Bitcoin halving is process of decrease in reward for miners effort. This will continue until the last bitcoin is mined. And the final bitcoin is predicted to be mined around the year 2140.
When miners solve mathematical problems with their hash power to verify transactions on bitcoin blockchain and secure the chain, they earn an amount of bitcoin (block reward) as payment for their proof of work (PoW). This rewarding process is so crucial for bitcoin blockchain. Every 210,000 blocks or every four years that bitcoin reward is halved. This situation is called ‘Bitcoin Halving’. Satoshi Nakamoto programmed/explained it at the beginning this digital freedom era.
Remember that only 21,000,000 BTC exists and about 18.400.000 BTC are in circulation as of May 8, 2020, which means there only are 2,400,000 BTC left as mining reward. Therefore, Bitcoin halving is a big phenomena for BTC price.
Bitcoin Halving News
Next bitcoin halving will be on 12 May 2020. So, 3 days (72 hours) remained for it. After May 12, 2020, miners will only be paid a total of 6.25 btc per block added to bitcoin blockchain. This has happened 2 times before ( 2013 and 2017). Here are some scenarios for miners and possible bitcoin price moves over time before and after bitcoin halving.
How BTC Price has Changed during Previous Halvings?
The BTC reward was 50 BTC for each block in the chain in 2009. During the first halving, the reward reduced from 50 to 25 BTC. Then, the second halving led to decrease the reward from 25 to 12,5 BTC for a block in a chain. On 12 May 2020, there ward will be 6,25 BTC for a block.
During the first halving, the price risen from $10 to $1,150 and the price was $650 during the second halving. After the second halving, the price increased by $20,000.
To put it in another way, let’s say you are a gold miner and the gold you can mine decreases every four years. Price change will be inevitable for gold, so its price would increase theoretically. However, please, always remember it is not a certain rule that the price increases after halving.
After Bitcoin Halving
As explained above, halving is a big phenomena for the price. Halving means that the miners will get 50% less BTC rewards (6.25 btc per block), which can create a shortage for BTC in circulation. Then, the price may start to rise in value.
In addition to that, if the price is lower than the mining cost, there is a theoretical possibility that some of miners can leave the network, which can create insecurity in the system and decrease in price. However, at the same time most of miners would like to keep mining BTC in order to keep the price high because they have huge amount of Bitcoin in their wallet.
To sum up, we, investmug.com editors, think that the second scenario will not work and the market will demand more BTC in time although less Bitcoin is mined. So, the BTC price will have increasing trend for long-term investment. As a result, each decrease in price should be considered as buying opportunity for the future.
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