My last prediction of the year! This is a good one, I promise!

[jamesc760]

I was responding to another thread somewhere and a thought entered my fertile mind:

next halving of bitcoin will take place by end of 2015.

If you don't already know what "halving" means, it means that around every 10 minutes, a block of bitcoins will be rewarded to a miner and the reward will be halved from current 25 to 12.5 bitcoins.

The exact date and time of the next halving is not quite certain, it just depends upon how many blocks will have been mined then. As we all know, the hashrate has been greatly accelerating and this acceleration is causing the date and time of halving to be earlier and earlier than expected.

This event, "halving of bitcoin reward for mining", will most likely result in overnight spike in, whatelse, bitcoin price. It should at least double:

so, if the prevailing bitcoin price on, say, October 15, 2015 is $50,000 (which admittedly is a conservative amount) and if the halving takes place at midnight on October 15, 2015, then the next morning, October 16, 2015, we will see an overnight doubling to $100,000.

This is a highly simplified version of what can happen in 2015. Many people will drive up the bitcoin price IN ANTICIPATION prior to the event and there will be many opportunities for panic buying and panic selling as well, as new entrants try to grab the dwindling supply of the new coins.

These are tumultuous times.

[YoYa]

And so thought they on November 28th 2012 that they would wake up the next morning to a price increase.....nothing happened. The market will have this priced in long before the action.

[Romyen]

This makes no sense to me. I'm trying to follow your logic. I think you are saying that people will stop mining bitcoins and buy them outright due to the halving, thereby causing the demand to increase, and the price to go up. Is this your reasoning? Mining for profit is already out of reach for most bitcoiners, and has been for some time. I don't think the halving will have any significant impact on price.

[wachtwoord]

And so thought they on November 28th 2012 that they would wake up the next morning to a price increase.....nothing happened. The market will have this priced in long before the action.

Indeed. Go and inspect the charts.

It's common sense this is true because otherwise everyone with half a brain could double his money in a few minutes. Markets are stupid but arbitrage gabs usually close quite quickly over time.

[jamesc760]

Good points!

So, if past is any indication, it won't affect the OVERNIGHT price to double. I gets it. However, the salient point of the event affecting the price, over a longer period of time.

I am not saying that miners will abandon their mining operation and start buying bitcoins instead due to the halving event. Where did I say that in my original post?

We need to look at the miners behaviour just before and after the last halving, November 2012,
We need to look at the bitcoin price around then,
How would the big mining outfits do once the halving occurs? Their profits will be halved. do they double their miners?

I am shocked that nobody so far chimed in said, "let's just get to the 2014 first, let alone 2015, geesh!!!!"

[Romyen]

I am not saying that miners will abandon their mining operation and start buying bitcoins instead due to the halving event. Where did I say that in my original post?

I never claimed that you said it explicitly. There is a huge logical gap in your original post, which you still haven't explained, leaving the reader trying to guess what you mean. Why would the halving event cause the price to double?

[Parazyd]

And so thought they on November 28th 2012 that they would wake up the next morning to a price increase.....nothing happened. The market will have this priced in long before the action.

Even then I anticipated a grow to 1k 

[GigaCoin]

I was responding to another thread somewhere and a thought entered my fertile mind:

next halving of bitcoin will take place by end of 2015.

If you don't already know what "halving" means, it means that around every 10 minutes, a block of bitcoins will be rewarded to a miner and the reward will be halved from current 25 to 12.5 bitcoins.

The exact date and time of the next halving is not quite certain, it just depends upon how many blocks will have been mined then. As we all know, the hashrate has been greatly accelerating and this acceleration is causing the date and time of halving to be earlier and earlier than expected.

This event, "halving of bitcoin reward for mining", will most likely result in overnight spike in, whatelse, bitcoin price. It should at least double:

so, if the prevailing bitcoin price on, say, October 15, 2015 is $50,000 (which admittedly is a conservative amount) and if the halving takes place at midnight on October 15, 2015, then the next morning, October 16, 2015, we will see an overnight doubling to $100,000.

This is a highly simplified version of what can happen in 2015. Many people will drive up the bitcoin price IN ANTICIPATION prior to the event and there will be many opportunities for panic buying and panic selling as well, as new entrants try to grab the dwindling supply of the new coins.

These are tumultuous times.

too far, we need to make it happen sooner 

[Kreigyr]

And so thought they on November 28th 2012 that they would wake up the next morning to a price increase.....nothing happened. The market will have this priced in long before the action.

