Halving – how Bitcoin mining will change

Every 4 years Bitcoin lives a very important moment in its history, halving.

What happens when halving happens? Using industry terminology, the reward for miners will be halved and this happens exactly every 210.00 valid minefields. Simply put, the quantity produced by each individual Th/s will be halved and therefore also the gross production of each individual machine. Halving is the basis of the economic models of cryptocurrency as it guarantees that coins will be issued at a constant rate, following a predictable decreasing rate.

This controlled rate of monetary inflation is one of the main differences between cryptocurrencies and traditional fiat currencies which essentially have an infinite supply. This process is essential to Bitcoin’s life and is a function written in the code and no one can ever change it, it is an important part of this great invention.

To date, March 2020, only two previous Bitcoin halving events have taken place. They occurred on November 28, 2012 and July 9, 2016. At the time of the first halving event, the price of Bitcoin was $12.31 and at the time of the second halving event, the price of Bitcoin was $650.63.

What will change in mining with this upcoming halving? Surely many things, because in the previous cases the cost of production was very low compared to BTC’s value and did not put in crisis most of the active miners while today the risk of seeing many of them shut down is real. This consideration derives also from the fact that the S9, the most famous miner in mining, has been present in the farms for some years and still today it occupies a very important slice of the world hashrate.

In order not to see the S9s turn off at the next halving Bitcoin should rise in value, probably around $20,000 would still guarantee profitability with S9s in various parts of the world but we still don’t know what price BTC will be at in May 2020, the expected date for halving.

The big miners manufacturers are about to launch on the market miners of the latest generation that will allow to have low maintenance costs and great profitability in case Bitcoin should rise in price considerably, but at the same time farms are moving to places where they can still keep costs down to ensure maximum profitability on new machines without having to turn off older miners.

In the last 3 years the areas where mining activities have been mainly concentrated are Russia, China and Texas. In reality there are farms now scattered everywhere but in these three areas have concentrated the best mining companies and are also offering the best conditions on the market.

So, is Bitcoin mining still going to be a part of it? It certainly is. Bitcoin cannot exist without mining, it needs the “on” infrastructure to live and consequently its value will always tend to compensate for mining costs.

What we will probably see is a big change in the proposals from companies offering hosted mining or cloud mining, they will certainly have to review the costs of the packs and the related daily fees per single Th/s.

halving Bitcoin

Only companies that will be able to offer mining at competitive and profitable conditions will be able to keep their customers and attract new investors, for everyone else there could be very difficult days.

We have tried to differentiate our investments in order to close some contracts before halving and only see active after halving situations that had a very low maintenance cost. The value of Bitcoin will determine the final scenario, however, we will soon find out what will give us this extraordinary event that, every 4 years, will accompany BTC on its way.

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