The world highest priced cryptocurrency bitcoin’s mining rewards are going to be halved after exactly 181 days. This Halving refers to cutting down the number of coins that are rewarded as incentive, when a block is approved by the consensus algorithm of bitcoin. The halving event was introduced as to keep the inflation under some kind of control.
Today there are a total of 18,048,625 in circulation, owned by miners, investors and exchanges for people to buy. This makes up about 85.95% of the entire supply, which is 21,000,000. Although, it has taken merely a decade to mine those 18,048,625, but it would take relatively more time to mine the rest of the 326,375 coins. This is due to the fact that the rewards are halved, after some time, but as the supply of bitcoin is limited therefore there will only be 64 bitcoin halving events. The reserves of Bitcoin will be empty by then. It was approximated that it would take about 121 years for bitcoin mining to end.
When bitcoin was first introduced, the price of each coin was basically none. With the passage of time the market saw some extreme bull runs. It has been observed that with every halving event, there comes a bull run. This accounted for increases of 1000% in Bitcoin in the very first year. If people were waiting for the market to stabilize then they have been in the wrong because, its more than 10 years later and we still haven’t witnessed bitcoin’s value being less volatile. The market keeps on oscillating.
In the beginning whenever a block was unlocked 50 coins were unlocked and offered as incentive to the miner. This sum of coins has since then reduced due to a phenomenon we have come to know as bitcoin halving. Today, miners get 12.5 coins for each block they unlock. This will be reduced to 6.25 at the next halving event. The miners then get reduced amount of coins every time they unlock a block. There have been only 2 halving events since the inception of bitcoin and the genesis block, the first one reduced its price from 50 to 25, and the second one reduced from 25 to 12.5.
Mining bitcoin is no easy feat. It requires a lot of computing energy that can be provided by ASIC mining chips that cost thousands of dollars. In addition to this, the mining rigs also require a large amount of computing power, and this conjures a huge electricity bill as well. As more and more coins are being mined, the mining power required to unlock the blocks is also increasing due to the increase in the complexity of the problem that has to be solved. The number of hashes that need to be generated also increase with time, which employ more computing power.
And as the complexity keeps on increasing and the rewards keeps on decreasing, the question arises, is mining bitcoin even profitable to miners?
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