Skip to content

“You can’t just switch off the miners”

May 12, 2020

Cointelegraph hosts live event in honor of Bitcoin (BTC) halvingthat will take place in a few hours.

Since miners’ profits are halved by about 10 BTC blocks, The event is a bittersweet moment for the industry. Cointelegraph organized a panel to learn more about how halving affects miners with Marco Streng, Alina Yao, CEO of Genesis Mining, Head of OKEx Pool, and Josh Goodbody, Head of Growth at Binance.

There is no death spiral in mining

An unlikely consequence of halving, but theoretically possible, is the so-called “death spiral”. The hypothesis is that if miners’ profits drop so suddenly, many will stop working in the mining industry, resulting in a slower blockchain and less profit. The result is a vicious cycle in which the blockchain could possibly stop..

“You can’t just switch off the miners”“You can’t just switch off the miners”

But The members of the committee categorically excluded this option for technical reasons. As Streng explained:

“Especially for big miners it is not so easy to say: ‘Oh, ok, it doesn’t look too good today, so I’ll turn it off tomorrow, tomorrow … Ok, it looks better, I’ll turn it on again. ‘ Home workers can do that […] However, if you are in areas with more than 100 megawatts and consume half of a power plant, this is a different order of magnitude and a different matter. “

Strength believes that Removing the hash rate will be gradual over the weeks and miners can assess the situation.

Yao predicted that around 30% of the hash rate will go down as former Bitmain S9 minersthat currently bring a maximum of $ 8 [al mes] Profit. “But it is not impossible for them to stay as long as they have access to extremely cheap electricity,” said Streng.

Goodbody completely agreed and said: “Everyone believes something drastic will change. […] It just doesn’t fit what we’ve seen historically. “

The miners have been adapted to all eventualities and are ready for the sudden changeGoodbody argued.

How does that affect the price?

A common belief behind the halving is that miners always sell the bitcoins they mine, and therefore reducing inflation will have a disproportionate effect on daily selling pressures.

But Goodbody revealed that many miners do not sell all of the BTC that they mine::

“It really depends on the miner. Some have sophisticated processes in which they use options and futures to intelligently manage their inventory. […] It’s not necessarily a fact that a miner who produces Bitcoin sells to cover his daily running costs. “

Yao added that too Miners are “true believers” of Bitcoin, so many of them keep the coins that they mine.

But The long-term effects of halving are still undeniableaccording to the panelists. “”There is a general delivery limitation that has a positive long-term impact on Bitcoin’s price.Goodbody added.

The Cointelegraph event continues with a panel discussion in which Tim Draper talks about the future of Bitcoin. Turn on the live stream to see their opinions!

Receive Breaking News !

Install
×
Enable Notifications    Ok No thanks