Deflationary Nature Of Bitcoin


It is important to note that the reward for Bitcoin mining was designed to be

reduced by half once every 210,000 blocks are mined or once every 4 years.


This is called Bitcoin halving. In 2008 the initial Bitcoin mining

reward was 50 BTC. In November 28, 2008 the first halving even took

place which reduced the reward to 25 BTC. Then 12.5 BTC in 2016 and

6.25 BTC in 2020.


This process will continue until 21,000,000 Bitcoin is

mined. The reason behind halving is to reduce inflation of the

cryptocurrency and reduce the rate of which new coins are issued to the market.

Like Bitcoin, new Ethereum (ETH) is created through mining.


Both ETH and BTC network currently uses a Proof of Work (PoWl) mechanism, which

guarantees that miners have to solve complex mathematical problems

before the generation of new blocks, after which they will be rewarded with

the cryptocurrency. Unlike Bitcoin, Ethereum does not have a supply limit.

However, the amount of new ETH released every year can be capped.


Ethereum halving will not happen in the same way as Bitcoin, in terms of

50% cut in the mining reward, and a specific schedule for the halving event.

Ethereum doesn’t foresee the decrease of mining rewards at a particular

point in time, like Bitcoin. However, the mining rewards that the Ethereum

miners earn can possibly be reduced.


Bitcoin would cut in half miners’ rewards every 4 years, at exactly 210,000 blocks. However that is not the case for ETH mining becase Ethereum halving is not pre-determined or

pre-programmed, and the release of new ETH will never stop. Therefore it

does not have the deflationary design of Bitcoin. Ethereum runs in an

inflationary mode, during the nonstop generation of new coins.


Your ability to earn more cryptocurrency as a miner will be determined by a

few key factors. But the most obvious of these are the number of mining

rigs you have operating and how many miners you are competing against.

17 views0 comments