3.2.0. Halving Technology
Another reason why POW mining is still profitable is because of Halving Technology. Though there are 21 million Bitcoins that will be produced and released by the Blockchain, these 21 million coins are not just released at the same time or haphazardly by the Blockchain.
The Blockchain releases Bitcoin in a coordinated manner. It releases Bitcoins in batches known as blocks. A block on the Blockchain network is a file that stores 1 MB worth of Bitcoin transactions.
One block of Bitcoin is produced and released approximately every ten minutes by the Blockchain to miners.
If one block is released in 10 minutes, it means 6 blocks are released every hour, giving a total of 144 blocks being released per 24 hours and 52 596 blocks per 365.25 days (one year).
A block contains a fixed number of Bitcoins.
In order to ensure that the number of Bitcoins being released into circulation does not increase exponentially and hence, negatively affect the price, the Blockchain automatically halves the number of Bitcoin in each block for every 210 000 blocks being released. This is the Halving Technology of Blockchain.
Understand this very clearly: it means for every 210 000 blocks of Bitcoin being mined, the Blockchain reduces the number of Bitcoins in each block by 50 percent!
This should be clearly understood so that you can take advantage of it to maximize your crypto investment.
3.2.1. Important Facts on Bitcoin Halving!!!
When Blockchain released the first block to Satoshi as he mined with his CPU computer on 9th January 2009, there were 50 Bitcoins contained in one block.
By 2012, after 210 000 blocks were mined, the number of Bitcoins per block reduced to 25.
Again, the number reduced to 12.5 Bitcoins per block in 2016 after another 210 000 blocks were mined.
In 2020, the number still reduced to 6.25 Bitcoins per block after another 210 000 blocks were mined.
This means approximately every 4 years, about 210 000 blocks were mined, and the blockchain automatically reduced the number of Bitcoin in each block.
How long will this process continue? The answer is: as long as there are Bitcoins still to be mined from the blockchain.
This means the next Bitcoin Halving is in 2024, then 2028, and so on. The last Bitcoin to be mined will be in the year 2140!
Where will you be by 2140?
3.2.2. The Effect of Bitcoin Halving
This systematic reduction by half of the amount of Bitcoin every four years has a tremendous impact on the price of Bitcoin and the Crypto Market. It makes Bitcoin scarce while the demand is increasing.
For instance, the price of Bitcoin moved from about one dollar in 2010 to about 1 200 dollars after the halving of 2012, and then moved to about 18 000 USD after the 2016 halving. It again moved above 60 000 USD after the 2020 halving.
What do you think will be the price of Bitcoin after the 2024 Halving?
The prediction, according to some financial and technological experts such as International Business Machines (IBM) Corporation, a multinational technology corporation headquartered in New York with operations in over 171 countries, is that Bitcoin will reach one million USD one day.
What do you think?
As mentioned above, by this halving technology, the Blockchain is programmed to release the last Bitcoin to miners in the year 2140. Thus far, about 19 million Bitcoins have been mined or released into circulation by the Blockchain.
This means, we still have about two million Bitcoins to be mined. You can see why Bitcoin mining is still profitable, especially if you can find a way to reduce the overhead costs of electricity usage and the servicing of your ASIC machine.
3.2.3. Bitcoin Halving and Crypto Bullrun
Since Bitcoin still retains dominance in the Crypto Market, any increase in the price of Bitcoin will also cause the prices of altcoins to increase.
In fact, a few months after each Bitcoin halving, the prices of cryptos skyrocket to all-time high.
For instance, the first Bitcoin halving occurred in November 2012. By November 2013, the price of Bitcoin reached an all-time high of 1 242 dollars.
Such a surge in the price of Bitcoin pulled up the prices of all the altcoins in the market. This is referred to as the Crypto Bullrun, which lasted up until December 2013 before it crashed down to fluctuate between 500 and 800 dollars.
The period of these low prices was protracted and it is known as the Crypto Bear Season.
In other words, the Crypto Bullrun of 2012/3 was followed by Crypto Bear Season that lasted from 2014 to 2016.
The 2014/6 Bear Season ended after the second Bitcoin Halving occurred in July 2016. About six months after this July 2016 Bitcoin Halving, the price of Bitcoin started to rise again to reach an all-time high in December 2017. This was the 2016/7 Crypto Bullrun, which ended by about January 2018 when the price of Bitcoin again crashed down to fluctuate between 3 000 to 6 000 dollars signalling the onset of 2018/9 Crypto Bear Season.
The 2018/20 Crypto Bear Season continued into 2020 when the third Bitcoin Halving occurred in May of same year. About 6 months after the May 2020 Bitcoin Halving, the price of Bitcoin started to rise again, shooting to more than 60 000 dollars by April 2021.
As at the time of the writing of this manuscript (August 2021), the price of Bitcoin had retraced a bit and regained upward movement. This was the 2020/1 Crypto Bullrun.
