Will halving kill BTC?

22 APR 2020 04:59

The final countdown for another halving of the Bitcoin network. Experts predict all kinds of results. Will this be the beginning of the end? Let's figure it out together.

Every four years, the rewards that miners receive for adding blocks to the network are reduced. The first time this happened seven years ago - initially, miners received 50 BTC per block, but in 2012, the reward was halved (to 25 BTC). Four years later, another reduction struck – already to 12.5 BTC. This time the amount will again be reduced by half – to 6.25 BTC.

Halving (i.e. halving the reward for miners) occurs automatically when mining 210,000 blocks. At the current rate of mining, this happens every four years. According to preliminary forecasts, the next decrease in reward will occur on May 17, 2020.

However, there are empirical findings based on the previous halving. According to simple estimates, the price of bitcoin grew by more than 10,000% in the six months after each halving. However, there are certain “BUT” for this: the price of bitcoin was then much lower, the number of bitcoins in access was much lower, mining as such was still possible not only for industrial miners but also for private farms in all geographical areas of the globe. Also, there was no government intervention into the extraction and use of cryptocurrencies.

Should everyone buy bitcoins now? Most analysts will say with confidence – yes, but we will not give recommendations. By the end of December and the beginning of January, the rate may rise sharply. Then you need to wait for the peak value of the course after halving (analysts predict the onset of the peak in the fall of 2020), and then you can exit the game.

At the same time, the analytic company Messari notes that bitcoin miners will not only face marginal pressure as a result of a decrease in cryptocurrency output, but they can also feel pressure as a result of the price decline caused by COVID-19, which will only increase the negative effect of the reduction.

Messari analysts believe that as a result of a combination of all the negative factors, the price of bitcoin after halving in 2020 could fall to $4000. As with any halving, only the most profitable and well-capitalized miners will survive.

However, it should be noted that too many variables may appear in the answer to the question, therefore halving BTC and its result remains a dark horse.