If you’ve learned the basics of Bitcoin, you probably know that periodically, the reward for including a block in the Bitcoin blockchain is halved. This happens every 210,000 blocks, or every four years on average, depending on the network’s activity. As of now, the block reward is 12.5 coins per block and will decrease to 6.25 coins per block. The halving is expected to happen on May 12th, 2020.
The reason behind this halving is simple: Bitcoin was designed as a deflationary currency. The idea is that, since production will decrease over time (like with gold), if demand increases, Bitcoin can be used as a hedge against inflation as the price is bound to increase. At every point, we know how many bitcoins are in circulation and how many remain to be mined, so we can understand its inflation rate, lending more predictability than we usually expect from a currency.
But the upcoming halving is affecting miners negatively, as they’re already spending a lot of money on mining (for equipment, maintenance and electricity costs), and now they will receive even less of an incentive to keep doing it - if they receive anything at all. However, they’re also hoping that demand for Bitcoin will drive its price up, so they’re willing to endure some time not generating any profits (or even operating at a loss) in the hopes that the future will be brighter.
After the previous two halvings, Bitcoin’s price rose over time - but past performance is no real indication of the future, so you shouldn’t bet on any outcome.
