Bitcoin mining is considered as one of the wealthiest industries across the market. But the question that a lot of people have in their mind is that what will happen of block rewards are cut in half? What would be its impact to the security of network and to the miners? It’s a given that Bitcoin mining is a very profitable activity. It has been long proven by hobbyist miners and those who have been doing this activity for a very long time. So when the upcoming halving in May 2020 cut the block reward in half, would that spell the end even for large and medium sized producers?
A lot of bitcoin enthusiasts perceive halving as a bullish idea as it is a catapult for the price of BTC. Hence, this halving will certainly and definitely affect the miners.
But before we proceed to that part, let us first understand what bitcoin halving is. The creator of Bitcoin who is believed to be Satoshi Nakamoto programmed the Bitcoin network that the miners’ block rewards would be halved every four years. The very first block reward started out at 50 BTC which was halved in the year 2020 and halved again in 2016. Therefore, the current block reward for miners is 12.5 BTC. Consequently, in My 2020, the block reward will go down to 6.25 BTC and another half after 4 years. Now, since over the years the block rewards are getting smaller and smaller, experts fear that once it becomes non-valuable already, then miners will no longer continue to do mining as they will no longer receive block rewards. As a result, if the halving will continue, and the value of the block rewards will be lesser and lesser over time, them it will definitely have a lot of negative effect on Bitcoin mining. First, miners who have low mining efficiency will be forced to stop their operations and may have to re-evaluate their business. Second, since giant international firms have cheaper sources of electricity and have more advanced technologies and machines, the digital mining will just become their racetrack. Third, the small operators will also be forced out of the market. This also includes those who are running S9s. So technically and generally speaking. If you will not be able o upgrade your equipment to the 70+ TH/s and your infrastructure to the 2500W miner you might just find yourself out of the market already.
Overall, the Bitcoin halving will certainly have a very huge impact on Bitcoin mining both in the long and short term. It is also expected that we will see the scenario where smaller operators will be driven out of the market while the larger mining farms with advanced technologies and infrastructures will stay in the market. Yes, Bitcoin might have been very profitable in the recent years. But as the industry matures and changes are coming in and out, we may not see this cryptocurrency as enticing as it is due to the Bitcoin revolution family.