The bitcoin halving event took place recently, and to understand the impacts of bitcoin halving on the bitcoin mining profitability and bitcoin market valuation. But, first, we should be familiar with the basic notion of bitcoin halving and the network of bitcoin. Blockchain is the superior technology that operates bitcoin with ultimate transparency and security. Visit the official trading platform for more information on bitcoin trading
The ledger copy is present on every peer-to-peer network node, making it challenging to alter the database. Nodes or the computing entity have the potential to disapprove the transactions. Once these nodes authorize the transactions, the information regarding transactions is added to the blockchain in blocks.
Cryptocurrency trading is a very profitable business right now. You can check la aplicación official to know more about cryptocurrency trading. Blockchain is pseudonymous as the transaction information is public to everyone but is present in a hashing function.
A higher number of nodes increases the scalability and stability of the blockchain. The bitcoin network currently consists of 14000 nodes per the rich sources. We all can become a node for the bitcoin network if we have a computer and space to store the blockchain copy. Let’s find out the bitcoin halving impacts the market value of bitcoin.
What do you mean by bitcoin mining?
Bitcoin mining is how individuals utilize their special computers to be involved in the bitcoin network as a validator. Bitcoin is based on the proof of work network; cryptocurrencies like ethereum and litecoin correspondingly utilize the proof of work technology.
Proof of work technology defines that a miner must provide enough proof of efforts invalidating the transactions. For example, to solve the math puzzle in the bitcoin algorithm, a miner has to contribute a computer and an energy source.
Bitcoin mining has witnessed many changes over the period. To generate the maximum block reward, we now need faster mining machines. ASICs are the mining machines that generate a massive chunk of hash rate in just one second.
Application-specific integrated circuits are specially designed for the bitcoin mining progression as they have a particular chipset that is highly synchronized with the SHA-256. As a result, the block reward availed by a bitcoin miner is not fixed.
Bitcoin halving
Halving of bitcoin means, when bitcoin miners mine 210,000 blocks, the block reward of bitcoin mining gets half. A bitcoin halving occurs nearly after four years, as miners take 9.5 minutes to mine each block.
Before any bitcoin halving, the block reward of bitcoin mining was 50 BTC; after the mining of 210,000 blocks, the first-ever bitcoin halving occurred in 2012. After the recent bitcoin halving, the block reward of bitcoin mining is now 6.25 units.
Impacts of bitcoin halving on the bitcoin market valuation
Bitcoin halving has a profound impact on the market valuation of bitcoin units. Bitcoin halving cuts the supply of bitcoin by half every year. Bitcoin has only a finite supply, and we cannot create bitcoins once we have mined 21 million bitcoin units.
Since bitcoin has a finite supply, the bitcoin halving event decreases the supply of bitcoin units after every 210,000. Therefore, bitcoin halving makes bitcoin scarcer after every event. The scarcity of bitcoin is increasing its demand, inclining the market value of bitcoin. In a nutshell, the impacts of bitcoin halving on the market value of bitcoin are positive.
After every bitcoin halving, bitcoin has shown a commendable blow in the market price.
Impacts of bitcoin halving on the profitability of bitcoin mining
Bitcoin halving decreases the block reward of bitcoin mining, so it is supposed to decline the profitability of bitcoin mining. However, the impact of bitcoin halving on bitcoin mining profitability is brutal to determine. One of the primary reasons behind this is that bitcoin halving alongside decreasing the supply of bitcoin units increases the market value of these tokens. Therefore, bitcoin halving hardly impacts the bitcoin mining profitability.
The only factors that affect the profitability of bitcoin mining are the cost of hardware, graphic processing units, electricity cost, and spot prices of these currencies. Bitcoin mining consumes a considerable amount of electricity, and we all know. The massive electricity consumption was one of the prominent reasons why China banned bitcoin mining. Due to such reasons, countries like Kazakhstan face an electrical crisis.