Countdown to Bitcoin Halving. Are you ready?

in #cryptocurrency • 8 years ago (edited)

The Bitcoin halving is coming in mid July 2016. What will it mean for holders of cryptocurrency?

What will happen?

The miners will receive a smaller payout for their efforts. However, their expenses will remain the same. So in order for them to stay profitable, they must devise another strategy.

With some of the biggest mining operations in China, I don't expect them to sit around and watch their profitability be severely restricted. I don't know what else they can do. However, it will be interesting to see what they come up with.

Predictions

Will Ethereum, Litcoin, or Dash become the focus of the miners? Oh wait, Bitcoin uses a different mining algorithm than those coins. Will the miners pick another SHA256 based coin to mine that will be more profitable? If so, which is the best candidate?

I recently read about a new optimization that allows the miners to gain up to 30% performance improvement. Will this be enough to keep the miners profitable?

Will several Chinese miners be force to shut down their mining operations? If so how would this affect the price Bitcoin and other digital currencies?

Takeaways

Holders of Bitcoin and other digital currencies will be watching the developments very closely. This Bitcoin halving event could cause the price to drop very quickly. All cryptocurrencies may fall in value as well, if the Bitcoin price drops dramatically.

What do yo think will happen? Let me know your thoughts?

8 years ago in #cryptocurrency by
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     8 years ago (edited)

    Here is my prediction:

    • When the block reward is halved, the BTC price will stay mostly unchanged (or perhaps drop), because any potential increase in BTC price due to the lowered supply increase rate has already been priced in.
    • Same price with half the current reward will make mining unprofitable for many (most?) miners. Therefore, many miners will stop mining.
    • This causes block times to increase significantly. It will take several weeks, maybe even months, before the difficulty is adjusted.
    • When the difficulty adjustment comes, it will over-adjust by a large factor.
    • Miners turn on their equipment again to make a quick buck. 2016 blocks will be mined within less than a day.
    • Difficulty adjustment will kick in again, again overadjusting by a large factor. This will make mining unprofitable for everyone.

    We have seen these catastrophic resonance effect of sudden difficulty adjustments a number of times in various altcoins (PTS, for example). That's why Gravity Well algorithms were invented.

    Bitcoin is well-known for not being able to react to changes in its environment. This will be its final mistake.

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