A Bitcoin halving immediately decreases the amount of BTC miners can generate by using computing power and mining equipment.
A halving can lead to a drop in price as miners sell existing BTC to cover imminent operational costs.
Why Bitcoin may not see a big post-2020 halving correction.
The third halving in the history of Bitcoin was activated on May 11.
There are two main reasons that support the argument of a less severe Bitcoin correction following the halving: less capitulation of miners and the March 12 drop of BTC. According to data shared by Capriole market researcher Charles Edwards, the hash rate of Bitcoin has been leading its price down in the past week.
The difference between the 2020 and 2016 halving is that the capitulation of miners is not as strong as four years ago.
Miners are not shutting down their mining equipment as fast as they did in previous halvings due to the price trend of BTC. Weeks before the May 11 halving, the price of Bitcoin was hovering at around $6,000.
If the price of Bitcoin does not increase in the upcoming weeks, miners will be operating with a substantial loss.
Estimates place the cost of mining after the halving at around $12,500 at the lowest.
"The gross cost to mine one bitcoin at projected levels following the halving would be $15,062. If we adjust our assumption on hash rate, and assume hash rate stays nearly flat from current levels then the cost to mine one bitcoin would fall to $12,525."
Unlike 2016, analysts say Bitcoin won't see a brutal post-halving crash for 2 reasons
Published on May 23, 2020
by Cryptoslate | Published on Coinage
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