Mining now is a legal type of business with a developing infrastructure. However, at the same time, it is not that simple. Enthusiastic miners are aware of Bitcoin’s tricks judging by its history and can only guess what future the crypto world is going to present to its believers. What is certain, the current year cryptocurrencies will be affected by halving which is going to take place this spring. Bitcoin halving is at the very core of the protocol. So what is halving and what possible scenarios can it provide?
What is halving?
Halving is the process of reducing the speed of new crypto units. This event occurs once every four years on average and it causes a decrease in miners’ reward for a successfully mined block. The role of the halving process is essential, as it is responsible for the stable pace of the creation of new coins. While traditional currencies have the unlimited supply, cryptocurrencies have a controlled level of monetary inflation.
That is one of huge differences between the two systems. In general, there are 32 halvings planned. Once they all happen, it will be impossible to create new digital coins, but this generation won’t be able to watch it as the last Bitcoin is estimated to be mined in 2140. However, it is more than a century from now, what users are thinking of currently is the question if it is still profitable to mine Bitcoins.
Halving in 2021 and its impact on mining
Crypto analysts predict that when the reward drops, used equipment and even the most popular and best on the market AntminerS9 might have great troubles. What concerns the whole mining industry, its affect is still to be determined. Optimistic users are expecting the price increase that can occur not exactly at the time of halving, but during the following months. On the other hand, the situation with halving this year is much different than it used to be before. Crypto followers have experienced two halvings already.
The first took place in 2012 and then the price of one Bitcoin was $12. The second halving occurred in 2016 with Bitcoin’s price $650. After 5 months, Bitcoin had an increase from $12 to $127 in 2012 and from $650 on halving day to $758 in 2016 respectively. Considering today’s situation with the digital currency, there are several issues that might affect its value. When the market is up, miners can sell coins. Speaking about the amount of mined Bitcoins, it is incomparable with the volume of traded Bitcoins. Although the volume of mined coins is little, the trading operations are done every day. Therefore, even when the third halving sees the reward fall to 6.25 BTC, it won’t be of great importance.
To conclude, the crypto expert and the author of books on digital money, Andreas Antonopoulos, states that mining will always be profitable because of a simple mechanism: disabling unprofitable devices gives profit to other cryptocurrency miners. The Wall Street analyst Tom Lee reveals another optimistic opinion. He believes that Bitcoin will soon grow to $40,000.
The crypto expert advances an argument that BTC can reach this target by doubling the number of its users. There is no doubt that a part of people simply blame crypto leaders’ opinions explaining that they have their own interest in the growth of the currency and they do lack considerable argumentation. At the same time, crypto holders pay attention to such prognosis and the main factor of the Bitcoin’s growth is the growth of its believers. Reliable e-cash is going to force the role of governments and turn the whole financing system upside down. Who will take the leading place?