The countdown is on for one of the most anticipated events in the Bitcoin market. The Bitcoin (BTC) block reward having lights hope to miners as economic downfall caused by the Coronavirus disease 2019 (Covid-19) strikes fear to global economies. Bitcoin halving last happened in 2016 and is expected this May 13.
What is Bitcoin Having?
Coindesk reported that the block rewards, the number of bitcoins entering the circulation every minute, will drop from 12.5 to 6.5. Miners who use electronic equipment in mining bitcoin produce new bitcoins that will join the flow as block rewards. Satoshi Nakamoto, a person or a group of individuals who disappeared after a year of the release of the software without explaining the circulation formula, formulated the bitcoin circulation formula.
What is its benefit for miners?
Miners can potentially win half of the total number of bitcoin during the halving, which occurs every 220,000 blocks or approximately every four years.
Halving is an anticipated event that has already happened twice in 2012 and 2016. Currently, 12.5 bitcoins are being circulated every 10 minutes after the two halvings. According to predictions, the process will accumulate a total of 21 million bitcoin in the year 2140.
What is the implication of Bitcoin having on bitcoin price?
Halving attracts the attention of miners because of the possibility of a price increase. However, its effect is still debatable. During the first halving in 2012, Nakamoto’s unique circulation formula showed little predictability value on the market’s response to halving. There was no concrete evidence that a decline in halving affects bitcoin’s price. Patterns, however, showed that prices are rising following the halving.
The bitcoin industry is speculating on the effect of each halving in bitcoin’s price. Coindesk reported that during the 2016 halving, bitcoin price fell by 10 percent reaching $610 before returning to its recent price index. According to Jacob Donnelly, an analyst from CoinDesk, there was little proof that the decline in the mining rate results in a long term impact on bitcoin price. However, the market saw an increasing pattern after the 2016 halving. Analysts predicted that when the supply of bitcoin falls, its demand stays the same, causing an increase in its price.
The theory suggests that the incoming halving will also generate a price increase, which is beneficial for the miners.
Predictions on Bitcoin Mining
Bitcoin trades for $6,600. According to predictions, bitcoin miners will be facing uncertainties this year, no matter what price the halving brings. Some suggest that revenues will fall by half this coming months because of the risk caused by the global pandemic, Covid-19. Bitcoin.com noted that the BTC miners would face further obstacles because of two other high-profile blockchains that share Nakamoto’s algorithm. Bitcoin cash (BCH) and bitscoinsv (BSV) are also scheduled for block reward reductions following BTC’s halving. Despite optimism on the price increase of bitcoins, the industry expects a drag down on revenues as the global economy falls because of the pandemic’s effect on the other sectors. Slowdown in the global economy is expected as nations intensify security measures to protect human lives through quarantines and lockdowns.