A. These are all great questions as we are expecting to have the next Bitcoin Halving this month (May 2020).
Bitcoin Halving is a process where the number of Bitcoins entering circulation (approximately every 10 minutes) is reduced by half.
This process takes place, roughly every four years, after 210,000 blocks are produced.
Now you might be wondering, what is a ‘block’?
Whenever a miner successfully solves the Bitcoin’s algorithm and calculations, he/she will be entitled to a ‘block’.
A block is simply a set amount of bitcoins agreed upon by the network over a certain number of years.
To understand how many bitcoins are currently rewarded per block, we’ll need to look back to the beginning of Bitcoin Halvings…
When Bitcoin was established in 2009, miners were rewarded 50 Bitcoins per block.
Then in 2012, the reward was cut down to 25 Bitcoins per block.
In 2016 we had the second Bitcoin Halving. This is where the block reward was cut down to 12.5 bitcoins.
And now in 2020, with the upcoming halving
, the block reward will drop to 6.25 bitcoins.
Side note: As more Bitcoins come into circulation and the calculations to mine bitcoin become more complicated, it will also be more expensive for miners to achieve a block.
In fact, this complicated algorithm, high demand for electricity and need for specialised hardware can cost around $8 million a day to mine just one block…
This process, will continue until the block reward eventually reaches zero. And according to the calculations, the end of the Bitcoin Halving process will end with a total supply of 21 million Bitcoins around the year 2140.
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Q. “Hi Timon, I have a question about Bitcoin Halving… Can you show us a chart on how the Bitcoin price has performed over the last two Bitcoin Halving events and where you see Bitcoin heading next?”
A. Sure, take a look at the Bitcoin chart courtesy from ChartsBTC
The vertical red lines shows you when the Bitcoin Halvings took place.
And the orange line shows you the Bitcoin price over time.
The first halving saw Bitcoin rally from $12.22 all the way up to $657.61 (over 5000% gain).
The second halving saw Bitcoin rally from $657.61 up to $12,000 (1,700% rise).
This means, with the next halving coming up and with the supply becoming less, we can expect the price of bitcoin to shoot up over 1,000% in the next four years.
Where too exactly? Well you’ll have to set an alarm for Monday for when I write my next Bitcoin prediction article…
Analyst, Red Hot Storm Trader
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