Bitcoin is due for another halving, expected around early May 2020. This scheduled halving is expected to have positive effects on the price of bitcoin, although miners may bring it back down.
The process of halving has been written into bitcoin protocol from the very beginning, by the creator Satoshi Nakamoto. Bitcoin is a finite resource, and it will max out at 21 million bitcoins (so far, approximately 18 million have already been mined). In an attempt to slow down the mining process so that not all coins are mined immediately, a halving process occurs every 210,000 blocks. Bitcoin halving refers to the process of making it difficult to mine for bitcoins. The reward for mining a bitcoin is halved – hence the name. This is not the first halving that bitcoin has experienced, and it will not be the last.
Initially, each time you mined a block, you received 50 bitcoins. Then the first halving occurred in 2012, and this dropped to 25 BTC after the second halving in 2016. Currently, when you mine a block, you only receive 12.5 bitcoins. On average, a new bitcoin block is being mined every 10 minutes. This has led people to believe that the next halving will occur around 14 – 18 May 2020, possibly even as early as May 3. It’s impossible to know for sure, because miners are continuously adding new hardware to the bitcoin network, reducing the time it takes to mine a new block.
After the halving sometime in May, the block reward will be dropped down to 6.25. This will not be the last halving; they will continue until the block reward reaches zero. This reduced reward is unlikely to decrease interest in bitcoin, as miners still make money from selling bitcoin, even at the reduced rates. Larger firms may bow out when they can no longer cover production costs, but smaller miners will continue, potentially leading to a more decentralized system.
The effect of the halving
Regardless of the specifics surrounding the halving date, it’s believed that the results will be generally positive. Historically, bitcoin has only ever experienced positive results after a halving, and there is no reason to suggest that this event will be any different. It’s possible that it could cause the value of bitcoin to shoot up to $400,000.
The halving is already being attributed to current positive bitcoin trends, as people gear up for the event. Investors are buying in more significant amounts, and this will only continue up until the event itself.
Despite this seemingly good news, investors are already keeping a close eye on any activity that is not likely to occur for a couple more months, and not all of them are feeling as positive. Some investors predict it is unlikely to be as much volatility this time around, as bitcoin has become far more mainstream since the last halving. Because the halving is so expected, it is unlikely that there will be much of a shock felt.