What is the impact of "halving" on Bitcoin mining?？
The cryptocurrency ecosystem is about to undergo a structural transformation, and the rewards for mining Bitcoin are expected to shrink for the first time in four years.。Based on current network activity, the "block reward" will automatically be halved to 6.25 Bitcoins。
The cryptocurrency ecosystem is about to undergo a structural transformation, and the rewards for mining Bitcoin are expected to shrink for the first time in four years.。Currently, miners who successfully add transaction blocks to the network receive 12.5 Bitcoins (worth about $112,000)。But based on current network activity, the "block reward" will automatically be halved to 6..25 Bitcoins。
This is actually the third reduction in Bitcoin block rewards。The first occurred in 2012, when the block reward was reduced from the original 50 coins to 25 coins, and the second occurred in 2016, when the block reward was reduced from 25 coins to 12 coins..5 coins。
How often does the block reward change?？
Block rewards are updated every 210,000 blocks (i.e. approximately every four years), a process that is expected to happen over and over again until 2140, when all 21 million bitcoins have been created.。As of May 2020, approximately 18.37 million bitcoins had been mined, with approximately 2.6 million remaining unmined.。Once Bitcoin reaches its supply hard cap, miners can continue to validate blocks to earn transaction fees。
What is "halving"?？
Cryptocurrency investors refer to the cyclical change in block rewards as "halving," which is a key part of Bitcoin's design to control the supply of cryptocurrency and ensure that a small number of new units enter circulation.。A new block is added to the Bitcoin network approximately every 10 minutes, meaning that approximately 1,800 new coins are currently generated per day.。But after the latest changes, only around 900 new bitcoins are generated every day。
If Bitcoin's block reward completely stops (i.e. immediately drops to 0), there could be chaos。If this happens, miners will have no incentive to verify transactions other than a negligible transaction fee, and the network will be at risk of collapse。By gradually reducing block rewards at predetermined intervals, miners and investors can have a sustainable market。
"halved"What it means for Bitcoin investors？
For Cryptocurrency Investors, Halving May Be a Good Thing。In theory, reducing the issuance rate of Bitcoin helps the cryptocurrency maintain its value - Bitcoin is still relatively scarce, which many believe could make digital units more valuable over time.。As a result, many Bitcoin investors don't want to sell their cryptocurrency - because they expect it to appreciate in the future.。
But as we approach the 630,000th block (the third halving), the situation is significantly different than it was four years ago.。First, Bitcoin went through a major boom and bust cycle (peaking at around $20,000 in December 2017).。More broadly, cryptocurrencies are also attracting mainstream attention and investment, with higher risks than before.。Of course, COVID-19 has made the situation somewhat uncertain。
What is the impact of "halving" on Bitcoin mining?？
While it's hard to know how things will play out after the halving, mining Bitcoin may not be as profitable。In the short term, if the price of Bitcoin remains stable, the number of Bitcoin miners may decrease, resulting in a possible decrease in the number of Bitcoins entering the market。While this could put upward pressure on the price of Bitcoin, it's also possible that this information could be "priced in."。Many miners and investors know that a halving is imminent, and the current price ($9,000) reflects that psychology.。
As a result, we will soon witness a historic third halving of block rewards for the Bitcoin network。While no one can predict the future, how will miners respond and whether the change will have an impact on pricing and volatility?？This is definitely an event to watch for investors or potential investors in cryptocurrencies。
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