Bitcoin Halving: What You Need to Know – Passive Crypto
May 2020 and the following months will be an exciting time for crypto enthusiasts. Bitcoin is going to be halved. Again. But what does that mean? Below, I’m going to explain everything you need to know to understand the halving of cryptocurrencies.
Bitcoin halving is a process that takes place about once every 4 years, once 210,000 blocks have been mined since the last halving event. When Bitcoin is halved, only half of the previous coin total will be awarded for every block mined.
At first, Bitcoin was awarded at 50 coin per block mined, and each block took about 10 minutes to mine. Come 2012, when the first halving took place, each block awarded only 25 coin once it was mined. Then, when the second halving happened in 2016, the total coin awarded was halved to 12.5 coin per block mined, and this same process will continue until around the year 2140 when the entire Bitcoin supply will have been mined.
Bitcoin is a cryptocurrency that was created from a block chain and is awarded after a block of that chain is mined. In order to mine a block, you would put your computer up to the challenge of solving a very complex math equation. This isn’t just your advanced calculus that a computer can solve in a matter of seconds, though. It’s an equation that you would need an incredibly high-powered computer to solve. The odds of solving one of these problems are around one in 5.8 trillion. Once the equation is solved, the block is mined and Bitcoin are awarded to the computer that solved it.
Bitcoin is a deflationary currency, meaning it has a limit on how many coin will be in existence once it has been fully mined. There will never be more than 21 million Bitcoin in existence. In February 2019, the Bitcoin block chain was 562,000 blocks long. That means that at that moment in time, there were 17,525,000 bitcoin mined and in circulation. With less than 4 million bitcoin left to mine, the value of each coin should increase since the supply is running low.
Let’s look at how the price changed with each prior halving. When Bitcoin was first about to be halved, it was trading for about $11 per coin. Within a year, that price jumped to $1,100 per coin. After a short time of it peaking like that, Bitcoin settled at around $220–230 per coin. Come the next halving, the coin price was around $600–700 per coin, and within a year, it jumped to almost $20,000 per coin. Based on those instances, the price for Bitcoin should take a massive price increase again some time in the 11–12 months following the halving.