Upcoming mining reward halving and the BTC price boom
Apart from confirming transactions on the Bitcoin blockchain network, Bitcoin miners help in generating new Bitcoins. A miner is usually rewarded with new Bitcoins every 10 minutes.
The number of Bitcoins that the miner is rewarded with, which is referred to as the Bitcoin reward per block, normally reduces by half every 210,000 blocks. Averagely, to mine this amount of blocks, it would take 4 years; therefore, after every 4 years, the Bitcoin reward per block is halved.
The first Bitcoin reward per block was 50 Bitcoins, but the value has reduced significantly with time and currently, the reward is 12.5 Bitcoins for every block mined. The last halving took place in 2016 and it is expected that the next 4 years will be coming to an end at 2020, from when the reward shall be 6.25 Bitcoins per mined block.
Effects of the Bitcoin reward per block halving
The halving of the rewards, of course, reduces the number of new Bitcoins supplied to the blockchain network. However, as the supply of Bitcoins is reduced, the users continue to increase due to the continued adoption of the cryptocurrency.
With high demand and low supply of coins, investors are most likely to start competing to get the Bitcoins, which will most likely drive the prices of the digital coins to new highs.
By 2020, more governments, industries, organizations, and individuals are expected to have adopted Bitcoin and cutting its supply short means the users will have to sweat to get Bitcoin. In this case, most of the Bitcoins supplied to the new users will have to come from the existing users who will tend to hold on their coins dearly thus pushing the prices higher.
Experts are actually linking the current Bitcoin price hike to the anticipated halving arguing that investors have spotted an opportunity which makes them want to buy more Bitcoin currently so that they may have enough to sell when that time comes. In a way, this theory holds water although some still argue that the price hike could be somehow related to the ongoing China-US trade war.
But in any case, whatever the reason for this price hike, investors should expect the prices to even shoot higher in the coming two years (that is 2020 and 2021). Everyone can remember what happened in 2016 and 2017. Actually, Bitcoin registered one of the highest prices then and if things work out just exactly as expected, the digital coin could be taking the investors for another ride to the moon very soon.