The crypto industry survived yet another bitcoin halving. Perhaps this is one of the momentous events of 2020, which for a long time will be at the epicenter of attention. While we do not see any significant consequences of the halving for the cryptocurrency market. However, the question remains, how will halving affect Bitcoin mining, and will this industry remain profitable? Let’s understand this issue together.
What happens to mining profitability?
Today, miners are divided into two camps: those who continue to consider mining a profitable business, despite halving, and those who are concerned about the risk of bankruptcy due to new mining conditions. The same mood among miners prevailed in the periods of the previous halving because their income directly depends on this event.
The first bitcoin halving took place on November 28, 2012. Then the reward for miners was reduced from 50 BTC to about 25. It is worth considering the fact that at the moment Bitcoin was not yet a strong asset and its extraction did not bring enough income. That is why a reduction in remuneration to 25 BTC did not fundamentally change the financial situation of miners.
The second halving, which took place in 2016, more significantly affected the profitability of mining. Reducing the reward from 25 to 12.5 activated the real race among miners. They began to look for solutions to increase the productivity of mining equipment, which directly affects the speed of generating new blocks in the Bitcoin network. Accordingly, miners began to receive higher profits for mining Bitcoin.
The third halving occurred on May 12, 2020 in fairly specific macroeconomic conditions. The spread of the pandemic, the high volatility of Bitcoin, the collapse of March 12 – never before had the flagship cryptocurrency experienced such a concentration of events at the same time. It’s hard to determine now. whether halving will affect the price of Bitcoin since the expected Rally did not take place.
Also, a reduction in rewards to 6.5 BTC provoked a wave of concern among miners. Reducing remuneration at a fairly high level of equipment costs and operational moments jeopardizes the business of most miners. But not all miners give up: many of them see in these circumstances reduced competition and, accordingly, increased opportunities for mining.
Mining equipment companies increase strength
Bitmain and MicroBT, companies that specialize in mining machines, are optimistic. They claim that despite halving, mining profitability remains high thanks to their development. In particular, MicroBT is actively popularizing Whatsminer M30S equipment, which can “accelerate” to 112 terrash/ second. The estimated return on this device is $8.53 per day, which is the highest among other mining equipment.
This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose.