- Posted by: UKDE
- Category: Bitcoin, Crypto, Cryptocurrency
You’re new to Bitcoin, start to join the crypto communities online or on other social media platforms, and maybe start having a conversation with advanced cryptocurrency traders. During those talks, there’s a chance the term “the halvening” comes up.
The halvening is the name given when the bitcoin network sees a 50% decrease in mining revenue, happening at intervals of 210,000 blocks, happening once every four years. Currently, bitcoin miners earn 12.5BTC ($43K) each time a block has been mined. Once the estimated halvening date between the 22nd-28th May 2020 has been reached, miners will instead earn 6.25BTC ($21.5K).
It is needed because bitcoin is finite, with the supply being 21 million and this number being reached would mean new ones can no longer be generated. As of now, it took 10 years to mine 80% of bitcoin, yet the final coin is said to be released until 2140. Not ideal for miners, but it is a crucial measure designed to protect the currency and to drive sustainable growth.
The reduction on revenue from mining did not result in miners hanging up their tools and stepping out into the light, as some may have expected – as shown by the computing power which drives the Bitcoin network staying the same. Some even theorise that in the short-term miners will continue to mine despite the revenue reduction as many believe the loss will be offset by future increases in the value of bitcoin.
The overheads for mining, however, are costly, generating high energy costs. In the long-term smaller miners will be unable to continue. On the surface, this could mark the death of the bitcoin, but like with many internet algorithms and protocols, things are rarely so simple.
Less miners on the network frees it up, so that mining becomes easier and consequently needs less electricity to mine a bitcoin, and thus the system continues to tick along with little trouble.