For the third time in bitcoin’s history, the reward for mining a bitcoin block will be cut in half. Here’s what that means for the digital currency.
On Monday, the cryptocurrency bitcoin will undergo a highly anticipated ‘halving’ event which occurs every four years to reduce the reward miners receive for mining new coins and help control inflation; while nothing about bitcoin’s fundamentals will change, the halving could have long-lasting effects on the price of the original digital currency. Monday’s halving—the third in bitcoin’s history—will cut the reward miners receive from 12.5 bitcoin to 6.25 bitcoin per block.
New blocks are mined by computers that solve complex math problems; right now, it takes about 10 minutes to mine a new block. The result of the halving will be dramatically reduced supply: because the reward is being cut in half, many bitcoin miners are likely to switch to more profitable cryptocurrencies.
There is a limit on bitcoins that can be mined: There are just 21 million bitcoin in the system and mining will stop once that number is hit; right now, there are about 18.6 in circulation meaning there are less than 3 million remaining bitcoin to be mined. It’s estimated that because of built-in safeguards like halving events, which prevent too many blocks from being mined too quickly, all available bitcoin won’t be mined untilThis price of one bitcoin is about $8,868; it began the year hovering around $7,000 before surging above $10,000 in February and plunging below $5,000 in March.
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