This year has been good for Bitcoin traders as the leading crypto asset has made significant gains on the crypto markets. Bitcoin prices have surged to almost $14,000 this year, and over the last few days, the cryptocurrency's price has risen again.
Many cryptocurrencies have scheduled halving processes through which the rewards that the miners of the particular cryptocurrency receive are cut in half. The halving of rewards is done to decrease the crypto coin’s rate of issuance and provide a safeguard against possible inflation of the coin.
Bitcoin’s halving is due in 255 days, and many players in the Bitcoin community are looking forward to the event. The amount of rewards miners receive when they find a new block will be reduced by half. Historically, halving processes result in high volatility of the cryptocurrency in question, and Bitcoin traders will be looking forward to the digital asset’s price possibly surging again.
For Bitcoin, the halving of rewards is supposed to be executed after every 210,000 blocks. Satoshi Nakamoto established this protocol in the initial iteration of the cryptocurrency. Depending on how quick he blocks are being mined, this number of blocks is reached after about four years. This means that a block is found every ten minutes, and there are a total of 144 blocks found per day.
This rate of mining places the current rewards for Bitcoin mining at 12.5 BTC per block, and this equals 1,800 BTC per day issued as rewards to miners. This figure also includes transaction fees for the platform on which the Bitcoin is being mined. From around the 17th of May, 2020, Bitcoin miners will earn 6.25 BTC per block. The decrease in the supply of mining rewards will bring down the hashrate of the coin because old equipment used to mine the coin becomes less profitable.
Past Halving Events
The first halving event for Bitcoin took place on November 2012 when 210,000 blocks were reached. During that halving, rewards dropped from 50 BTC we block to 25 BTC. After this event, the price of the coin responded by going through a bear market for six months.
The second halving process was done on July 9, 2016, when blocks reached 420,000. During this halving, Bitcoin rewards were reduced to 12.5 BTC. The event had a similar effect on the market as that of the first halving event.
After both events, the price of Bitcoin fell significantly, but a bull market then followed them. During the bull market phase, the price of Bitcoin rose to new heights. When the 2020 halving occurs, historical data suggests that Bitcoin prices will fall and then rise significantly.