Crypto News

Bitcoin Halving and Why Does It Matter?

Bitcoin Halving and Why Does It Matter?

On the blockchain of Bitcoin, a block refers to a file that stores 1MB value of Bitcoin transactional records. Miners can compete to add a new block using professional hardware to solve difficult mathematical problems, generating a 64 characters output. They complete the work and lock the block so that it cannot be changed. Miners can earn Bitcoins for completing such blocks. 

Bitcoin halving occurs when the rewards for mining new Bitcoin blocks are halved. So, miners get 50% less Bitcoins to verify transactions. Bitcoin halving is scheduled to occur once 210,000 blocks get mined or nearly every four years until 21 million Bitcoins are produced by the network. Bitcoin halving is an essential event for Bitcoin traders and investors because they decrease the number of new Bitcoins produced by the network. It limits the production and supply of new Bitcoins. Therefore, the rates can rise if the demand stays strong. Though this has taken place in the months after and before halving – making the Bitcoin rate appreciate quickly – the situations surrounding every halving are different. Even the demand for Bitcoins can fluctuate. 

Why Does Bitcoin Halving Matter?

The buyers of Bitcoin should know this systemic feature too. It is because halving generally comes with lots of turmoil for the crypto. 

Crypto analysts pointed to a surge in Bitcoin trading volumes instantly a month after and before each halving. It is simple to see why. When Bitcoin halving occurs, the supply of Bitcoin gets lesser, hence increasing the worth of Bitcoins that are still to be mined. With such a fluctuation comes the opportunity for making profits. You can also 

There are other factors also that should be considered while looking at the booms of Bitcoin after a halving like more news coverage of Bitcoin and cryptos, a slow, steady growing list of Bitcoins in the world, and the fascinations with the anonymity of the digital asset. So, we can say that the earlier Bitcoin halving has been a bullish catalyst for its price. Soon, the Bitcoin miners are expected to decrease since the economic rewards for mining will become less attractive and unprofitable. 

What Impact Does Halving Have on Bitcoin?

Turning to the more extensive impact of Bitcoin halving, a reduced reward for mining Bitcoins will decrease the revenues that miners will produce from adding a new transaction to the blockchain. The electricity cost needed for powering computers that help solve complex mathematical problems will increase the Bitcoin price greatly for miners to balance getting half the amount of coins. Miners should work as proficient as possible. Hence, there will be a high demand for new equipment to deliver more hashes every second while decreasing overheads and consuming lesser energy. As a result, the miners may switch to mining crypto assets like Bitcoin SV or Bitcoin cash. Since these cryptos use similar hashing algorithms like Bitcoin, they are easy to turn to.

Why Is Bitcoin Halving Important?

Bitcoin halving reduces the rewards of Bitcoin/ block in a mining cycle. However, the demand will probably stay the same, whereas the amount of mined Bitcoins will fall. Hence, since there is a high demand for Bitcoins and halved supply, the Bitcoin price is anticipated to rise. Still, whether the rate will appreciate or not mainly depends on the demand and supply ratio. Historically, the Bitcoin rate has appreciated after halving. Before next halving invest in Bitcoin to get a good profit. However, If you want to make a good profit from Bitcoin trading then Bitcoin Future is a perfect platform for you. It is an automated trading platform that can help you to get maximum profit. Read Bitcoin Future Review to know more about this unique platform.

When Is Bitcoin’s Halving Happening Next? 

The most recent Bitcoin halving occurred on 11 May 2020. The next Bitcoin halving is expected to take place in early 2024. There is no specific date. It largely depends on the occurrence of 210,000th block mining since the last Bitcoin halving. Bitcoin investors and miners should begin preparing now.

Conclusion

History suggests that a positive relation is there between halving and increase in the Bitcoin price. But, keep in mind that the price is not just affected by Bitcoin halving, and it depends on various other factors.

David Grundy
About author

David Grundy covers breaking news stories of finance industry for FinanceKnown. He is news reporter having 10 years of experience in this field. He also writes news articles on financing, banking, investment and much more.
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