I think it's more plausible this time, but still improbable. The impression I have of the mining market now is that everything's done on much tighter margins, and miners that aren't speculating ideally need to make at least some amount of coins to break even. When the reward halves, most miners conceivably will need twice the buying power per Bitcoin to keep their profits - or lack thereof.

It certainly will not be instantaneous, but I have a strong feeling that if miners are still on the edge when this halving date encroaches, prices will do something interesting.

[samson]

I think we will see some large scale miners going out of business in the future.

[Kreigyr]

I think we will see some large scale miners going out of business in the future.

Or miners-gone-speculators. The introduction of ASICs has created a situation where I feel that miners that aren't immediately profitable will find rising prices to be an excuse to continue mining when they otherwise may not have. While I'm certain many already do so, it's going to be more prominent as these miners will have a much less liquid market to sell their hardware into than GPU miners did.

You can offload a few hundered GPUs as the demand for them is in the millions. You probably can't offload a few hundered ASICs in the same amount of time, and given how quickly mining hardware is obsoleted now, that's an issue.

[nastybit]

So do you think that overnight bitcoin can double? Seriously? Miners already priced this in to speculate if they can keep a few or sell everything at today's market price.
Also the market do not price this in because we cannot (can we?) establish what's the percentage of newly minted coins sold every day. The market priced in the total number of coins (21M) tho.

[...]
so, if the prevailing bitcoin price on, say, October 15, 2015 is $50,000 (which admittedly is a conservative amount) and if the halving takes place at midnight on October 15, 2015, then the next morning, October 16, 2015, we will see an overnight doubling to $100,000.
[...]

yeah yeah very conservative, I think it will be $1M

[Elwar]

It was sort of priced in before the halving but I believe that it contributed to the climb that started in January.

[fluidjax]

The most significant event that will occur when we move to 12.5 coin reward is that  some people will suddenly realise "oh right, so you can have less than one bitcoin..I didnt realise it came in fractions"

[dancupid]

The price discovery took a few months - but the trend did sort of double:

[jamesc760]

I am not saying that miners will abandon their mining operation and start buying bitcoins instead due to the halving event. Where did I say that in my original post?

I never claimed that you said it explicitly. There is a huge logical gap in your original post, which you still haven't explained, leaving the reader trying to guess what you mean. Why would the halving event cause the price to double?

Ok, let me try it this way:

supply is cut in half and there is a growing demand for it, so price would go up??? basic economics, no other voodoo.

[Syke]

Ok, let me try it this way:

supply is cut in half and there is a growing demand for it, so price would go up??? basic economics, no other voodoo.

Then consider the true supply.

All miners throughout the entire world generate about 100k coins per month. Trading volume on all exchanges is about 100 times that. The drop from 25 coins to 12.5 coins will be a non-event.

[jamesc760]

Non-event, eh?

I still think it will have an effect because we are/will be in a totally different place than we were during the last halving of the coins. Markets will have factored in the halving as the date/time approaches; and when it happens, psycholgical impact will be made. Market responds to psychological changes in people's mind.

[cbutters]

You are forgetting that despite the mining reward halving, that doesn't mean that there wont already be 15 million bitcoins in existence at that point. so roughly 3/4 of all the coins will already be mined by that point. Mining won't be and isn't now the only way to acquire bitcoin. just because mining becomes harder, doesn't mean there isn't already an economy of bitcoin. mining becomes less and less relevant as bitcoin grows. I do agree that it will HELP drive the price of bitcoins, but difficulty doubling wont mean the price doubles. If you use this sort of logic, when no more bitcoins can be mined, the price would go to infinity....

[T.Stuart]

mining becomes less and less relevant as bitcoin grows

Sorry if I have misunderstood something but mining is actually necessary to keep the blockchain updated with payments. It is therefore important to factor this into the argument for the future. When Bitcoin takes off as a payments system (both Bitcoin transactions and Fiat > Bitcoin > Fiat [think Bitpay] transactions) then miners are powering the engine that keeps this system going. It will be necessary that they remain profitable in order that they stay in business to power the system - the price of Bitcoins must be satisfactory to the miners - but you should also remember that they will take a share of transaction fees within the system, which should count for more, a lot more, in the future.

[arepo]

I was responding to another thread somewhere and a thought entered my fertile mind:

next halving of bitcoin will take place by end of 2015.

