Free webinar. How can you generate future 100x returns even in a crypto crisis? Practical tips and examples. Also suitable for beginners. Click here.
Everything you need to know before investing a single euro during the crypto crisis.
- What will the majority do and what do you need to do to be better off?
- The backdrop of the crypto crash and the levers of great opportunity.
- When will we hit bottom?
- When is a new high in crypto prices expected?
- How to avoid scams and succeed?
Register for the free webinar HERE, to get new and updated information on the current situation in the crypto universe.
The Bitcoin blockchain is approaching the halving event, which will take place in March 2024, where the energy consumption for mining one Bitcoin will be doubled. With halving, the rate of creating new coins is reduced, thereby reducing the available supply of new supply.
As an investor in digital currencies, it is essential to understand the technology behind Bitcoin and its tokenomics, or where it gets its value and how it remains a currency with a limited supply.
All of this can be learned at the practical webinar:
- What does halving mean for the future of Bitcoin as a currency?
- How do Bitcoin miners make money?
- Why is the number of new Bitcoins decreasing?
- How does BTC halving affect the price of Bitcoin?
So, this means that from 2020 onwards, all cryptocurrency miners will receive 6.25 BTC for participating in the Bitcoin network, processing and confirming transactions for each block successfully mined. At the next halving in 2024, the reward for one block will drop to 3.5 Bitcoins.
- Two specific methods for high returns, even when prices are falling.
- What will the majority do and what should you do to be in a better position?
- Background of the crypto crash and leverage of big opportunities.
- Which cryptocurrencies to buy during a crisis?
- Trends, trading, earning techniques.
Enter your name and email address now to participate for free.
A block is not equal to one transaction!!
We can imagine a block as a folder of documents, where each transaction is a paper in the folder of documents. For improved security, reduced fees and more efficient operation, Bitcoin processes blocks instead of individual transactions. It is not yet clear how the next halving will affect the price of bitcoin, but many experts believe that the price will follow a similar pattern to the previous three events, where demand will increase mainly due to increased reporting of news and because after halving the supply of new coins will be limited.
Photo: Bitcoin halving decreases the rewards for miners
Will halving of rewards raise the price of Bitcoin?
Larger Bitcoin investors hope that the 50 percent drop in new Bitcoin stocks will create upward pressure and raise the price of bitcoin, as has always been the case so far.
The effect of halving will probably be slightly different this time and not as pronounced. In the past, miners could use ordinary computers, but as more people entered the Bitcoin network, mining difficulties increased.
Why?
Hashrate is a measure of a miner’s computing power; the more miners in the network, the harder it is to solve the puzzle, which is a competition between miners, where organizations or miners with the highest “hashrate” can mine the most bitcoins.
Only large companies are willing to spend more money on block mining and invest in computing power when bitcoin prices are higher. The creation of bitcoins has exponentially decreased over time, while the supply of existing bitcoins has grown. There are currently over 18.4 million bitcoins in circulation out of a total of 21 million. Before the 2020 halving, 656,250 bitcoins were created in the entire year, compared to 328,125 bitcoins in 2021. In other words, halving has reduced the “inflation rate” of bitcoin from 3.6 percent to 1.8 percent per year.
The previous halvings took place in 2012 and 2016, and the next one is expected in 2024. The price of bitcoin increased 30x in the year after the November 2012 halving, and tripled in the year after the July 2016 halving, before increasing further in the second half of 2017.
How do Bitcoin miners make money?
Miners collect a list of transactions that have been issued when the last block was created, in order to build one block. They then compete against time, where they perform millions of trillions of compressed SHA-256 calculations per second in a race against time to find a block that pays the highest compressed value.
The reward for completing a block used to be 12.5 bitcoins before 2020, and is now 6.25 bitcoins. The winner of the time game receives this reward along with any transaction fees. Currently, transaction fees are worth approximately 0.6 bitcoins or $5,000 per block, which is significantly less than the value of the block reward. As a result, the block reward has been halved, which almost overnight caused a reduction in miners’ income.
Photo: Reduction in miners’ income
So, in the case that the price of bitcoin falls after the halving event, miners will not have any incentive; the reward for processing transactions will be smaller and the value of bitcoin will not be high enough to cover electricity costs. To prevent this, bitcoin has a kind of defensive mechanism where it adjusts the difficulty of mining transactions. For example, if the value of BTC does not increase after the next halving event, the difficulty of mining will decrease (which motivates miners). This in turn means that the amount of bitcoins issued as a reward is always smaller, but at the same time the difficulty of processing transactions is also reduced. This process has proven successful 3 times.
Electricity is one of the biggest costs of mining bitcoins, so halving the rewards should ultimately also reduce the amount of electricity consumed for bitcoin mining. Currently, one bitcoin transaction can consume up to 1,200 kWh of electricity, which is almost equivalent to 100,000 bank transactions. That’s why today you need a lot of money and specialized machines, as well as space, to be able to mine.
Interesting fact; In 2009, it took a few seconds of household electricity to mine one bitcoin, while today it takes 9 years or $12,500 of household electricity to mine one bitcoin.
This is also the reason why about 80% of the computing power in the BTC network is owned by only seven companies.
The impact of the halving event on miners and investors:
- Impact on miners: The actual impact on miners is quite complex, as it depends on several variables. On the one hand, a smaller supply of new bitcoins increases demand, and on the other hand, a reduced number of rewards for miners, and particularly for smaller mining companies, makes it difficult for them to operate in the Bitcoin network, as they are unable to compete with large mining corporations. Therefore, when the price of Bitcoin rises, the number of miners decreases. The opposite is also true. The departure of miners from the Bitcoin network is not good at all, as they are responsible for maintaining security by validating blocks.
- Impact on investors: So far, the halving event has caused an increase in prices due to reduced supply and increased demand. Active trading always increases in anticipation of the halving. Many larger institutions believe that the FED will reverse its general decisions on the direction of the economy to a truly stable low inflation rate in 2023, which roughly coincides with the growth of Bitcoin in anticipation of the halving in March 2024. Time flies quickly, so stay tuned and be ready when things turn around!
Buying cryptocurrency. Buy cheap, sell high. Whoever understands this, achieves everything. We are now entering a period when very favorable purchases of cryptocurrencies will be possible.
- Which cryptocurrencies to buy this year?
- Top 10 crypto projects with the possibility of 100x growth.
- 5 common ways people lose their investments.
All this and more will be discussed in the webinar.
Enter your name and email address now to participate for free.
