Bitcoin Halving: What does it mean for Cloud Mining?
Today we are going to talk about Bitcoin Halving. I will tell you what it is, when it happened, when it will happen again and how it affects cloud mining contracts.
What it is?
Miner Pool - is a collection of individual miners who 'pool' their efforts or hashing power together and share the blockreward. Miners create pools because it increases their chances of earning a block reward. When you buy a cloud mining contract, you are most likely buying a piece of that power that works together.
The block reward is a fixed amount of Bitcoins that get rewarded to the miner or mining pool that finds a given block.
New bitcoins are issued by the Bitcoin network every 10 minutes. For the first four years of Bitcoin's existence, the amount of new bitcoins issued every 10 minutes was 50. Every four years, this number is cut in half. The day the amount halves is called a "halving" or "halvening".
Approximately every 4 years, the block reward gets cut in half.
The Bitcoin halving is scheduled in block height, not date. The halving happens every 210,000 blocks.
When Bitcoin Halving happened?
The first block reward ever mined was in 2008 and it it was for 50 Bitcoins.
In 2012, the first reward halving occured and it dropped to 25 Bitcoins.
In 2016, a second halving occured where the reward was reduced to 12.5 Bitcoins.
The third halving occired at 11 May, 2020, where the reward will be cut down to 6.25 Bitcoins.
The next Bitcoin Halving is expected around March 12, 2024, where the reward will be cut down to 3.125 BTC per block
What is the Significance of the Bitcoin Block Halving?
The halving decreases the amount of new bitcoins generated per block. This means the supply of new bitcoins is lower.
In normal markets, lower supply with steady demand usually leads to higher prices. Since the halving reduces the supply of new bitcoins, and demand usually remains steady, the halving has usually preceded some of Bitcoin's largest runs.
This already happened in 2017, and now it is happening at the end of 2020-beginning of 2021.
The 2012 block halving was the first halving and happened on November 28th, 2012.
New BTC Per Block Before: 50 BTC per block
New BTC Per Block After: 25 BTC per block
Price on Halving Day: $12.35
Price 150 Days Later: $127.00
The second halving occurred on July 9th, 2016.
New BTC Per Block Before: 25 BTC per block
New BTC Per Block After: 12.5 BTC per block
Price on Halving Day: $650.63
Price 150 Days Later: $758.81
The second halving occurred on May 11, 2020.
New BTC Per Block Before: 12.5 BTC per block
New BTC Per Block After: 6.25 BTC per block
Price on Halving Day: $8821.42
Price 150 Days Later: $10672
Price 200 Days Later: $37193
When will all 21 million Bitcoins be mined?
All 21 million bitcoins (BTC) will be mined by 2140. But more than 98% will be mined by 2030.
The halving is necessary. This is how Bitcoin controls its supply. Once the block subsidy expires, transaction fees will pay miners for securing the network.
How does halving affect cloud mining?
Imagine if you decided to buy a cloud mining contract in April 2020, a month before the Fourth Halving happened?
Not knowing about the upcoming halving, you would calculate your future profit based on the current charges, even if taking into account the scenarios of increasing the difficulty of the bitcoin network.
But then, a month later, on May 11, you would find that your daily charges have halved!
How would you feel at this moment?
Today, in February 2021, there is absolutely nothing to be afraid of. The next halving will take place in March 2024, which means that:
all contracts that you can buy now on cloud mining services will have ended.
At the moment, do not be afraid of the upcoming Bitcoin halving - it will not take place soon and will not affect your current contracts.
Halving is cool. It allows bitcoin to rise in price and restrains the growth of network difficulty.
Mining companies have to create more complex and energy efficient computers and disconnect old models from the network.