with each block of transactions will fall to 3.125 from 6.25 bitcoin.
WHAT IS THE HALVING?
The halving, which happens roughly every four years, the latest of which is expected this week, is a change in bitcoin's underlying blockchain technology designed to reduce the rate at which new bitcoins are created.
Bitcoin was designed from its inception by its pseudonymous creator Satoshi Nakamoto to have a capped supply of 21 million tokens.
Nakamoto wrote the halving into bitcoin's code and it works by reducing the rate at which new bitcoin are released into circulation.
So far, about 19 million tokens have been released.
HOW DOES IT HAPPEN?
Blockchain technology involves creating records of information - called 'blocks' - which are added to the chain in a process called 'mining'.
Miners use computing power to solve complex mathematical puzzles to build the blockchain and earn rewards in the form of new bitcoin.
The blockchain is designed so that a halving occurs every time 210,000 blocks are added to the chain, roughly every four years.
At the halving, the amount of bitcoin available as rewards for miners is cut in half. This makes mining less profitable and slows the production of new bitcoins.
WHAT ABOUT PREVIOUS HALVINGS?
There's no evidence to suggest that previous halvings have been behind bitcoin's subsequent price rises.
Still, traders and miners have studied past halvings to try and gain an edge.
When the last halving happened on May 11, 2020, the price rose around 12% in the following week and 659% in the following 12 months.
But there were many explanations for the rally - including loose monetary policy and stay-at-home retail investors with spare cash - and no real evidence the halving was behind it.
An earlier halving occurred in July 2016. Bitcoin rose around 1.3% in the following week, before plunging a few weeks later and then rallying.
In short: it's hard to isolate the impact, if any, halvings may have had previously or predict what could happen this time around.
Regulators have repeatedly warned that bitcoin is a speculative market driven by hype and one that poses harm to investors.