Every four years for the past 10 years, the Bitcoin halving has brought joy to early Bitcoin investors and anxiety to less efficient crypto miners.
Although a few might quietly wish for an end to the substantial losses that have previously driven some companies into bankruptcy, the majority of miners believe: This is what sets Bitcoin apart; it’s here to stay.
“Kristian Csepcsar, head of public relations at Bitcoin mining company Braiins, expressed that we in the mining community welcome and value the halvings but also harbor some apprehension towards them.”
Some miners of Bitcoin might face financial difficulties if the price of Bitcoin does not rise above the expense of mining during the upcoming halving on April 20. Concerns have been raised about this potential issue.
According to Csepcsar, miners deeply identify with the essence of Bitcoin. Consequently, despite the intense strain caused by halvings on the mining sector as a whole, we acknowledge that halvings are essential components of Bitcoin’s structure.
Bitcoin mining companies such as Hut 8 view the halving as a chance to expand and boost their competitive edge, as expressed by CEO Asher Genoot.
Genoot told CryptoMoon, “We’ve made thorough business adjustments in preparation for the halving, with a strategy to operate at lower costs.”
He mentioned that Hut 8 miner only activates its operations when it’s financially beneficial, utilizing exclusive software. Additionally, they boast a robust financial position, holding over 9,100 Bitcoins, ensuring stability and allowing for investment in expansion.
According to Jaran Mellerud, co-founder of Hashlabs Mining, Bitcoin miners might be fond of abandoning the halving process. Nevertheless, it’s important to note that Bitcoin’s network isn’t governed by miners, but rather by operators of nodes.
“Bitcoin was not made for the miners, but for the hodlers.”
Would it be possible to scrap halving?
Changing Bitcoin’s halving is hypothetically feasible through a hard fork, similar to how any modification to Bitcoin’s structure works.
Nevertheless, many believe achieving the necessary consensus for a change would be extremely challenging. On the other hand, some contend that the modified product, as proposed by [name], would no longer be Bitcoin in essence.
“Batten stated to CryptoMoon that this change could undermine a cherished aspect of Bitcoin for its users: the fact that Bitcoin has less inflation than gold and will continue to follow a deflationary path.”
One reason why Bitcoin draws in investors is its restricted circulation of only 21 million coins, which sets it apart from other currencies. Jaran Mellerud, co-founder of Hashlabs Mining, explained this point.
If there were no bitcoin halvings and a limitless supply, the market value of Bitcoin would probably be significantly lower, denying miners the advantage of the increased block reward.
Csupofrom Brains asserts that eliminating the bitcoin code’s built-in halving mechanism is practically unachievable.
“Significant alterations to Bitcoin’s fundamental structure are extremely difficult to accomplish at the present time,” Csepcsar explained.
“Putting everybody into consensus and changing such a core principle of bitcoin is impossible in any short time frame such as a few years. What will be the case in 10 years and more is another matter and nobody has an answer to that.”
In simpler terms, not all miners agree with the proposition of abolishing Bitcoin’s halving events, while full nodes might be opposed to this idea. Importantly, full nodes hold substantial power in the Bitcoin system. (New Layer Capital’s partner, Nicholas Safford, made this observation.)
If a team of miners aimed to introduce that proposal, they’d have to split Bitcoin’s blockchain into two distinct versions through a hard fork. Consequently, the resulting digital currency would no longer represent Bitcoin.
Miners fear the halving, but they don’t hate it
Bitcoins historical price increases following halvings have been linked to optimistic market feelings. Yet, concerns exist about the potential rise in mining costs after a halving, which could negatively impact profitability.
When the halving event occurs, the cost for a miner who previously paid $35,000 per BTC to mine one Bitcoin will experience an unexpected jump in costs, now having to pay $70,000 per BTC instead, as explained by New Layer Capital’s Safford.
“The cost to extract one Bitcoin has surpassed its current market price of approximately $65,000, making it unprofitable for this miner to continue operations,” he explained.
Reducing the block reward in half will result in some miners with exorbitant electricity costs, less effective hardware, and high operational expenses being unable to continue mining.
So, Bitcoin halvings are probably here to stay
Confident sources within the industry believe that the benefits of halvings will eventually outweigh the challenges, making them a permanent fixture.
“According to Bitfarms’ chief mining officer Ben Gagnon, speaking with CryptoMoon, halvings play a crucial role in guiding a gradual increase in Bitcoin’s supply toward the cap of 21 million, necessitating ongoing advancements in energy efficiency.”
Despite the decrease in block rewards every four years during a halving event, the overall value of global mining activities in US dollars has continued to increase significantly. (Gagnon’s observation)
Gagnon additionally noted that several coins lack halving events and instead choose a steady increase in their coin supply. According to him, these coins have underperformed compared to Bitcoin.
“According to Taras Kulyk, the CEO of SunnySide Digital, the essence of the Bitcoin Network lies in the fact that the code serves as the law and cannot be altered.”
“Looking beyond the next decade, it’s impossible to predict with certainty what will unfold. As for significant modifications such as increasing the 21 million Bitcoin limit or eliminating the halvenings completely, I wouldn’t place any bets on those occurrences based on current information.”
“Bitcoin either has to survive these harsh situations or is not the antifragile freedom tool that we all want it to be.”
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2024-04-10 01:58