On January 11th, Ravencoin goes through what is called a halving event. As with many other cryptocurrencies, such as Bitcoin, Ravencoin too has halvings every 4 years.

What is a halving event and why does it happen?

To understand what a halving is, one must first understand how new coins are created. In cryptocurrencies, this process is called mining and if you are reading this article, chances are you are somewhat familiar with it. NiceHash makes mining so simple that you do not even need to know the underlying foundation of cryptocurrencies to start earning some coins! However, something that you probably know is that your PC is doing all the hard work. The better hardware you have, the more you earn.

It is the miner’s responsibility to validate blockchain transactions by including them in a block linked to the previous one. In order to create this block and verify transactions, miners must spend a lot of computational power and energy to solve mathematical problems.

As a reward for helping secure the blockchain, miners earn the newly generated coins created with the block. We will not dive too deep into mining in this article, but if you want to learn more about this complex, yet fascinating topic, you can read this previous piece on the Proof-of-Work consensus mechanism.

Now that you understand how coins are generated, you are probably asking yourself “why?”. Why do we need to cut this reward in half every now and then?

Conventional FIAT currencies allow governments or banks to print money. This not only causes inflation, but can also raise other concerns. There is no theoretical limit to how much money can be printed. On the other hand, Ravencoin’s maximum supply is capped at 21,000,000,000 RVN. Generating new coins through mining ensures that the coins are being issued at a predictable rate.

In order to control the rate of monetary inflation (or rather deflation), Ravencoin has in its code that every 2,100,000 blocks (approximately every 4 years) the amount of coins being generated is cut in half. After January 11th 2022, miners will get only 2500 RVN per block instead of the usual 5000 RVN they were used to.

What are the consequences for Ravencoin? Will profitability drop?

As soon as the block number 2,100,000 is mined, rewards will be cut in half. This will result in an immediate profitability drop, after all, Ravencoin miners will get half of the coins they previously got! It is, however, expected that the price of Ravencoin rises in value. The demand for the coin still exists and is constantly growing, but the amount of coins being generated was cut by half. In fact, if you look at RVN-BTC charts, you can see that the coin’s price did jump over 40% in the last few days amidst a Bitcoin downtrend!

With a rapid valuation of Ravencoin, it might be possible to maintain profitability. Miners will still get less Raven, but maybe the same or better profits when we look at fiat values.

It is also important to note the other possible scenario: miners disconnecting due to the drop in profitability, lowering the network hashrate. At this time, this scenario does not seem likely, but it could happen - if not to Ravencoin, to other cryptocurrencies that deployed a similar strategy.

If the price does not change and miners cannot sustain a profitable operation, they will be forced to disconnect their hardware. As a result, the network hashrate will drop and personal rewards will increase up to a sustainable point. An extreme example is that enough miners disconnect such that a miner that was previously mining 1 block per day now mines 2 blocks and, therefore, get’s the same amount of RVN as they previously did.

The answer to what will happen probably lies in a balance between these two scenarios. It is not expected for the price of Ravencoin to double (although it could!), but we do anticipate an increase. We also expect some miners to disconnect if the price does not double in value, to a point where we achieve a stable outcome.

If you are mining with NiceHash Miner, our software will automatically pick the most profitable algorithm to mine for your hardware. You do not have to worry about profitability swings on various cryptocurrencies!

Where can I get some Ravencoin? Can I mine it?

If you are part of the “increased demand” for Ravencoin, you can trade it with Bitcoin (BTC) or Tether (USDT). If you are a NiceHash miner, you get paid in Bitcoin, but you can also easily swap your BTC for RVN using the convert feature in your Dashboard. You can learn more about Ravencoin here in our founder's blog.

Do you have any thoughts on this halving event? Share them with us and other community members in our Discord server and Reddit!