With one of the most highly-anticipated events in Bitcoin’s history due to With one of the most highly-anticipated events in Bitcoin’s history due to take place tomorrow, leading visionaries across the crypto and blockchain spectrum share their insights on what the impending Bitcoin halving might mean for the industry.
Andy Ji, Co-founder of Ontology, the high-performance public blockchain and distributed collaboration platform, said:
“This Bitcoin halving will certainly be different to the last. Bitcoin and the crypto industry now face new challenges as current trends such as de-globalization and Covid-19 impact the world. In the coming months and years, Satoshi Nakamoto’s economic system will have the opportunity to prove its resilience and strength in comparison with traditional Wall Street protocols.
We can be cautiously optimistic about the Bitcoin Halving in relation to price. Given that this time, news that the Bitcoin halving is happening is widely known, it’s less likely that it will drive price upwards as much as it did the last time. As central banks around the world begin to increase supply of fiat money, the possibility of gradual growth towards a more bullish market becomes increasingly likely.”
Nick Cowan, CEO of the GSX Group said:
“The halving of Bitcoin is another important milestone in a journey of development since its inception, a journey that will continue to be defined by gradual institutional involvement, and wider mainstream adoption. The halving also presents a timely reminder that bitcoin is a long term project, of which we are still in the early stages. The impact of a Bitcoin halving can vary widely, but it will have repercussions across the growing token economy. The Bitcoin halving has been a long standing topic among the crypto community, with many feeling that any influences on price have already been ‘baked’ into the current price range we’re seeing today. The price is important for a lot of elements surrounding Bitcoin, especially for the miners. Ultimately, miners will receive less per successful block hashed, which could impact the cost-implications of running mining operations. The ‘break-even price’ model could see miners feel the pinch of a Bitcoin price drop, and may have to re-evaluate their business models. If the price were to rise, then it would equal out the costs for miners receiving lower rewards from mining. The creation of Bitcoin lit the path towards the adoption of cryptocurrency, but more importantly the innovations in blockchain technology. At GSX Group, we’ve made it our mission to transform the legacy systems within traditional capital markets, utilising blockchain technology. We aim to reverse the rising cost of capital, remove counterparty risk and disrupt the existing FMI model from the cumbersome T+2 model, to a T Instant future – saving costs and increasing efficiencies in every aspect of the securities trading life-cycle.”
Ashish Singhal, CEO and Founder of CRUXPay and Coinswitch.co, said::
“It will be interesting to witness the BTC halving, especially considering it will happen amidst the ongoing pandemic issues and a nose-diving economy. The influence on BTC price can be assessed in two phases – before halving and after halving. The weeks leading up to the halving might see a price drop as most miners start selling their crypto earnings to run operations for the months following the halving. This will allow them to keep accumulating bitcoin post-halving, in order to break even when they receive less rewards post-halving. Most retail users anticipating an increase in price post-halving will try to accumulate bitcoin within the same time frame. The price drop due to selling of bitcoin by the miner will be compensated for to some extent by the retail buyers accumulating bitcoins. Then, in theory, after the halving the bitcoin prices should go up because the supply is now cut to half and the scarcity will increase further as miners avoid selling until the break even price is attained, all the while the demand remains the same.
For miners, bitcoin halving means a doubling of operational costs for the same amount of earnings. The only way to sustain would be for the bitcoin prices to reach a breakeven price. It will see small miners leave the system, and the big one with deep pockets will dominate. This may not be a good thing for bitcoin, because it skews towards centralisation.
For the wider blockchain space in the short term, there will be two major impacts – the impact on price and the impact on hash rate. The impact on price is due to the reduced supply over a constant or increased demand. And the impact on the hash rate is due to the smaller or inefficient miners exiting the system. Over the long term, if the stakeholders in the system adapt to the halving and the halvings to come in the future, then it means that bitcoin can eventually become what it was designed for – decentralised sound money.”
Jason Wu, CEO of DeFiner.org, the true peer-to-peer network for digital savings, loans, and payments, said:
“With the upcoming halving, the revenue from mining will be reduced by 50% immediately. The gross margin will be down around 40%, considering there is some buffer from reduced energy cost. Miners will shut down a lot of machines immediately after the halving, due to this lower revenue. This will support the BTC price, due to less energy cost and the fact that miners won’t need to cash out BTC to pay for their energy cost.
Around 2 weeks after the halving, the mining difficulty will be adjusted and profitability of miners will go up from -50% down back to around -30%. At this point, miners will be able to reopen old machines. This influx will keep increasing the mining difficulty, and therefore reduce the BTC rewards yet again. All of this will finally reach a balance and there will be some stability after a while. On top of all of this, as the old mining machines become obsolete, new machines will be more profitable and ramp-up to the market more quickly.
In terms of value, BTC price will likely rise steadily after the halving. Combined with 50% reduction of newly mined BTC supply, we may face a liquidity issue. There is not enough BTC on the market to meet the new buyers attracted from the price appreciation. If this happens, most likely the BTC price will keep going up and push up the mining difficulty to a higher level as well. The mining rewards per block will keep reducing, and when it reaches just 25% of the original level, the price of BTC will go up at least four times, potentially reaching $40,000 easily. Therefore, the halving will help the BTC price trend upward to reach a new level in the foreseeable future.
If all of this coincides with a financial crisis of the current fiat currency world, we cannot even imagine how high BTC can go for the next 1-2 years. The bull market of BTC may return and this will attract new capital and attention from the public into this industry. This will be a big boost for the whole blockchain industry. More talents will be attracted to develop the technology itself. Blockchain technology will be more popular and benefit people’s real life. People will enjoy wealth control and independence.”
Nicholas Pelecanos, Head of Trading at NEM Ventures, said:
“Bitcoin is weeks away from the halving event where the bitcoin block reward will be halved from 12.5 BTC to 6.25 BTC per block. After this event, the production cost of each bitcoin will double as the supply per block is halved. Happening only twice in bitcoin’s price history, this deflationary event has historically signalled the start of bitcoin’s most tremendous bull runs, but not before a brief sell off. The 2012 halving was followed by an immediate 10% sell off and the 2016 sell off witnessed an extended 38% decline. Both halvings were followed by an approximate 50 day decline in the hashrate.
If history were to repeat itself and bitcoin entered into a decline post halving, high operating cost miners may have to shut down their rigs until bitcoin reaches a sustainable price. In this event, those with low cost operations would control more of the hashrate and therefore win the majority of the block rewards. Between the halved supply and the economic fallout of COVID-19, bitcoin’s fundamentals are only growing stronger. In the face of this, would low cost miners not be incentivised to keep the Bitcoin price as low as sustainably possible for as long as possible, in a bid to accumulate as much Bitcoin as possible before the bulls are truly out of the gate.”