An event is about to take place on the Bitcoin network that only occurs roughly every four years.
The amount of new bitcoin earned by miners with each new block of transactions is about to be cut in half.
This is the part of Bitcoin’s predictable, transparent monetary policy, that can be verified in the source code available on the Bitcoin Core GitHub repository.
When these kinds of changes in bitcoin’s inflation rate happen, then it is recognized as a halving event. The upcoming halving is expected to take place on May 25, 2020 at 03:56:59.
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What Does Halving Mean To Bitcoin Miners?
So, with the block reward splitting in half from 12.5 to 6.25 coins, it seems obvious that some miners will soon be operating at a loss.
What happens if a miner is operating at a loss for a long period of time? They turn off their equipment in most of the cases.
There are some who have wondered whether the halving event could lead to a doomsday scenario where a sudden drop in the network hashrate leads to slower transaction confirmations, that then prompts to a lower bitcoin price, which after that leads to even more miners turning off their equipment, and then the cycle continues.
The vast majority of the bitcoin mining community doesn’t seem worried about the halving event. Recently, Bitcoin Magazine conducted interviews with many representatives of the mining community, and all of them are positive about the halving.
With that said, most of them do believe there will be a minor drop in the overall network hashrate.
It is amazing to note that miners are most likely to receive a larger USD-denominated block reward after the halving than they were at the same time in 2018.
Even though the number of bitcoins included in mining reward is about to be cut in half, the bitcoin is still leading the cryptocurrency world.
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What Does This Mean For The Bitcoin Price?
Many bitcoin lovers are convinced that the halving will have an immensely positive impact on the bitcoin price and that is true that, despite the downfall, Bitcoin is still leading the market.
Whether this increase will continue post-halving is up for debate.
The last halving took place on September 7th, 2016, and it didn’t appear to have had much effect on the price, at least not quickly.
Indeed, the bitcoin price was also below $15 at that point in time, so that it was a completely different environment. And, the price began to skyrocket in mid-January 2013.
It is uncertain that if the market has dependably priced in the upcoming halving event. Either way, it will be enthralling to watch how the halving affects both the price and the mining community. To learn more about it in detail, check out our guide to Cryptocurrency Halving.
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