Will halving affect the price of BTC? How will miners be affected by halving? What about public perception?
Well today is the day folks, after months in advance the Bitcoin halving is here: today, just after 20:30 GMT, the rewards that Bitcoin miners receive in exchange for the work they do to add transactions to the blockchain will be cut in half.
What does this mean for the Bitcoin network? Predictions about the consequences of halving far and wide, but there are several popular narratives among cryptocurrency analysts.
# 1: Many experts believe Bitcoin price will rebound after halving, eventually
Currently, the price of Bitcoin has been somewhat successful: BTC peaked at around $ 9,700 on Sunday, May 10; As of press time (Monday, May 11), that number had dropped to $ 8,675, falling to $ 8,466 in the past 24 hours (although it is important to note that Bitcoin has risen approximately 40 percent since the start of the year, beating both gold and USD.)
One of the most popular beliefs in cryptocurrency circles about halving events is that they are great for the price of Bitcoin – that halving will sooner or later cause the price of Bitcoin to explode.
This belief stems from the fact that cutting the mining reward in half contributes to an increased BTC shortage as the number of users on the networks continues to grow. At this current time (prior to halving), 1800 BTC is produced daily through miners; after halving, that number will drop to just 900 BTC per day.
At the end of last week, Jose Llisterri, co-founder of the cryptocurrency derivatives exchange Interdax, explained to the media that over time, this reduction in the supply of Bitcoin leads to a reduction in selling pressure: “this accumulates with over time and acts as an upward force on the price of Bitcoin, ”explained Llisterri.
But how long would it take for this price increase to manifest itself in the price of Bitcoin? "In the past, we saw BTC hit new highs 12 months after the first half in 2012 and 18 months after the second half in 2016."
This time, a post-halving price increase could take even longer: "If we have progressively longer cycles for bitcoin, we could see a new high between 18 and 24 months after May, which means Bitcoin could hit a new high historical between October 2021 and May 2022 ".
Of course, there has been a lot of debate about how the COVID-19 outbreak will influence the effects of the pandemic. Some analysts believe that QE and other government stimulation efforts will be a good thing for Bitcoin; Others believe that the pandemic could have a long-term buffering effect on the price of BTC.
# 2: small and medium Bitcoin miners could take a serious hit
While halving’s may be great for the price of Bitcoin in the long run, there is a part of the cryptocurrency industry that is likely to take a major hit as a result of halving: the miners.
After all, when halving occurs, the miners' profits will literally be cut in half overnight. Assuming there is finally a rise in BTC prices, mining operations could become more profitable once again, but it may take a while.
Therefore, large mining pools with state-of-the-art equipment and lots of cash are not necessarily the ones to worry about: instead, it is small and medium-sized Bitcoin mining operations that may also be relying on outdated equipment, which they may eventually be forced to close.
Nathan Nichols, managing partner of Imperium Investments, told him last week that he believes halving "will harm most miners."
As the cost of BTC production continues to rise, these miners may be forced to sell their equipment and their Bitcoin, perhaps at a loss: “With the high costs comes the pressure to sell a miner's BTC inventory as the energy costs must be paid in fiat, ”said Nichols.
Interestingly, Bitcoin's hash rate, the amount of computing power used to power the network, was 120.635 million TeraHash / second (TH / s) at press time, just below its annual peak of 123.2 m TH / s, which was achieved last week. This could indicate that more miners are entering the network, or that miners already in the network are starting up their machines at full speed before halving. Several analysts believe that the price follows the hash rate.
# 3: Halving is a phenomenal “marketing opportunity” for Bitcoin and cryptocurrencies in general
Regardless of what happens as a result of halving in terms of price movements or changes in the mining industry, BlockFi co-founder and CEO Zac Prince brought up an important point about halving in a webinar last week: Halving "It creates a phenomenal marketing opportunity for the space."
“In fact, halving doesn't matter much in terms of fundamentals, but everyone is going to hear about Bitcoin. It will be in all the press; it already is now ”.
And in fact, halving appears to have drawn more attention to Bitcoin: Google data shows that the number of searches for the word “Bitcoin” has increased dramatically in recent weeks.
Bitcoin also received quite positive news from China Central Television, a state television network in China.
The article, which spoke of the "dizzying rise in the price of Bitcoin before halving," was especially surprising given China's vexatious relationship with Bitcoin and cryptocurrencies in general in the past, and further noted that legendary hedge fund manager Paul Tudor Jones had proclaimed to his investors the benefits of the # 1 cryptocurrency on the market.
Whoa, first time saw a chinese national media talking about bitcoin pump !! The finance section of CCTV (biggest national televisions in China) posted an article about bitcoin today, the article said bitcoin 3rd halving is close and its price pumped up to $ 10,000 on May 8th. pic.twitter.com/NNKJUezgnU
– molly (@molllliy) May 10, 2020