At Least 70% Of Bitcoin (BTC) Miners May Shutdown By Q4 2020
With less than 320 days to go to the much-awaited Bitcoin halving event, it’s not clear what will happen to the miners and the price of Bitcoin. However, since the mining rewards are likely to decrease, miners may end up switching off their rigs due to projected losses.
The halving event is hard-coded into the Bitcoin protocol and is meant to reduce the amount miners earn for keeping the Bitcoin network in check. Next year’s halving event will reduce the amount earned by miners from the current 12.5 Bitcoin to 6.25 Bitcoin per block.
Tone Vays, a crypto analyst, notes that:
“Technically, everything is in play until the end of 2010, after that sub $5,000 is not likely. Worst case scenario: prices drop to $5K into the halving, then after the halving 70 percent of miners shut down due to negative revenue, Bitcoin spirals down in price but then rises from the dead!”
Bitcoin (BTC) Will Eclipse Altcoins
Additionally, the analyst predicts that the halving will help Bitcoin make considerable strides in its price, something that will eclipse Litecoin (LTC), Bitcoin Cash (BCH), among other altcoins cementing its role in the ecosystem. According to Tone, “they will never be a store of value and will depreciate against BTC.”
However, others have a different take on the effect of the Bitcoin halving event scheduled for May 2020. For example, Expsycho, a Twitter user, opines that the halving will have the opposite of Vay’s prediction.
Bitcoin. Bitcoin will pump 6 months before halving because people will have
Fomo, as Litecoin has Then just after, it will dump.”
But, What Happened In Previous Halving Events?
While it’s hard to predict what will happen
when Bitcoin halves for the third time since it was created in 2019, previous
similar events spell hope.
For instance, during Bitcoins first halving in Nov 2012, the price responded positively to reach a high of $1,000. Unfortunately, the effect was felt close to 12 months after the halving. Additionally, after Bitcoin underwent its second halving in 2016. Close to 12 months later, prices surged to as high as $20,000 in Q4 2017.
Unfortunately, the price did not maintain the momentum and fell sharply in 2018. However, this seems to be the norm. In 2012, during the first halving, the price reached its peak only to lose its grip and fall back. But when it came back, it surpassed its previous high.
According to Garrick Hileman, co-founder,
“Cryptocurrency markets are often very event drive, and as we get closer to the next halving, Bitcoin’s price will receive a boost from those anticipating the forthcoming reduction in new supply. In the months leading-up to the last two halving events, we saw Bitcoin’s price steadily trend upward, and then power higher following the reward halving.”
Even If Miners Leave, Those Who Hold On Have a Chance
While reducing the amount miners earn on the Bitcoin network is likely to discourage miners, a lower hash rate translates to a lower the mining difficulty. Consequently, less electrical and computing power will be required to mine a new Bitcoin. As such, those who will be bold enough to remain will still make profits.