The May 2020 Bitcoin halving is among the major events expected to affect the blockchain and crypto space next year particularly the BTC price. Block rewards will reduce from the current 12.5 BTC per block to 6.25 Bitcoins.
Ideally this should trigger a reduction in the supply of Bitcoin to a level lower than its demand growth in order for the BTC price to surge. According to BTC halving design, every four years marks a reduction by half on the block rewards which translates to 0.195 BTC as of 2040. Crypto analysts have however estimated that it will take more than a century for the BTC block reward to hit its minimum ‘1 satoshi’ which is equivalent to 0.00000001 Bitcoin.
How Long Will BTC Halving Cause Crypto Bull Runs?
The BTC halving model is only sustainable if the price responds as expected to this process every time a new block reward is set. So far, the previous halving on BTC saw the crypto coin rally majorly as a result of market excitement. This basically means that Bitcoin miners were compensated adequately for their block rewards as per the BTC prevailing price.
However, this begs the question of the risk affiliated to an unresponsive crypto market once the May 2020 halving occurs. Miners will not receive value for their BTC leaving them to rely on transaction fees only; this can barely sustain their operations given the energy intensive nature. On the bright side, this risk will fade away with time as BTC networks grow to full sustainability where the ecosystem stakeholders are well compensated.
BTC Mining processor companies have been challenged to keep up with the BTC halving pace to produce profit making machines. Otherwise the crypto mining industry may lose a large number of miners given the lesser block rewards with time. This can be dangerous as major BTC mining firms will be left to dominate the space and gradually erode the network’s ability to resist censorship.