Many hope that Bitcoin’s halving will trigger another bull rally next year. However, problems could also arise, especially with regard to Bitcoin mining.
Bitcoin halved in 141 days
The countdown to bitcoin halving is on, the date is now estimated to be May 14, 2020. The widely anticipated event will do a number of things for Bitcoin – such as the reduction in inflation, i.e. the reduction in the BTC generated per day.
Many anticipate a price increase before the event, as was the case with Litecoin earlier this year. However, according to Longhash, it could be different.
Looking at price action so far, it appears that the price increase started about six months after the last bitcoin halving and peaked up to a year later.
Earlier Bitcoin halving in 2012 and 2016 saw price peaks late in the years that followed, with 2017 being the most recent halving.
According to the report, there is insufficient evidence that the halving of 2012 caused the 2013 rally and that the halving of 2016 was responsible for the peak of 2017, which was largely driven by the ICO boom.
After halving 2020, the cost of mining a BTC will be more expensive, but the cost of the asset itself may not increase to the same extent. A lot has been invested in mining, which is reflected in Bitcoin’s hash rate, which, according to bitinfocharts.com, has just reached a new all-time high of 111.84 EH / s.
The use of advanced bitcoin mining hardware and greater use across China have undoubtedly driven the rise in the hash rate. It has also recently been reported that China controls up to two-thirds of the world’s hash rate.
Provinces like Sichuan alone have more than half the power in bitcoin mining, with small mining operations gradually emerging around the world.
If the hash rate continues to rise, but the BTC price remains at the current level after halving, yields for mining could fall further. That would put hardware manufacturers like Bitmain and Canaan under pressure.
The latter has already seen a share crash of over 40% since its IPO in November. Bitmain is also currently in a bad position after the recent power struggle at the top.
If the price pump fails to halve bitcoins, the mining industry will have to face much greater pain in 2020.