Over the past few years, the interest of the public in Bitcoin has been on an upward trajectory. Ordinary people with a little online training have found a place in the cryptocurrency rave, the usual entry point is Bitcoin. This widespread interest in Bitcoin means that the price of Bitcoin is almost always on the rise. Indeed, very few currencies have seen the kind of astronomical increase in value that Bitcoin has seen. However, since June 26th, the price of Bitcoin has been on a steady downward trajectory. The price of Bitcoin fell from $13, 868 at its peak to around about $11, 000 over a three week period. This represents a 20% decline in price from 2019 all-time high.
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Despite this steady decline in value over an extended period of time few people are worried about Bitcoin’s future. The general Bitcoin community acknowledges the fact that the slump in price does not do much damage to Bitcoin’s long term viability.
One of the reasons people are not bothered about the Bitcoin price decline is the concurrent increase in hash rate. The hash rate in a blockchain network is simply the number of hash operations that can be performed in a given period of time. In other words it is the speed at which a miner operates.
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The hash rate of Bitcoin’s network has increased steadily throughout 2019. Since 2019 began it has grown from 35 exahash to an all-time high of 75 exahash. This consistent increase in hash rate amongst many other things means that more resources are being committed into the mining of Bitcoin. This means that people expect that the value of Bitcoin will increase in the long run.
This expectation that the price of Bitcoin will increase has led to the hoarding of Bitcoin by miners. Miners have been acquiring capital in order to run operations till next year without having to sell any Bitcoin. The reason for this hoarding of Bitcoin is that most miners expect a block reward halving to occur in May 2020.
The block reward halving is a predetermined process in the Bitcoin blockchain. It reduces the block reward by half once every four years and the next one is scheduled to occur in May 2020. This simply means that the reward (in Bitcoin) for solving a “block” will be reduced by half. Miners currently earn 12.5 BTC every time they solve a block, therefore after May 20, 2020 the reward for solving a “block” will reduce to only 6.25 BTC.
However, despite the impact this will have on the future of Bitcoin very few people understand what it means. An even fewer number of people are paying attention to it. Researchers however expect the halving to become a bigger narrative for Bitcoin as the second half of the year progresses.