How bitcoin halving will affect mining
18 / April / 20 Visitors: 91 ★★★★★
In bitcoin, the process of complicating the extraction of coins and reducing the reward was originally laid down. In anticipation of a halving in May 2020, analysts shared their views on the future of cryptocurrency: some are confident in the growth rate to at least $ 60,000, others in the absence of major changes and the complete transition of miners to alt coins.
What effect will bitcoin have on mining
The process of sharing the block signing reward occurs every 210,000 blocks, preventing bitcoin inflation. Remuneration will be reduced every four years, up to the extraction of 21 million coins, which is expected to happen in 2140.
Halving of the main digital currency was carried out twice: on November 28, 2012, the size of the award fell from 50 to 25 BTC, and on July 9, 2016 - from 25 to 12.5. Given that the production rate of one block is 9 minutes 20 seconds, the next halving is expected at block 630,000 - May 2020.
Many expect Bitcoin to go up to $ 100,000. Everyone has their own opinion on this matter, but analysts agree on one thing - halving bitcoin will complicate mining by pushing away most miners with weak equipment.
The principle embedded in bitcoin will help to avoid serious changes in the operation of the network: a decrease in mining activity automatically leads to a decrease in its complexity. Suppose, after reducing the block reward for some miners, BTC mining will become unprofitable. After abandoning it and reducing the hash of the network, the mining difficulty indicator will instantly go down.
The result is that with the departure of many miners, the intervals for adding new blocks to the blockchain will not change, which will maintain a high transaction processing speed.
What course do analysts predict after halving
Studies conducted by investment company Grayscale show strong volatility for 1–1.5 years after halving bitcoin. After the first division of remuneration, the rate rose to $ 1,100, and after the second - up to $ 20,000. Then there was a sharp drop in the cost of BTC, but by the next halving the rate was again rising.
The third division of remuneration should also have a strong positive impact on the course. Digital Asset Research experts compared the effect of the two previous processes, predicting the growth of the value of one coin to $ 60,595.
Analysts at Strix Leviathan, an American cryptocurrency startup, are not so optimistic. The upcoming halving is capable of pushing the Bitcoin rate up for some time, but it certainly will not reach the forecasted level of 60–80–100 thousand dollars.
How to prepare miners for halving
The upcoming reduction of the block reward from 12.5 to 6.25 BTC may push the miners away, as equipment and electricity are getting more expensive, and the reward is decreasing. Miners already have to join mining pools, giving 10-20% of the amount to the server, because working alone is not profitable. After the next halving of the award, such an activity may become unprofitable.
Despite the skeptics' predictions about the miners leaving, the two previous halving show a completely different example. For people with old equipment, the extraction of new coins will indeed become unprofitable, since the amount received will be less than the cost of electricity in fiat equivalent.
For example, now 80% of mining farms use Bitmain Antminer S9. After halving, 8 out of 10 mining devices will become unprofitable, disappearing from the market. This will lead to a decrease in competition, a subsequent increase in the profitability of the BTC mining process for people using new generation ASICs, for example, Bitmain Antminer S17 and T17.
Such equipment already exists. Over time, the price of it will increase, so now is the time to update the equipment. After halving, the capacity of the new devices will be enough to cover the cost of electricity and decent earnings. The Bitcoin exchange rate will also go up, so mining will remain as profitable.