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The BTC Halving Has Cost Us! But For How Long?

Bitcoin Halving Aftermath – What Comes Next?

The 2020 Bitcoin Halving that happened in May did not go quite as well as some people expected. While most crypto enthusiasts were very optimistic about the aftermath of the halving event, things turned out to be far from good. A substantial number of miners stopped mining on their equipment as the halved reward made them unprofitable. As a consequence of fewer miners working, transaction fees became considerably higher, the hash rate managed to decrease by up to 40%, while the new blocks are generated at unimaginably low speed.

Hash rate

One of the most significant post-halving trends is the decreased hash rate, The mining profitability of the older generation mining units has dropped substantially (or even turned into negative) as the block rewards got halved. At the moment of writing, an Antminer S9, which is a previous generation mining unit, is estimated to generate a negative $2 per day.

Block time

With a third of the miners turning off their mining units, it was only to be expected that the block generation speed would drop. The Bitcoin daily block generation metric fluctuated between 100 and 120 blocks per day before dropping to only 95 blocks on May 17. This amount of blocks generated per day was last seen during the 2017 Bitcoin-lows.


While the hash rate and block generation time are very significant, the most significant metric out of these are the Bitcoin transaction fees, as they affect not only the BTC infrastructure but the consumers as well. While people who transact in Bitcoin won’t mind a bit slower transactions, they will most likely be frustrated by the increase in transaction fees.
Transaction fees went up by more than one-third just three days after the halving, resulting in an 800% monthly transaction fee increase.
How long will this last?

Everyone is asking if this change of circumstances will affect Bitcoin negatively in the long run. However, experts believe that the latest adjustments, though negative, were not big enough to make a long-term negative impact. Most of them believe that it might take three to four difficulty corrections before miners could return to their “business as usual.”
The situation seems to be coming back to normal as all the parameters are returning to their previous levels.

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Why is Bitcoin’s hashrate on the rise? 

Bitcoin’s hash rate has reached an all-time high of almost 120 exahash per second. The crypto reached this milestone two days shy of its birthday – on January 1st. (January 3rd is Bitcoin’s birthday, being the day the first block of Bitcoins was mined.) On new year’s eve, Jameson Lopp, CTO of CASA, the multisig wallet company, tweeted that “Bitcoin’s network hash rate increased by 162% during 2019, from 38 to 100 exahash per second.”

To put this in perspective, bear in mind that Bitcoiners were celebrating when the hash rate went over six exahashes in 2017. 

Also, consider the fact that this year’s surge in hash rate is despite 2018’s rather bearish market, followed by the subdued market sentiment in 2019. 

What’s A Hash Rate?

For the nontechnical crowd, the hash rate is simply the speed at which a mining computer operates. In the case of Bitcoin and other cryptocurrencies that rely on mining to release new coins into existence, the hash rate is the efficiency and performance of a mining machine. It refers to the speed of mining hardware (specialized computers designed to handle the intensive computational power of crypto mining) when trying to solve or “compute” a block.

A higher hash rate is advantageous because it means a miner has an increased chance of finding the next block and receiving a reward.

What Does This Mean For Price? 

Many crypto enthusiasts take a high hash rate to mean a higher price for Bitcoin. But this is still a contested fact. Other people believe that a high hash rate has the opposite effect. 

Sometimes the correlation is the other way round. An increase in Bitcoin price causes the hash rate to surge, as was the case around the period of May to June 2019, when, according to BitInfoChart, hashing power leapfrogged in response to the price uptrend. This trend continued until Bitcoin’s hash rate reached an all-time high of 108.8 m terahashes per second. (100 m TH/s = 1 exahash.)

While the relationship between hash rate and price is still a point of debate, it’s worth noting that the increase in hash rate is happening just as we are entering the year of the next halvening. As we count down to 20 May 2020, the date when Bitcoin halving will take place, prices will almost unquestionably have a bullish run. What effect will this have on the hash rate? We can only wait and see. 

Hash Rate Doesn’t Mean Everything

An increased hash rate translates into stronger network security. That’s pretty much agreed upon. What it does not mean, though, is more miners are joining the network, or decentralization has been strengthened even more. For instance, the vast majority of miners are located in China, as opposed to a proportionate global distribution the way Satoshi Nakamoto envisioned. As such, the hash rate is not close to a holistic dimension of network health. To its credit, however, the network has so far proven resilient against attacks and censorship, which is quite impressive. 


Eleven years since its inception, Bitcoin is presenting with an unprecedented hash rate. This fact only spells good tidings for the network – and its cryptocurrency. The world’s first cryptocurrency is getting stronger, and this is good news for investors, crypto enthusiasts, and even blockchain fans. Let’s see which way the hash rate goes as we advance towards the next halvening, and especially after it.

