Bitcoin halving is just around the corner. A phenomenon that is eagerly awaited by the entire crypto community, due to the possible negative and positive effects that it will bring to the crypto market. However, probably the biggest consequence of this event will be felt in mining groups, which could see their costs double.
Bitcoin mining and halving
If we ever had to define what is the key element in the operation of the Blockchain, mining would undoubtedly be one of the main candidates. Well, it is this activity that allows the very existence of block chains. And its operation in transaction processing.
And, if we remember what is explained in our ABC Crypto, we will undoubtedly know that the Blockchain works as a distributed database. Whose processing power is not centralized on a single server, but distributed on the computers of network users. Those who lend their computing power in exchange for a reward in cryptocurrencies.
Thanks to this, the Blockchain and the cryptocurrencies that use it, can maintain decentralization as one of their core values. At the same time that mining is used as a mechanism to issue new crypto assets to the market. Which, instead of being created by some agency as a central bank, will be created by its own users.
So, knowing this, the relationship between mining and halving of Bitcoin is very clear. A phenomenon that will reduce by half the reward received by the miners for lending their computing power to the BTC Blockchain. At the same time it increases the difficulty of mining for these same users.
The effects of halving
Something that does not prevent the proximity of the halving raise emotion within the crypto community. Especially for what is expected to generate in the price of Bitcoin. Well, a decrease in the reward of mining in the Blockchain also means an increase in the shortage of cryptocurrency.
Therefore, by decreasing the supply of Bitcoin and keeping its demand stable, or even increasing, the price of BTC should grow significantly. Emulating the situation presented in 2016, when BTC’s last halving boosted its price to around $ 20,000.
Something that is not only desirable, but necessary, for the survival of the cryptocurrency. Well, a report prepared by the firm TradeBlock, estimates that the cost of mining a single Bitcoin will skyrocket after halving from $ 6,851 to $ 12,525 on average.
Therefore, if there is no significant increase in the price of BTC immediately after halving on its Blockchain. We could witness a dramatic decrease in the number of miners in their network. Only those miners whose costs are sufficiently reduced can remain.
International Studies student, interested in economics and international politics. Passionate about the progress of the Fourth Industrial Revolution in general and cryptocurrencies in particular.