There’s another reason behind bitcoin’s 200% rise this year - it’s got nothing to do with Facebook

Bitcoin has been on a tear this year, rising almost 200% since the start of the year. There are multiple theories as to why, and one in particular is gaining traction.

It’s being called “the halvening”, an event where the rewards to so-called bitcoin miners are cut in half. To understand what that means, it’s important to know how bitcoin’s underlying technology — the blockchain — works.

Miners with high-powered computers compete to solve complex math problems to validate bitcoin transactions. Whoever wins that race gets rewarded in bitcoin.

Currently, the number of bitcoins miners are rewarded in stands at 12.5. The rewards are halved every few years to keep a lid on inflation. By May 2020, experts say, the reward per miner will be cut in half again, to 6.25 new bitcoins.

“Bitcoin’s current inflation rate is approximately 3.76%,” Mati Greenspan, senior market analyst at social trading platform eToro, told CNBC by email. “In May of next year, it’s scheduled to be reduced to 1.8%.”

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Source: Bitcoin: How ‘the halvening’ is boosting the cryptocurrency’s price