2020 is already coming, just over four months before Bitcoin’s production is halved for the third time. Bitcoin’s production is halved every four years, according to the design of “The Father of Bitcoin”, Nakamoto. Since the first Bitcoin output on January 3, 2009, Bitcoin has undergone two planned production cuts, and at the end of November 2012, the new block was awarded from 50 bitcoins to 25;
On July 10, 2016, the new block was reduced from 25 bitcoins to 12.5. The third halving will take place around May 18 this year, with the new block creation bonus reduced from 12.5 bitcoins to 6.25, or from 1,800 to 900 per day.
So what impact will the halving of Bitcoin production have on the price of Bitcoin and the mining industry?
Positive impact on Bitcoin prices
Changes in Bitcoin production have a direct impact on the price movement of Bitcoin.
Bitcoin is defined as a digital asset or commodity in most countries in the world, an OKEx investment researcher told Newsbeat. He noted that when demand remained stable, reduced supply would drive up commodity prices. Looking back at the two production cuts that BTC (Bitcoin) has had in the past 10 years, the price of Bitcoin has risen a year later compared with the price of the time when the production was cut. “The third bitcoin production cut, the currency price will also be a boost. He said.
Bitcoin price chart from early 2012 to late 2019
In the year after the first halving of Bitcoin production, the price of bitcoin rose from $12.58 to $964.48, the sources told reporters. In the year after the second half of production, the price of bitcoin rose from $649 to $2,319. Both production cuts pushed up the price of bitcoin, but the second cut had a significantly less positive effect than the first. This, he says, is largely due to changes in market conditions, with more and more people holding bitcoins, larger and larger on-market flows, higher and higher price bases, and more professional people involved in speculation or investment.
or put pressure on the mine manufacturer.
Bitcoin production, on the other hand, has halved, with mining to bear the brunt.
Both miners and miners are preparing for a halving of Bitcoin production in May.
“A halving of Bitcoin output means half of the revenue, and with the same currency price, the cycle will be halved, directly affecting the sale of mine machines, ” an industry insider told reporters. ”
In response, bitcoin miners have cut the upcoming bitcoin in half by cutting jobs.
On January 1, 2020, the mining industry’s largest company, Big Land, was blasted to launch a personnel optimization program at the end of 2019. One of the reasons for optimization is to deal with a “slimming plan” that halves.
Another U.S.-listed bitcoin miner, Jianan Technology, wrote in a risk warning note in the prospectus that over time, bitcoin mining returns (as measured by the number of bitcoins awarded) will decline, potentially reducing the willingness to mine. The next half will occur in 2020 and is expected to be completed by 2140. As a result, the reduction in the available Bitcoin mining incentives may reduce the productivity of Bitcoin mining machines.
Miners: Hoard coins and replace mines with low power-to-power ratios
Mr. Anine, a miner who started working in the bitcoin industry in 2016, expressed concern about the halving of bitcoin production.
“Because I don’t know what the market is after halving”, “the past market can not represent the future, the first two half are up, does not mean that this time will certainly rise.” Xiao Said.
He told reporters that after the production was halved, the biggest problem for him was that all the small-money machines in his hands would be shut down, unless they encountered a bull market like the one in 2017, and the price of the currency skyrocketed again, otherwise ant S9 series, Avalon A9 series, core T1, all to shut down.
Xiao Anine said: “Small computing machine power consumption, although there is no big calculation power, but the power consumption ratio is generally above 85W/T, many are 100W/T, digging the currency is not enough to electricity.” ”
Therefore, according to Xiao A9, ordinary miners like him are currently in the layout of low-power machines, even if the price of the coin does not rise after half, at least can maintain electricity costs.
On the other hand, he thinks that the best thing to do now (for miners) is to hoard as much money as possible, “dug out of the money, in addition to electricity costs, the rest are hoarded, (the price) even if not rising, should not fall where.” ”
Bitcoin output is 0 p.m.
Bitcoin output is expected to run out by 2140 as its output continues to decline.
The OKEx investors said Bitcoin’s output would not be zero, but its output would be infinitely close to zero in the distant future. From Bitcoin’s production reduction rules, each reduction is based on the existing output deduction of 50%, using a simple mathematical formula is: the new award amount – the amount of the existing bonus / 2. In cases where the reward is not 0, the formula will never calculate the result to 0.
Referring to the impact on the market as Bitcoin output approaches 0, he further told reporters: “Objectively speaking, I am not afraid to make any bold predictions about the future.” Because the time span is too far away, it takes 12 years for bitcoin rewards to fall below 1, and 24 years after bitcoin rewards drop to less than 0.1. If the impact of production cuts on the future market is bound to be in line with economic logic, production cuts will break the balance between supply and demand, future demand is an unpredictable unknown, if demand is stable, supply halved, it must be to boost the price of Bitcoin. ”
For miner Xiao A9, the time is even more remote.
“Early on, the last coin was dug up in 2140, and I didn’t live that long. He said, “Look at the present, no one knows what’s going to happen in the future.” “