The May 2020 halving will be the third halving in Bitcoin’s history, but what happened during the previous halving of 2016?
It was the second halving, it happened at block number 420,000, mined at 18:46 on July 9th, 2016.
It was the first block in the history of Bitcoin where the miner who managed to validate it was assigned only 12.5 BTC as a reward.
In fact, until the previous block the reward was 25 BTC, already halved once on 28th November 2012 with the 210,000th block.
Only 1,257 transactions were included in the 420,000th block on July 9th, 2016, with a total fee of 0.57569681 BTC. Therefore the miner collected a total of 13,07569681 BTC.
Everything happened without any particular problem, although in the following days the block time increased up to 11 minutes, compared to the 9 minutes of the blocks before the event.
The halving and hashrate of Bitcoin
In the three weeks following the halving, Bitcoin’s hashrate dropped from about 1.7 Ehash/s to 1.3, a drop of about 23%.
This decrease was only temporary since after a little more than a month after the halving the hashrate was back to 1.7 Ehash/s: in fact, even the increase in block time was limited (+22%) and only temporary.
Therefore, from a strictly technical point of view, the halving of 2016 proceeded smoothly and with very little impact on the performance of the network. Besides, it was widely announced and expected, hence nobody was unprepared.
The price of bitcoin in 2016 after the halving
As far as price was concerned, the impact was more significant.
Until the end of May 2016, the price had remained fairly constant, fluctuating more or less around $430. However, from May 26th onwards, the price rose sharply, which brought it to $770 on June 18th, about three weeks before the halving.
At that point, it first fell back down to just over $600 and stabilized around $670 in the days before the halving. Two days before the halving, on July 7th, it dropped to $620, but it immediately recovered to $670 within 5 days.
However, at the end of July, the price fell back to below $570. It remained below $600 until September 3rd, while from September 4th, a slow but steady rise began, which first took it to over $800 on December 21st, 2016, and then to over $1,100 on January 4th, 2017.
This was very close to the previous all-time high, which occurred in December 2013, but was followed by a heavy retracement to $750 on January 12th.
In other words, from mid-December 2016 until mid-January 2017 there was a month of great volatility, which was followed by a full-blown bull-run.
In fact, by early February 2017, the price had already returned above $1,000, and by March it had already exceeded the previous high at over $1,200.
Therefore, during the halving of 2016, the price went up from $430 to $670 and then fell back to $570 in the following months.
Approximately two months after the halving, a bull-run began that brought the price back above $750, with a momentary peak close to the previous all-time high, and was followed by a second bull-run that took the price to exceed the previous all-time high, eight months after the halving.