I’ve read about this, but a lot still confuses me, to be honest this is my first time getting to know about it. It happens every four years just like a World Cup… Wow.
I would like members who have in one way or the other been affected by the halving event share their experiences especially miners and investors.
I know it affects small miners the most, let me hear from the experienced guys!
So, from what I have learnt so far, the halving process happens to be a protocol that was designed alongside every other protocol that makes up Bitcoin in general. This halving occurs
approximately every four (4) years, after the successive completion of the mining of
210,000 blocks. Ideally, there is a certain number of rewards that miners get for their hard work and efforts. This reward tends to decrease by half the moment the allocated number of blocks (210K) have been mined. The essence here is to reduce and regulate the amount of supply.
It is important to note that the initial reward for miners was
50 BTC per successive mined block. Along the line, it went down to
25 BTC, then
12.5 BTC,
6.25 BTC, and currently to
3.125 BTC.
In regards to how this halving process affects miners, I have come to understand that there are basically three (3) types of miners, which are: solo miners, pool miners, and cloud computing miners.
Solo miners: are a set of independent miners that work alone and compete with others in mining a block and earning a reward. All mining rewards are meant for the Solo miner only, but the miner must bear the cost of maintenance, high electricity bills, etc.
Pool miners: which I prefer to call group miners, involves a group of individuals that combine their computational power for mining purposes. Rewards here are distributed based on the agreement in place.
Solo miners are basically threatened in such cases, as the reward becomes more scarce. Due to the high cost of maintenance, electricity bill (if not solar), etc., they are forced to join a mining pool instead.