Bitcoin halving explained: What investors should know

#bitcoin #crypto #youtube
00:00:05 Bitcoin halving
The price of Bitcoin (BTC-USD) has no shortage of catalysts – from the debate around regulation, to whether it’s a security or a commodity – and whether or not it really is digital gold.

00:00:13 Halving date
But one event is undeniable in its impact on the world’s premier digital asset – the halving. Once every four years the reward for mining the biggest crypto currency is cut in half. This happens in order to reduce the amount of coins in circulation.

00:00:33: How is it calculated?
It happens very specifically every time 210,000 blocks are mined. We can calculate the date fairly precisely with the knowledge that the average block time for bitcoin mining is around 10 minutes. That calculation gets us very close to 4 years.

00:00:40: Why is it needed?
Because there is only so much bitcoin available – 21 million to be exact – and like any other cryptocurrency it needs to remain scarce to hold its value.

00:00:55 How often does this happen?
The halving takes place every four years. The first in 2012 decreased the award for creating a new block from 50 BTC to 25 BTC.

The second halving in 2016 lowered the reward further – from 25 BTC to 12.5 BTC.

The last time out was in 2020, and you guessed it, we halved again – the block award dropping to 6.25 BTC.

There nothing wrong with your math – this time around the block reward miners receive will be halved to 3.125 BTC.

00:01:27: What happens to the price?
The moves could be significant; in the past we’ve seen Bitcoin rise after a halving event, though there’s no certainty this will always be the outcome.

00:01:38 Outcome for the miners
The rewards they’re generating will of course diminish, and that’s not great for an industry with a very high cost burden. Keep an eye on how the big publicly listed miners, the likes of Marathon and Riot, manage this event. As ever, talk of consolidation will no doubt do the rounds.

No matter how you look at it, the event will have serious consequences for all crypto stakeholders, and we’ll be across all the developments here at Yahoo Finance.

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