The halving occurs every 210,000 blocks and reduces the block mining reward by half—now 12.5 Bitcoin per block. Each of the adjustments is designed to continually manage inflation on the network.
The consequence of each halvening is a massive profit slash among miners, with just half the current block reward as revenue. This leads to a massive reduction in miners, with the weak hands being forced out.
However, as miners are no longer able to continue, the total hashrate on the network drops dramatically. This leads to a subsequent reduction in difficulty for each block mined, reducing costs for miners who make it through. In the end, the genius of Nakamoto shines.
The halvening has historically been a time which attracts bulls to bitcoin because it results in the halving of the reward for minting new blocks. That highlights the limited supply argument and automatically makes the bitcoin already in existence more valuable. At least that is how the logic has played out over the last few occasions. It is also worth remembering that cryptocurrencies are a little more than a decade old so drawing long-term conclusions is still something of a spotty endeavour.Click HERE to subscribe to Fuller Treacy Money Back to top