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What is Bitcoin Halving?
The bitcoin network issues new bitcoins every 10 minutes. During the first four years of bitcoin’s existence, the number of new bitcoins issued every 10 minutes was 50 every four years, this number is halved the day the amount is reduced is called Halving.
Halving in bitcoin is the amount of coins that miners receive when adding new transactions to the blockchain that is halved every so often.
In 2012 the number of new bitcoins issued every 10 minutes was reduced from 50 to 25 bitcoins, in 2016 it was reduced from 25 to 12.5.
Now it will decrease from paying 12.5 bitcoin to 6.25 and it will be reduced by half every 210,000 blocks until the last bitcoin is mined in 2140 where the price will be so low that the way it works will be rethought, but for the moment it is like this.
The halving decreases the number of new bitcoins that are generated per block. This makes the amount of bitcoin decrease.
Previous halving’s have been followed by a rise in the price of bitcoin this was noticed a lot in 2016 when the reward decreased from 25 bitcoins to 12.5
This is theoretically due to supply and demand, the fewer bitcoins being created, the more valuable the ones that currently exist will be.
How this affects the miners
The effect of halving the miners, having a lower reward for mining bitcoin will reduce their income generated by the miners.
But this does not mean that the cost of energy or the necessary parts to have a mining computer lower their prices, since these have a high cost instead the miners are greatly affected by the halving and have to find a way to reduce costs to continue mining.
If the price does not increase as the number of bitcoins that are given for mining a block is reduced, it will be more difficult for miners to continue to stay in the mining business.
Mining must become more and more efficient, in which the hardware can process more hashes per second while consuming less energy, which would reduce costs and improve production.
An alternative for miners would be to move to mine similar cryptocurrencies such as bitcoin cash or bitcoin SV that were created when a fork was used in the blockchain, they use the same hashing algorithm that bitcoin uses, which makes it easy to change them.
When is the next Bitcoin Halving?
The Bitcoin halving is scheduled in block height, not date.
The halving happens every 210,000 blocks. The 2024 halving will happen on block 840,000.
The next halving is expected to occur in 2024 this will likely occur between February 2024 and June 2024.
How does Halving affect the price of Bitcoin?
Cryptocurrency investors prepare for the bitcoin halving, this event is expected to add substantial value to the price of bitcoin that you never know will happen.
Analyzing the first halving, he showed how the markets responded to this change. The bitcoin community did not know how it would affect the network with a sudden decrease in rewards. In the end it turned out that the price started to rise shortly after the halving.
The second reduction was highly anticipated, and like its predecessor, it created an increase in the price by reducing the number of bitcoins that were produced, that day the price was lowered by 10% but immediately rose to its normal price. This drop in price did not create any long-term impact on the price.
The immediate impact on the price of bitcoin was small, the market registered a gradual increase during the year following the second half. Some argue that this increase was a late result of the halving. The theory says that when the supply of bitcoins decreases, the demand for bitcoins will continue to rise, which drives up the price. If that theory is correct then we could see the same price increases in future halving’s.
It is believed that if enough people anticipate the halving, buying bitcoins will cause the price to increase before the halving instead of increasing the price afterwards.
Safe haven asset in times of financial instability
Data showing prices in bitcoin has responded positively to financial uncertainty, as evidenced by the price history,
Just as bitcoin gold became an asset to protect against financial instability, day by day the world supports bitcoin more and stabilizes more.
The massive sale incites panic that affects global markets. The bitcoin market recovers strongly after the drops that are produced by these sales, this causes bitcoin to be a good investment like gold since although its price falls year after year it rises thanks to the halving that reduces the amount of bitcoins that are created and their price increases.