The Bitcoin halving in 2020 started approximately in the middle of May 2020. It decreased its bitcoins from 12.5 to 6.25 and the halving happens every 4 years. The first Bitcoin halving occurred on November 28, 2012.
We have listed on this article key points for Bitcoin halving:
1. What is Bitcoin halving?
2. Bitcoin halving for miners
3. Bitcoin Halving history
What is Bitcoin halving?
Every four years, the amount of Bitcoin that can be mined is halved (reduced). New bitcoin blocks are mined in the bitcoin network approximately every 10 minutes. With a limited amount of 21 million or 20,999.999,9769 Bitcoins available for mining in total. The total amount of Bitcoin is released in block rewards. Block reward is the amount that miners receive as a reward. Bitcoin network is “maintained” by miners by adding new transactions to the chain of blockchain and solving highly complex mathematical problems with their mining hardware.
Since the bitcoin halving started in 2012, the number of bitcoins halved every 10 minutes was 50. Every four years, the bitcoin halving amount is reduced to 50%. In 2016, when the second bitcoin halving occurred, the number of bitcoins was reduced to 25. And in 2020 the bitcoin halving will drop from 12.5 to 6.25 bitcoins. And thus the halving decreases the number of new bitcoins generated per block and lowering the supply of new bitcoins. With lower supply because of halving blocks, Bitcoin’s price has seen a huge increase.
The 21 million bitcoins are estimated to be mined in the year 2140. The total of Bitcoin mined until now is about 18 million or and the halving block is limited to 32 events. After the last bitcoin block halving, there will be no more block rewards. And the only way to earn Bitcoin comes with transaction costs. Litecoin cryptocurrency is projected to launch a halving block in a few years.
Bitcoin inventor, Satoshi Nakamoto when he was asked about halving on P2P Foundation, said: “In this sense, it’s more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value.”. If you are interested in reading more about bitcoin we made a article just for you explaining what is bitcoin.
Bitcoin halving for miners
Halving it means less profit because of reduced bitcoins amount. Mining has costs like energy bills, hardware equipment. Miners will have to cover the hardware damages or pay for insurance of the hardware. So it means mining will not have a profitable amount as before halving. But it doesn’t mean miners will have to shut down mining because of that. With a lower supply of bitcoins, this could lead to an increase in the price of bitcoins. With hardware mining becoming less more profitable because of halving, there are other mining methods too.
Cloud mining would be affected too but it would be less more costly than hardware mining with equipment hardware, cost of insurance, and more. Even though it doesn’t offer much about mining, Mobile mining can be a great way for small miners to start earning even after the halving. With mining starting to become less more profitable because of halving, it could benefit miners somehow too. Some miners will quit mining because of high equipment costs, less more profit, high costs of energy bills.
And this would lead to some miners quitting mining and maybe selling the equipment hardware. New hardware equipment or used hardware equipment would be on sale at a cheaper price because of halving. And miners could start buying new hardware equipment at a cheaper price even though it would be less more profitable because of halving.
Bitcoin founder, Satoshi Nakamoto on mining costs and price he said: “It’s the same situation as gold and gold mining. The marginal cost of gold mining tends to stay near the price of gold. Gold mining is a waste, but that waste is far less than the utility of having gold available as a medium of exchange. I think the case will be the same for Bitcoin. The utility of the exchanges made possible by Bitcoin will far exceed the cost of electricity used. Therefore, not having Bitcoin would be a net waste.”
Bitcoin halving history
Bitcoin halving dates from 28 November 2012. Bitcoin’s price now was about $12 and the halving block started with 50 bitcoins per block, reduced then to 25 bitcoins per block. In 2016 the halving block reward was 12.5 bitcoins. Bitcoin’s price at that year was over $2,000 and started rising over $20,000 in December 2017.
The next halving block reward is expected to start in May 2020 with bitcoins halved from 12.5 to 6.25 bitcoins approximately every 10 minutes. The 2020 halving price could potentially mean a price increase of Bitcoin if we look back at the previous dates of halving. With a lower supply, there would be much more demand predicted to lead to a price increase of Bitcoin.
Image via pixabay, Writer Behar H.