Bitcoin Halving Shifts Into Future All the Time: Will It Happen as Scheduled?
Posted on 04-09-2020.
Bitcoin halving will keep happening at predetermined moments until there are 21 million coins. The thing is that it’s predetermined not in time, but in block height. The nearest halving is expected to happen in May 2020.
In this piece, we look back at the previous Bitcoin halving events and explain the varying expectations about the upcoming one.
Halving is a colloquial term for a scheduled 50% decrease in block reward for miners in Bitcoin. Since the very beginning, the Bitcoin protocol was programmed to cut the reward in half every 210,000 blocks, thus decreasing the rate at which new coins are generated. The network is meant to go on like this until there are 21 million coins generated, so new blocks bring miners only the respective transaction fees and don’t create new coins.
Thanks to halving and adaptive mining difficulty, the supply of new BTC is distributed steadily throughout a century and a bit. This keeps overly-enthusiastic miners from mining the entire 21 million coins as fast as possible and potentially crashing the price. Fixed supply and halving mean that Bitcoin is a deflationary asset, as opposed to inflationary assets like conventional national money. This makes Bitcoin scarce, which reflects on its market value.
For Bitcoin miners, halving is a watershed event that cuts their income at least in half. This forces miners to upgrade their equipment significantly to keep the money coming, hope for the Bitcoin price to grow, or quit the business.
Two previous Bitcoin halvings in 2012 and 2016 were relatively predictable in timing.
Mining difficulty in Bitcoin changes to keep new blocks coming out roughly every 10 minutes. If more miners with more powerful rigs join the network, blocks will be mined faster, so the protocol cranks up the difficulty until the 10-minute interval is restored. If this is the case, you simply need to multiply 10 minutes by 210,000, which is roughly 4 years. In total, there are 64 halvings scheduled, the last one estimated to happen somewhere around 2140.
At the start, the reward was 50 BTC per block. Bitcoin went on like this until the first halving in 2012, generating about 50% of the total supply intended. Back then, most of the coins were mined by the creators of Bitcoin themselves as there wasn’t much of a commercial incentive to participate. Around 2010 when the first exchanges started to appear, the situation began to change.
On November 28th, 2012, the 210,000th block has been mined and the reward went down to 25 BTC. By that time, there was already some apparent interest in Bitcoin and the halving boosted the price some more. During this period Bitcoin reached $1000, although the price crashed later on because of big trouble with one notorious exchange.
On July 9th, 2016, the reward went down to 12.5 BTC as miners reached block 420,000. By this time 75% of the supply has been released. This is the modern era of Bitcoin, encompassing the 2017 hype and further correction.
The next halving will set it at 6.25 BTC and will happen at block 630,000. At the time of writing, there are 625,154 blocks mined
and less than 5 thousand left to go. According to the current estimates, the halving is to be expected mid-May, 2020. This is very much in line with the earlier projections
dating back to 2018.
Although, some of the more recent projections were varying.
Going back to September 2019, a prominent crypto-enthusiast @hodlonaut suggested
that the halving is likely to come in April, a month earlier than planned. His argument was based on the growing hashrate in the Bitcoin network throughout 2019.
Later, during the coronavirus crisis in March 2020, estimates shifted further
towards late May as the hashrate in the Bitcoin network dropped together with the price and the average block time reached 14 minutes.
As mentioned by Matvii Sivoraksha, CBDO of Madfish.Solutions, Managing partner at Zionodes.Com and a professional miner, we are reaching the end of a rather eventful period for Bitcoin.
“Over the course of the current batch of 210,000 blocks, some big Bitcoin forks took place, take Bitcoin Cash and Bitcoin SV. These two forks caused delays in block generation times because miners were moving between different coins. As a result, the mining difficulty couldn’t keep up with wildly fluctuating hashrate and block times way higher than 10 minutes.
“This time it is much harder to pin down the precise time of halving than back when there weren’t as many SHA256-based coins with significant hashrate,” Matvii told forklog.media.
He also said that the upcoming halving, similarly to the previous cases, will lead to short-time centralization of Bitcoin mining as some players will have a harder time upgrading their rigs and squeezing out profits”
“Mining businesses will feel it. As usual, some players with expensive electricity or older equipment will have to optimize or shut down their farms. This isn’t neither good nor bad for Bitcoin.”
All in all, Matvii concluded that despite the crisis and economic turmoil the upcoming halving is coming as expected and Bitcoin miners are unlikely to face anything too unusual. The halving will be a blow for businesses, but both the hashrate and the price will probably keep growing as they did the last two times.
Thanks to the relatively stable and clear halving schedule, the Bitcoin mining community is well-aware of the upcoming changes. The same is likely to be the case for most of those interested in the first cryptocurrency in terms of trading, innovation, and whatnot else. While it may not be a pleasant thing to anticipate for an individual miner, halving is an integral part of the Bitcoin protocol necessary to keep it going in the long term.
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