Bitcoin mining is a competitive process where miners use computational power to produce new bitcoins. Every 10 minutes, a new block is mined, rewarding the miner with bitcoins, known as the block subsidy. This subsidy is halved approximately every four years or every 210,000 blocks, an event called the halving. Initially, each block rewarded 50 bitcoins, but the current reward is 6.25 bitcoins, and by 2140, it will decline to zero.

The halving affects Bitcoin's price as it reduces the supply of new bitcoins. If demand remains constant, the reduced supply from the halving could increase the price. However, the market has not always anticipated this event, leading to significant price increases post-halving. Miners, who are often forced to sell their bitcoins to cover operational costs, exert downward pressure on the price. The halving reduces this pressure, potentially causing a price rise if demand stays the same.

Historically, halvings trigger hype cycles in Bitcoin's market, leading to price surges and eventual crashes as the market seeks equilibrium. The supply of tradeable bitcoins decreases over time, shifting to long-term holders, which can drive up the price. The unpredictability of the size and investment willingness of new market participants during a hype cycle makes it challenging to price in halvings. Additionally, complex feedback loops in Bitcoin's monetization process add to the difficulty of predicting price movements related to halvings. #plebchain