The block reward was cut in half for the pioneering cryptocurrency, which was definitely the most anticipated event this year finally taking place. As a result, the rate at which new bitcoins are minted has dropped by 50% for the third time in the history of the coin.
At exactly 3.23 PM EST on May 11, AntPool mined block 630,000, initiating the scheduled hlaving event, according to data provided by Tradeblock. This block consisted of 3,134 transactions with an estimated transaction value of 3,311.62144322 BTC. Chinese bitcoin miner F2Pool mined the last block before halving occurred.
Halving is a quadrennial event, which means it occurs every four years (or after every 210,000 blocks). This event is basically a stroke of genius that aims to end BTC inflation by reducing the rewards for mined blocks on the bitcoin network.
After the halving that just happened, miners' rewards have been reduced from 12.5 BTC to 6.25 BTC. The bitcoins produced daily, therefore, will be reduced from 1,800 to 900 units. Bitcoin's inflation rate will subsequently drop to 1.8%. This means that the OG cryptocurrency now has a lower annual inflation rate than gold.
Me @PeterSchiff, Bitcoin has a lower inflation rate than gold now.
– Pomp 🌪 (@APompliano) May 11, 2020
The first halving took place in 2012, where the rewards were reduced from 50 BTC to 25 BTC. The second occurred in 2016 and the rewards were reduced from 25 BTC to 12.5 BTC.
Possible effects of Bitcoin halving
Network miners will feel the immediate effect of halving. Due to reduced revenues, small miners will be forced to shut down their rigs as the cost of production is expected to double to $ 14,000, about 70% above current prices. Charles Edwards de Capriole sees a large mining capitulation in the short term.
This will be the most brutal Bitcoin Halving in history.
Production cost is about to double to $ 14,000.
70% above the current price.
Last halving, price was just 10% below Production cost, and Price & HR collapsed -20%.
Without FOMO now, expect a big miner capitulation. 30% + pic.twitter.com/zfbjKmjsUC
– Charles Edwards (@caprioleio) May 11, 2020
Nakamoto designed that the gradual reduction of rewards would reduce the number of bitcoins minted every 10 minutes. With a limited supply of 21 million, BTC is well on its way to becoming one of the world's scarcest assets.
As supply shrinks, assuming demand remains constant, the price is expected to skyrocket and print new all-time highs. However, the impact of the third halving on the price of bitcoin is a hotly debated topic in the cryptocurrency community. While some believe that halving it's not an eventothers are sure it is Very optimist for the bitcoin price in the coming months based on historical performance.
However, due to the unpredictability of the cryptocurrency market, it remains to be seen what the price of bitcoin or miners will be. The digital asset is valued at $ 8,900 at press time, with gains of 0.91% in the last 24-hour period.