A two-fold reduction in the reward of miners for the extracted block is a rare event. Many people became interested in the sphere of digital money in 2017, so this halving is their first. We tell you everything you need to know about it
On may 11, at block 630 00, the reward for bitcoin mining was halved: from 12.5 to 6.25 BTC. The next halving will take place on the 840,000 block, which will be mined around 2024. After the 2017 , when the price of BTC reached a historical high of $20,000, many more people became interested in digital money. And for many of them, halving happened for the first time, so there are questions that require a simple answer.
What is halving?
This is a two-fold reduction in the reward for the block obtained. Initially, the miners received 50 BTC, on November 28, 2012 this number decreased to 25 BTC, on July 9, 2016 - to 12.5 BTC. Yesterday, may 11, 2020, it fell to 6.25 BTC. Now the profitability of cryptocurrency mining has become 50% lower.
Why do you need halving?
Satoshi Nakamoto by reducing the reward of miners for the extracted block made the issue of cryptocurrency controlled. It is believed that over time, bitcoin will be extracted more and more expensive and difficult. New coins will be released to the market more slowly. It will keep the inflation of cryptocurrency. Now, when Central banks of various countries "print" national currencies to help the economy affected by the coronavirus pandemic, supporters of digital money call the limited emission of bitcoin a great advantage.
What will happen to the miners after halving?
After reducing the reward for the extracted block, the profitability of mining falls by half. At the end of April, co-founder and managing partner of F2Pool (the pool that produced the last block before halving 2020) Wang Chun suggested that less effective players would be absorbed by larger companies. This opinion is shared by Alejandro de La Torre, Vice-President of Poolin.
At the same time, large companies are ready for halving if they have new equipment and access to cheap electricity. According to the co-founder of F2Pool, any farm that spends no more than $3,500 on mining one BTC will survive.
Bitcoin will definitely rise in price after halving?
After the previous halvings, the cost of the first cryptocurrency increased many times. For example, after the first reduction in the reward of miners, the price of the coin increased from $11 to $1100. After the second one-from $600 to $20,000. However, now no one guarantees that the bitcoin exchange rate will again show an impressive growth.
Many experts, including Fundstrat co-founder Tom Lee and billionaire and head of Galaxy Digital Mike Novogratz call halving one of the drivers of future growth in the value of the first cryptocurrency. But there is an opinion that the reduction of the miners 'reward for the extracted block is already "in price", which means that after the event, the asset value may decrease. For example, Litecoin Creator Charlie Lee and Bitcoin Cash supporter Roger Ver spoke about This.
