Countdown to the Bitcoin Block Reward Halving
Although at first, the word "halving" might sound rather ominous, it is nothing but music to the ears of the crypto miners. The Bitcoin block reward halving is one of the most anticipated events in Bitcoin’s history and the whole crypto community.
Block halving is an event wherein the miners are rewarded a certain amount of bitcoins whenever a block is produced, which is roughly every 10 minutes. Respectively, the rate at which new bitcoins are generated decreases.
New bitcoins that are produced by miners enter circulation as block rewards. Every 210,000 blocks, approximately every four years, the total number of bitcoin that can be won is halved. This event is periodical and is programmed into Bitcoin’s code.
There have been two halving events so far. During the first one in 2012, the block rewards dropped from 50 to 25, and on the second event in 2016, it decreased to 12.5 coins per block accordingly. Since there is a fixed number of bitcoin that is 21 million, there can only be 64 halvings in all. Therefore, the block reward will keep on halving until the block reward per block becomes 0.
The halving date is never fixed as it depends on when 630,000 (3 x 210,000) Bitcoins are in circulation. On average144 bitcoins are unlocked per day with one bitcoin mined every 10 minutes. At this pace, the next halving event should occur sometime in mid-2020 (supposedly in May), however, the exact date is yet unknown due to the fluctuation of the bitcoin mining rate.
The Bitcoin halving is getting so much attention because many believe that the event will lead to a price increase. Around and after a block halving the Bitcoin value becomes extremely volatile, which results in rapid price change during this period, and it is therefore quite impossible to foresee the Bitcoin value after the halving.
However, after the two previous events, the price of Bitcoin rose considerably around a year after each halving and there are a few explanations for this. When the rate at which new Bitcoins enter the market is reduced, it creates scarcity and consequently, the distortion of the Stock-to-Flow ratio drives the prices up.
Moreover, following the results of the previous halvings crypto enthusiasts are keen on betting on the price-growth for 2020, which may prompt the Bitcoin price increase this time also. Hence, holding onto your crypto is likely to become even more profitable.