How will the halving of BTC rewards affect miners and currency prices?

Source: shallot

Editor's Note: The original title was "Additional BTC Supply Over $ 100 Million in 1 Year"

For the most part of this year, the Bitcoin network has been running faster than expected, which has further led to a significant increase in Bitcoin issuance.

I. Mining nearly 20,000 bitcoins in the past year

According to Satoshi Nakamoto's original plan to mine a block in ten minutes, about 144 blocks can be mined in a day.

However, according to trustnodes, an average of 147.64 blocks have been mined daily in the past year. This means that nearly 4 extra blocks are added each day. Based on the current block reward of 12.5 BTC, it is equivalent to an increase of about 50 bitcoins per day, a total of about 18,250 additional bitcoins. At current prices, it's worth about $ 132 million.

According to BTC.com data, 53889 blocks have actually been mined in the past year, and 52560 blocks should be mined at the original mining rate. This means that close to 1,500 blocks or nearly 20,000 bitcoins are mined additionally.

Factors that make the Bitcoin network run too fast

1.Bitcoin computing power keeps rising

On November 8, Bitcoin's mining difficulty decreased by 7.10% compared to the previous two weeks. In addition, according to Tokenview data, in terms of mining data, the average hashrate of Bitcoin in the past seven days was 88.01 EH / s, and the average hashrate of nearly 24 hours was 78.7 EH / s. The hashrate of the entire network reached 110 EH on November 23. / s has dropped significantly after the high level; yesterday, the total number of blocks produced on the entire network was 122, a decrease of 3 from the previous day. The average block generation time was 708.2 seconds, an increase of 17 seconds from the previous day. The total on-chain transaction fee was 39.87 BTC.

But in general, the computing power of Bitcoin has been on the rise, so the overall speed of the Bitcoin network is gradually accelerating.

Bitcoin hashrate in November 2019

With the recent sharp decline in the price of bitcoin, the volatility of computing power is strong. However, the reason for the price decline may also be that inflation has been higher than expected. Although the additional mined bitcoins accounted for only a small portion of the total inflation rate, but increased the supply by more than $ 100 million, miners may have started selling bitcoins instead of holding them.

2. Bitcoin reward halving effect and scarcity

As we all know, halving the Bitcoin reward will reduce the new supply by 50%, and scarcity is an important factor in the price of Bitcoin.

Onion's previous article pointed out that as of mid-to-October, excluding bitcoin that can be proven to be lost and assumed to be lost (permanently lost), the actual circulating supply of bitcoin was 16.3 million, with less than 3 million bitcoins remaining. For mining.

As a matter of course, miners want to frantically mine the Bitcoin network to run faster than expected before the Bitcoin mining halving is a key factor.

The latest data from Scallion showed that Bitcoin halving is expected to take place on May 15, next year, and there is less than 170 days to halve.

(Image source: bitcoinblockhalf)

3. How will the halving of Bitcoin affect miners and currency prices?

As for how the halving of Bitcoin mining rewards will affect the BTC price, Cobo founder Godfish recently said in an interview that "halving bitcoin is a fatal blow to existing miners, and the revenue is directly reduced by half. The drastic fluctuations in this section may lead to the fact that the miners that account for about 50% of electricity costs are unable to mine because their marginal revenue is less than the marginal cost, so they can only choose to shut down. If the currency price is not reduced in half, If the price rises sharply, the computing power of the entire network will drop, and the cycle of mining machines will become longer.

Dovey Wan, founding partner of Primitive Ventures, shares the same view. It pointed out that on November 8, the difficulty of bitcoin mining fell sharply for the first time in 2019, a decrease of about 7%. Mainly due to the shutdown and shutdown of low-end mining machines, prices have fallen, partly due to the end of the rainy season, and cheaper surplus hydropower is no longer widely available. If the price of Bitcoin does not double when Bitcoin is halved, many miners will face serious difficulties.

The latest data from Scallion F2pool shows that based on the current difficulty of mining the entire network of Bitcoin, based on the electricity price of 0.38 yuan / degree, there are 4 Bitcoin mining machines at the shutdown coin price. Among them, the mainstream mining machine S9 is approaching the shutdown price. On November 25, mainstream mining machines once fell below the shutdown price.

In addition, bitcoin founder Wu Jihan said that the halving of Bitcoin mining revenue said that the cryptocurrency itself is cyclical, just like the halving of Litecoin, but the halving of Bitcoin may be different from the halving of Litecoin . Each time BTC's bear market and bull market are growing, it is possible that when this time halved, the bull market will not come. I personally think that there are still many uncertainties about the impact of halving in the future. Wu Jihan believes that now is a good time to invest in mining. If I am a miner, I will not stop mining and will continue to invest in mining equipment. Wu Jihan said that we are currently in a short-term currency price correction. It is very important to have a long-term perspective. I take a negative attitude that the halving will increase the price of the currency, but I am positive about the long-term trend of the price of Bitcoin . If the currency price remains unchanged after halving, the efficiency of existing equipment must be improved, and there must be a trade-off between efficiency and computing power.