Block prizes will be halved on May 12th and many analysts are beginning to wonder how this event will affect the crypto market and the mining community.
Halving - strong impact on miners
Cointelegraph talked to three analysts to find out what impact halving can have. Whether it will introduce a "healthy balance" or increase fees.
Johnson Xu, lead analyst at TokenInsight, predicts that halving will have a strong impact on miners.
“A large percentage of older generation miners such as S9s will be shut down in the short term, and phase-out from the network permanently in a few months post-halving,”
, Ji said
“The bitcoin halving will result in the network in short term chaos, however, once the difficulty adjustment kicks in and self-adjust to an equilibrium state, we will see the bitcoin network back to a stable position quickly. The halving is positive to the industry in the long run.”
“Bitcoin halving is a healthy rebalance to force the network to re-adjust itself into an efficient network where miners can make sufficient margin,”
Halving will hit the miners
Zach Resnick, managing partner of the investment company - Unbounded Capital, agrees that a halving will disrupt mining operations. Resnick points out that halving can harm miners and will cause them to mine other cryptocurrencies such as BSV and Bitcoin Cash (BCH), which will cause the price of bitcoin to fall.
“At the moment of the halving, many miners will become unprofitable, and some will likely move to mining BCH and BSV,” said Resnick. “As miners fall off the BTC network, block times will lengthen. If price falls, then more miners will fall off the network.”
“If transaction volume increases, fees could quickly spike to unusually high levels since block space will be more scarce due to the longer block times. High fees can make headlines that see prices continue to fall, block times continue to lengthen, and fees continue to rise.”
“Because we don't believe there is a fundamental reason for prices to increase, we think it is somewhat likely that speculators waiting for a price surge will cut bait if price is stagnant, and very likely speculators will sell if prices are dropping quickly.”
“Many miners are also highly leveraged and may seek to front-run an exit if they no longer believe that a price surge is imminent,”
, he said
Will the price of bitcoin increase after halving?
NEM Ventures' head of trading, Nicholas Pelecanos, said that halving "has historically signaled the start of Bitcoin's most tremendous bull runs."
However, Pelecanos said that reducing the prize for a block usually results in a "temporary sale" with an immediate drop in hash power.
“The 2012 halving was followed by an immediate 10% sell-off and the 2016 sell-off witnessed an extended 38% decline. Both halvings were followed by an approximate 50-day decline in the hashrate.”
Pelecanos predicts that halving problems of shitheads can only be temporary:
“If history were to repeat itself and bitcoin entered into a decline post halving, high operating cost miners may have to shut down their rigs until bitcoin reaches a sustainable price.”