The Halvening - What it is and Why it matters

[BTC Future 3946]

Satoshi Nakamoto wanted Bitcoin to have scarcity. He decided, for his own reasons, that all Bitcoins in existence should reach a maximum of 21 million. He also wanted Bitcoin to be decentralized so he figured out that computers around the world can run the software and using PoW (burning electricity through their CPU's while solving SHA-256 algorithm) they can compete each other into creating Bitcoins. What he also did was to place a set of rules, that all computers (nodes) that are running the software, must follow. These rules are called consensus rules as they demand consensus between all participants of the Bitcoin ecosystem. 

 

One of these rules that was hard-coded into the software from version 1.0 is the halving of miners rewards every 210,000 blocks. Miners get rewarded for their electricity spent, with the creation of new Bitcoins and fees. Basically they profit way more from new Bitcoins and right now fees are just something extra for them. Every miner that finds a block is rewarded from a coinbase transaction 12,5 new Bitcoins. These Bitcoins are new, never existed and constitute Bitcoin's inflation

The 3rd Bitcoin halving will occur on block 630,000, which is expected in 12th May 2020. It will halve these rewards and miners from this block will be rewarded 6,25 new Bitcoins for every block the find that gets validated through the network. 

Why this matters to price? Miners have huge cost to run their operations. In order to sustain them, they have to sell. Their plans are to hold when prices are low and sell when prices are going high again. Still what will happen, and what has happened during the last two halvings, is that the selling pressure gets reduced. Less new Bitcoin rewards for miners means that they will be selling less as well. For many miners, in order to sustain their profitability and keep running their operations, there would be need for either Bitcoin's price to rise, or for fees to rise. Although concerning fees it is probably not much probable and it would require for fees to rise almost five to six times on average to fill the gap from the halving of rewards. 

There are many smaller miners still using old ASIC's as the Bitmain Antminer S9. In order for this hardware to be profitable after the halving, a price of $10,000-$15000 would be required. These miners probably plan to shut down if price does not rise a lot before the halving. A business can't run on loss, so unless major price change happens, all of these miners will shut down. The gap will be filled by new mining operations in China and other places where electricity can be negotiated at really cheap rates.

So there probably won't be a problem with hashrate, it will keep advancing at least for a few years, but there might be some short of more centralization of mining. Back in 2018 Bitmain along with it's affiliate pools was collectively holding almost 50% of the mining hashrate. This is a danger to the decentralized nature of Bitcoin and should be avoided.

 

Taking everything into consideration, it looks that the halvening event can once again become the catalyst for a potential bull run in Bitcoin's price. The positives outweigh the negatives and I think that the risk/reward ratio justifies investing in Bitcoin. Always with caution though as it is a very volatile market. Only invest as much as you are willing to lose. 

 

[magd 5231]

The half-period is the energy that is paid to maintain the price of bitcoin, so it is important to reduce mining rewards until the negative impact of whales on the price is stopped. For this reason, the rate of rise after the half is good.

[Yunusalemu 0]

wow well i never knew how this whole minner stuff are all being proccessd before, even the electricity supply and all those processing power it demands, this article is quiet parcked with lots of information, thanks for posting this here for us all to benefit 

[kadayakito 765]

Unlike many cryptocurrencies, Satoshi Nakamoto created with bitcoin has a volume limit. This is control and makes bitcoin more valuable. halved to reduce inflation and it maintains bitcoin.

[jacker 1095]

halving is important. with bitcoin halving it will make bitcoin more valuable after halving ends, it maintains the existing bitcoin this time having more investment opportunities for everyone.

[Honny143 13612]

Well first I say thanks to share this useful topic about bitcoin halving, its really knowledgeable topic to me because I know bitcoin halving, but i have no the full details about this halving, but your topic gives lot of information to understand this process.

[BTC Future 3946]

On 5/2/2020 at 1:09 AM, Sezar55 said:

My dear friend, the half simply created it to maintain the price of bitcoin and not collapse it by whales, so the profits of miners are reduced in order to achieve the largest increase in bitcoin in this period, which is a good idea to maintain this currency

The halving was hardcoded in the bitcoin software by Satoshi since Bitcoin was released. He explained exactly why he did that and he never hiden the fact that it could make Bitcoin's price more attractive. Miners have a few options with the halving. Either they quit, or they adjust. To adjust they certainly need new hardware, more powerful from their old equipment and also renegotiate electricity price with their power supplier. Also they can hope that either prices or fees will rise and they can be still in profit with their current terms.

