Bitcoin halving 2020: ASIC processors brace for another drop in revenue

Somewhere around May 20, 2020, most expect the third Bitcoin block subsidy reward reduction to occur. When this takes place, 50% fewer Bitcoins will be rewarded every 10 minutes when a block is created. This phenomenon is widely known as Bitcoin halving and historically, what followed in the months after was an epic increase in the market price of Bitcoin. The atmosphere this time around is different, as many in the Bitcoin community fear the next halving will negatively affect the long-term value of the digital currency. 

Their apprehension is driven by the apparent reality that the current state of processing transactions, aka mining, on the BTC network is no longer sustainable. In a recent report, the digital currency focused research firm TradeBlock estimates the average cost to process a single BTC block could jump to $12,525 after the halving. The analysis also assumes an electricity price of 6 U.S. cents per kilowatt-hour. This benchmark is nearly double the average cost of $6,851 at present, which already has BTC miners operating at a loss. 

The new estimated cost to support the BTC blockchain is well above the current BTC token market price of approximately $6,000 (at the time of publishing). The digital currency needs to rise by over 100% before the transaction processors powering the network will break-even. Even if there is some price increase, without magic, divine intervention, or outright market manipulation, it is unlikely BTC coin prices will double from now through April or May 2020. 

BTC miners are facing a rapidly approaching future where the market price of the token will not increase enough before the spring halving to cover the 50% fewer coins. As financial markets cope with a possible global recession, mainstream citizens have so far not rushed in to pump up the price of the BTC token. At this stage, it is highly unlikely mass adoption will ever occur on the BTC network, given its still high current price yet lack of real-world…

Source Link

Advertisements