If you don't already know what "halving" means, it means that around every 10 minutes, a block of bitcoins will be rewarded to a miner and the reward will be halved from current 25 to 12.5 bitcoins.

The exact date and time of the next halving is not quite certain, it just depends upon how many blocks will have been mined then. As we all know, the hashrate has been greatly accelerating and this acceleration is causing the date and time of halving to be earlier and earlier than expected.

This event, "halving of bitcoin reward for mining", will most likely result in overnight spike in, whatelse, bitcoin price. It should at least double:

so, if the prevailing bitcoin price on, say, October 15, 2015 is $50,000 (which admittedly is a conservative amount) and if the halving takes place at midnight on October 15, 2015, then the next morning, October 16, 2015, we will see an overnight doubling to $100,000.

This is a highly simplified version of what can happen in 2015. Many people will drive up the bitcoin price IN ANTICIPATION prior to the event and there will be many opportunities for panic buying and panic selling as well, as new entrants try to grab the dwindling supply of the new coins.

These are tumultuous times.

TL;DR -- lurk moar

this has been discussed ad nauseum from the beginning of bitcoin time, most recently around the last halving. here are a few things to consider:

1) while the bitcoin market is still grotesquely inefficient in many ways, protocol fundamentals like the reward halving are largely well-known in the bitcoin community, and it is likely that not only will the event be "priced in" far before it actually occurs, but also that every future reward halving is already priced in.

2) block reward halving is a far cry from a halving of supply, so even the most basic keynesian interpretation does not suggest that the price should double.

3) block reward halving is better modeled as a halving of the inflation rate, something that modern economists still can't agree on regarding its effect on markets, so good luck anticipating its effect on price.

--arepo

[ffe]

mining becomes less and less relevant as bitcoin grows

Sorry if I have misunderstood something but mining is actually necessary to keep the blockchain updated with payments. It is therefore important to factor this into the argument for the future. When Bitcoin takes off as a payments system (both Bitcoin transactions and Fiat > Bitcoin > Fiat [think Bitpay] transactions) then miners are powering the engine that keeps this system going. It will be necessary that they remain profitable in order that they stay in business to power the system - the price of Bitcoins must be satisfactory to the miners - but you should also remember that they will take a share of transaction fees within the system, which should count for more, a lot more, in the future.

No one is guaranteeing miners anything, least of all profitability. If they are necessary and useful, transaction fees will go up to replace the reward Bitcoins lost per block. Note this requires that users must feel _some_ pain if they want timely transactions.

[T.Stuart]

mining becomes less and less relevant as bitcoin grows

Sorry if I have misunderstood something but mining is actually necessary to keep the blockchain updated with payments. It is therefore important to factor this into the argument for the future. When Bitcoin takes off as a payments system (both Bitcoin transactions and Fiat > Bitcoin > Fiat [think Bitpay] transactions) then miners are powering the engine that keeps this system going. It will be necessary that they remain profitable in order that they stay in business to power the system - the price of Bitcoins must be satisfactory to the miners - but you should also remember that they will take a share of transaction fees within the system, which should count for more, a lot more, in the future.

No one is guaranteeing miners anything, least of all profitability. If they are necessary and useful, transaction fees will go up to replace the reward Bitcoins lost per block. Note this requires that users must feel _some_ pain if they want timely transactions.

I think miner's profitability will also naturally and intentionally get priced in to Bitcoin if the system keeps going as is.

[Erdogan]

The cost of mining follows price, not the other way around.

But, since this is speculation, as long as enough noobs think the price will double, it probably will. Just not from one day to another. Even the noobs can see this in advance, you OP is one example.

[Romyen]

I am not saying that miners will abandon their mining operation and start buying bitcoins instead due to the halving event. Where did I say that in my original post?

I never claimed that you said it explicitly. There is a huge logical gap in your original post, which you still haven't explained, leaving the reader trying to guess what you mean. Why would the halving event cause the price to double?

Ok, let me try it this way:

supply is cut in half and there is a growing demand for it, so price would go up??? basic economics, no other voodoo.

You seem to be a little dense, and some of the respondents to your posts credit you with more intelligence than you apparently have. I'll take this slowly, and point out why underlying a couple of underlying assumptions that you make are wrong.

1) Bitcoins can be bought from anybody who has them, not just miners. They are a fungible commodity and don't degrade with age or reuse, as does food. Therefore the supply is not cut in half with the halving event.

2) Even if the number of bitcoins put up for sale were halved, the price wouldn't necessarily double. It's much more complicated than that.