Edited May 4, 2020 by BTC Future

[BitcryptoHan 2557]

On 5/2/2020 at 5:19 PM, Honny143 said:

Well first I say thanks to share this useful topic about bitcoin halving, its really knowledgeable topic to me because I know bitcoin halving, but i have no the full details about this halving, but your topic gives lot of information to understand this process.

Do not thank on this forum, give like reaction instead as it was written in a topic. You can send pm to the user as well. 

To get good knowledge about halving, you can check coindesk or cointelegraph, they have good articles about it. 

[BTC Future 3946]

On 5/4/2020 at 5:51 PM, BitcryptoHan said:

Do not thank on this forum, give like reaction instead as it was written in a topic. You can send pm to the user as well. 

To get good knowledge about halving, you can check coindesk or cointelegraph, they have good articles about it. 

You didn't like this one then I guess. Was hoping to bring valid information for discussion and I'm sure that coindesk and cointelegraph would have way better articles about everything we post here, as they are paid professional authors and it is their job to provide something better from forum posts. Anyway I'm sorry I've failed you, I will go on with my life now and keep posting something that might be better than this.

[Zaino34 0]

Thank you, my friend, for this little information. I have left a few days for half of the bitcoin, which is repeated every 4 years. In this half, the rewards of miners are reduced to half, and no one knows what price bitcoin will reach.

[Shahud 1319]

i found your topic is very Technical regarding trading .as a newbie in tradimg i am nkt getting all thr points like bitcoin inflation , whales and many more.bit it is really a good thimg to know about many things by your topic

[jamesvince 2389]

Halving event is happening after every four years and this is measures for control of inflation on bitcoin. And this event in past happened only two times in the history of bitcoin on 2012 and 2016 and only one day remaining of 2020 halving event then next halving event is on 2024.

[BTC Future 3946]

On 5/9/2020 at 6:10 PM, Shahud said:

i found your topic is very Technical regarding trading .as a newbie in tradimg i am nkt getting all thr points like bitcoin inflation , whales and many more.bit it is really a good thimg to know about many things by your topic

Thanks friend. If you didn't understand something it is probably because I didn't explained properly. If you have any questions please ask and I will try my best to explain. If I don't know something I will try and find the valid answer from my sources and provide it back the sooner I can.

[BitcryptoHan 2557]

On 5/10/2020 at 1:11 AM, jamesvince said:

Halving event is happening after every four years and this is measures for control of inflation on bitcoin. And this event in past happened only two times in the history of bitcoin on 2012 and 2016 and only one day remaining of 2020 halving event then next halving event is on 2024.

Not all halving even happens in every four years, on my some coins like bitcoin, bitcoin forks or fork of fork and litecoin halving are every four years including some other coins, some coins are using different ways to have while some do not halve but are mined normally with certain amount that are constantly generated per month. 

[Upright 2688]

As from my knowledge from the Halving, as it happens per the 210000 bkivjs which are mined, as I think that, one of the importance of having is that of the security of the network having to be more difficult and validated on higher degrees as the main aim of miners is to validate transactions as it also mounts to the build up of the halving

As from my knowledge from the Halving, as it happens per the 210000 bkivjs which are mined, as I think that, one of the importance of having is that of the security of the network having to be more difficult and validated on higher degrees as the main aim of miners is to validate transactions as it also mounts to the build up of the halving

[Whited35 15285]

Every essential information about Bitcoin halving is in the above topic. Some of interesting facts about halving are, 21 million bitcoins will be total number of Bitcoin in this existence and Bitcoin halving is done to control the emission of Bitcoin to prevent from further price inflation. 

[Saj555 2250]

Halving is a process that boost up the prices of bitcoins and the rewards are reduced in half for the miners. A halving takes place once in four tears. Three halving has been taken place and this year the fourth halving took place. It reduce the mining rewards. The mining rewards were at 12.5 btc but now if is at 6.25btc. So we are hoping for the increase of the prices. 

[escmys 15]

When 210000 blocks are created in the blockchain network, Btc reward given to miners is reduced by half. This event, which repeats every 4 years, is named halving.

[Poker888 31]

Halving is actually an adjustment in the networks through which transactions with this cryptocurrency occur. And it is thanks to this adjustment that during this day the profits of Bitcoin miners are cut in half. Your goal: reduce inflation