Cryptocurrency
Past Halvings in Review: Case for an Immediate Bitcoin Upsurge Is Flawed
Cointelegraph reports, “The block reward halving of Bitcoin (BTC) has long been touted as an optimistic factor to drive the short-term price trend of BTC in the first half of 2020. Historical data, however, shows that the halving does not necessarily coincide with an immediate upsurge in the price of Bitcoin. “On the Bitcoin network, miners create […]
Cointelegraph reports, “The block reward halving of Bitcoin (BTC) has long been touted as an optimistic factor to drive the short-term price trend of BTC in the first half of 2020. Historical data, however, shows that the halving does not necessarily coincide with an immediate upsurge in the price of Bitcoin.
“On the Bitcoin network, miners create blocks that record Bitcoin transactions to essentially verify and confirm payment data using computing power. Through large-scale mining centers filled with ASIC mining chips and sophisticated equipment, miners use a large amount of electricity and have high maintenance costs in order to mine BTC. Individual or small producers can mine BTC through pools — i.e., a group of miners that work together by contributing their computing power to mine Bitcoin blocks.
“Every four years, the reward of mining Bitcoin halves, dropping the revenues of miners by 50%. Often, miners prepare for halvings by saving six to 12 months of cash as a buffer to ensure that even if Bitcoin’s price drops after the halving, their businesses can be sustained.
“The first halving of the Bitcoin network occurred on Nov. 28, 2012. At the time, there were only a handful of major cryptocurrency exchanges that facilitated Bitcoin trading, and it was still relatively difficult to purchase Bitcoin. For that reason, many analysts made the argument that market data prior to 2016 — when there were a limited number of exchanges — may not be reliable…”