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The Eighteenth Million Bitcoins Will have Be Mined by the of This Week

This week marks a milestone in the life of the world’s first cryptocurrency – Bitcoin., the cryptocurrency monitoring platform, reported that the total Bitcoins in circulation had reached 17.72 million by October 14, 2019. It will take the days before next week to mine the remaining amount to 18 million.

It has taken Bitcoin slightly over ten years to expend 85.7 of its total supply, which is quite the metaphorical “drop in the ocean” when compared to the 120 more years it will take for the total number of coins to be mined.

120 Years?

For many people in the crypto community, this seeming discrepancy might prove confusing. How can it take ten years to mine 18 million coins and 120 years to mine the remaining 3 million? The answer is in the network creator’s genius model, which is built to make the currency appreciate as the years go by, rather than devalue.

Now, the number of Bitcoins is finite. There can only be 21 million coins in supply, and when one day all coins are mined, no new ones will be introduced.

Miners get block rewards (free coins) every time they mine new coins. As time goes on, the block rewards are halved – for every 210,000 blocks mined.

When Bitcoin was new, miners could receive 50 coins for every block. The first halving was in 2012, bringing the rewards to 25 coins. The next halving happened in 2016, cutting the rewards to 12.5. The next one will occur on May 2020, making the reward 6.25 coins.

If the Bitcoin protocol remains intact and the halving process remains consistent, Bitcoin will reach the maximum supply cap in 2140.

Bitcoin Investors Are “HODLing” More Than Ever

Meanwhile, the number of addresses hodling 1000+ Bitcoins has increased, as people stockpile on the currency. 

On-chain analyst Glassnode (on-chain refers to transactions that occur on the Blockchain and are only valid when it’s modified to reflect them) has highlighted that the number of Bitcoin wallets holding more than 1000 BTC is now 2100 separate wallets. More wallets are holding bitcoins in the 1,000 – 10,000 bracket more than in any other bracket.

Similarly, the number of bitcoins in wallets with 1000+ wallets has gone from strength to strength: from 6, 919, 950 in September 2018 to 7, 184, 501 in January this year, to 7, 530, 446 as of October 14, 2019. 

These numbers indicate that as we approach the next “halvening,” people are buying Bitcoins in larger volumes, as further indicated by the recent increase in hash-rate discussed in more detail below. 

Bitcoin’s Hash Rate Is at an All-Time High

The hash rate for Bitcoin is also at an all-time high of 110.19 EH/s after being on a steady increase for the last two years – according to the cryptocurrency analysis website Hash rate is essentially the rate at which a crypto-miner is working. The faster they are working, the higher the hash rate, and the quicker they can solve the next block and claim their reward.  

Just in July this year, the hash rate was 80 EH/s and has since grown by 37% in that short amount of time. In September, it hit 100 EH/s for the first time ever, with new highs regularly being achieved for the network. A high hash rate indicates surging mining activity on the Bitcoin network. This could be due to more miners scrambling to acquire more block rewards, or simply due to more efficient mining rigs entering the industry. 

Effect of Halving on Miners and a Next-Generation of Mining Rigs

With the next Bitcoin halving event being only six months away, the mining rig industry is rushing to roll out sophisticated and more powerful hardware to meet changing demands. As the reward rate goes down from the current 12.5 bitcoins for each mined block to 6.25, miners will want to mine even faster to get more coins within shorter time frames.

As such, we are witnessing a new wave of mining rigs, each more powerful than its predecessor. Some of the types of equipment are even up to about 500% more powerful than the older models, in terms of hash rate. 

Going by Bitcoin’s previous halving events, the crypto is likely to witness an upswing in the year before and after the event. This is especially likely, considering the currency continues to show strongly this year. Assuming that it remains on that path in the next few months, chances are it will experience an upswing after the next halving.

Bitcoin After 2140

One of the crucial aspects of Bitcoin’s survival is miners – the people who secure the network and verify transactions. Thus, a legitimate question is: what will happen to miners after every Bitcoin has been mined? After all, there won’t be any financial motivation – they will not be able to exchange their block rewards with cash. Will Bitcoin continue to function?

Fortunately, the network’s creator, Satoshi Nakamoto, envisioned this and addressed it with this statement: “Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free.” What this means is besides block rewards, the Bitcoin protocol also provides transaction fees as a “compensation” option.

The transaction fees will rise after the maximum supply is reached; hence, mining will not be a loss. The only caveat is: currently, the fees pale in comparison to the reward of Bitcoins. However, as the rewards continue diminishing, the transaction fees will increase. The final result is the transaction fees will become valuable enough so that miners should continue verifying transactions. So, while new Bitcoins cease to enter into circulation, Bitcoin miners still get a payday. 

As these exciting chapters for the world’s pioneer’s currency continue to unfold, we can only wait and see how it holds up. It should particularly be interesting to see the coin prove its mettle after the next “halvening.”