What’s Going to Happen with the Bitcoin Halving?
Bitcoin has halved in the past, so it’s not like the event scheduled for this coming May is anything special. However, many analysts say that bitcoin’s future may ride on this single halving for several reasons, as it will likely determine whether bitcoin’s price spikes to its all-time high again.
A halving means that the number of block rewards given to miners for extracting new coins and expanding the market are reduced. This is significant in that given how far bitcoin has fallen over the past few weeks in terms of its price, block rewards have already dropped for miners everywhere. When bitcoin’s price goes up, the rewards go up, and when its price is miniscule, so are miners’ returns.
The coronavirus has had huge effects on both the digital and traditional markets. Bitcoin fell into the high $3,000 range, and though it has since recovered to surpass the $7,000 mark, there’s still plenty of room for improvement given the asset was trading for well over $10,000 back in February.
This event caused mining rewards to fall significantly, and with May’s halving, they’re slated to fall even further. Many miners are expected to simply shut down their operations and seek work in different industries. The future of bitcoin mining is on very thin ice, and many are hoping this doesn’t see the death of mining altogether.
The good news is that bitcoin halvings have proven to be very bullish in the past. Despite the troubling circumstances bitcoin is witnessing at the time of writing, Matthew Dibb – co-founder and COO of Stack – believes this event will be no different. He states:
The halving should create increased upward pressure on the price of bitcoin in the coming two months.
However, several traders and enthusiasts still find themselves on pins and needles, and it looks like people are scrolling through the internet to see what information they can find that will put their fears to rest. April 11 of this year saw the most searches of “bitcoin halving” in roughly 11 years. While this figure has since fallen by approximately 18 percent, it’s still twice what it was in late March.
Rewards Have Already Been Reduced
According to Mike Alfred, CEO of Digital Assets Data, the search spike has a lot to do with retailers becoming more interested in bitcoin and digital currencies. In an interview, he explains:
We are hearing and seeing increased retail interest. The unprecedented era of stimulus and money printing has pushed many people toward bitcoin as an alternative monetary system.
As it stands, virtually ever bitcoin miner receives roughly 12.5 BTC for every newly mined block. The halving will reduce those rewards to 6.25 BTC.