All About Bitcoin Halving
As we are getting closer to the next Bitcoin halving, it is time to see what lies ahead. Let’s have a look at when is Bitcoin halving and what is expected to happen to the price of BTC. Keep reading to be prepared for the big event!
Bitcoin’s total supply is set at 21 million and by February 2020, around 18.2 million BTC has already been mined. This sums to about 85% of Bitcoin’s total supply and although a substantial portion of BTC has already been mined, we are not nearing the end of mining, yet. Bitcoin halving occurs once every four years and it decreases the rate at which new BTC are created. The event makes mining Bitcoin more difficult and the protocol cuts the block reward in half once every 210,000 blocks, meaning that miners receive 50% less in block rewards.
After Bitcoin’s launch in 2009, miners received 50 BTC in block rewards and created 10.5 million BTC before the first halving in 2012. The first halving decreased the block reward to 25 BTC per block and the third halving we are expecting this spring, will decrease the reward to 6.25 BTC.
When is the next Bitcoin halving?
The next Bitcoin halving date is not completely fixed since it is dependent on the speed of generating new blocks, which may vary. It currently takes an average of 10 minutes for the network to produce a new block. According to the current speed, the next Bitcoin halving will take place around the second or third week of May. The most popular guess is May 18, 2020.
As for the fourth and last halving – it is expected to happen in 2140. The last halving will mean that miners stop receiving block rewards. All fees will then come from transactions.
What Will Happen to the Price of BTC?
Bitcoin halving brings along dozens of theories on how the price will be affected. Historically, the price has increased after a halving but there are many factors to consider in price predictions.
Bitcoin was priced at around $11 on the date of its first halving in 2012. BTC rose to $12 in one day and saw a hefty increase that year, reaching $1038 by November 2013. The second halving saw a similar pattern – BTC started climbing a month before the halving and gained 12% within the month, reaching $650 on July 9, 2016. The price increase continued and BTC traded at $2500 exactly a year later.
Halving cuts down the supply of BTC and makes the asset more scarce. From the supply/demand standpoint, the price is likely to go up if there is corresponding demand. However, many critics believe that the price increasing effect of halving has already occurred. Furthermore, changes in the industry over the last four years and the market becoming more mature are also seen as reasons why critics believe the third halving will not have the same price effect as the previous.
With lots of different price predictions populating the internet, many still turn to historic data and start purchasing BTC to prepare for the halving or to mitigate their fear of missing out. This in itself generates demand and stimulates the price increase.
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