Bitcoin (BTC) Reward Halving Arrives in a Year; What This Means for Miners?

Based on various clocks and relative block time, there are around 366-365 days left until the block reward falls from 12.5 BTC to 6.25 BTC.

Bitcoin (BTC) will go through its fourth halving, a scheduled event happening every four years. The repercussions of this event are multiple, and halvings in the past have affected both the mining economy and open market trading. There are expectations the halving would bring a new period of growth, as the one following the 2016 halving.

In May 2016, BTC prices hovered between $400 and $500. The halving ushered growth toward $1,000 and into the biggest BTC rally in history, all the way up to $19,600.

Currently, 12.5 new BTC are created with each block, with an average of 144 blocks per day. This coupled with the 17,715,163 BTC roughly in circulation, translates to an annualized inflation rate of 3.78%. To compare, the US annualized inflation rate hovers around 2%, with a 2.5% Fed interest rate. After the halving, Bitcoin inflation will become lower than the US dollar inflation, at 1.8%.

Despite the claims that Bitcoin is not an inflationary asset, in fact, the need to mine the coins has increased the inflation rate, especially during the early days. But now, as less new coins are created, the asset will see a new form of scarcity.

The Bitcoin mining hashrate is now around 54 EH/s, hovering near the peak at 60 EH/s. Already users have seen separate blocks where transaction fees exceed the block reward. As block reward falls, BTC miners will depend more heavily on fees to support their business and turn a profit.

Past halvings have also brought significant rallies:

A similar effect was seen for Litecoin (LTC), an asset that has less than three months to its halving. Currently, the Litecoin block reward is still 25 LTC. The looming halving boosted the price, which has managed to bounce off the lows and even re-cross the $100 barrier during a recent rally.

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