On May 11, the block reward in the Bitcoin network dropped from 12.5 to 6.25 BTC, marking the third halving in the history of the Bitcoin currency.
Cryptocurrency industry stakeholders from around the world shared with ForkLog their thoughts on the aftermath of the third Bitcoin halving.
Because a lot of content is quite interesting, Satoshi Mamoto translated and shared this interview with forklog.
How will the third halving change the Bitcoin industry, especially mining?
Danny Scott, CEO of CoinCorner: I don't think we will see major changes in the mining industry. This is the third halving. Most miners are experienced in this area and know what to expect. The point to me is that this marks the beginning of the next supply-demand balance where the market will regulate itself.
Max Keidun, CEO of Hodl Hodl: I think the entry barrier for mining will be higher, the competition between existing companies will be more intense, and the establishment of new companies will become more difficult. The halving could have a positive impact on the price of Bitcoin, which would lead to new business opportunities. This means opportunities for new projects, traditional finance will be more interested and optimism about the industry will rise.
Joshua Scigala, founder and CEO of Vaultoro: The change has already begun, and ASIC chipmakers have caught up to the forefront. Miners now have the smallest and most efficient nanochip architecture. It's funny, in the old days, if you bought a miner, by the time the miner shipped to you, a better generation would have made your miner almost obsolete. Now that miners have caught up to mainstream general purpose chip manufacturing, when you buy mining rigs you know you won't be doing twice as fast next month. This increases predictability and reduces costs for miners due to mass production. For example, a crazy use case might be a USB powered lottery ticket that can be mined on its own when you plug it in. Your chances of winning the jackpot are very slim, but still better than winning the lottery. As ASICs become commoditized, we have a strange use case. We will see more and more power plants installing bitcoin miners so that they can do something with the excess energy that is wasted. Power plants have already started this trend, with one in upstate New York installing 7,000 Antminer S17s to capture lost profits. Neither use case is affected by the 2020 halving.
Alejandro De La Torre, Vice President of Poolin: The industry will evolve. This event is a key event for new entrants. New entrants know that only 6.25 BTC will be mined per block for the next four years. Likewise, since we are reaching the limit of chip wafer size, mining equipment can no longer be multiplied. Add these two factors together and you can see how new players feel more confident in betting on the mining industry.
Yang Haipo, CEO of CoinEx: In the past, mining farms did not pay much attention to operational details and strategies because the returns were high. However, after the halving, mining farms have to pay more attention to their operations due to much lower returns. They have to be well constructed, professionally run, and look for cheaper power supplies. Advanced technologies such as chips should be 7nm or even 5nm, and the energy efficiency ratio must be reduced. Only machines with an efficiency ratio lower than 40J/T are worth investing in. The number of third-party firmware service providers, especially for mining machines, will also increase. There will be massive growth in the mining industry, and the only option for individual players will be cloud mining.
CBDO Anna Moskaleva, Bizonex: Looking back at previous halvings, there were fewer and fewer small independent miners, replaced by more specialized companies. I think we're going to see a similar merger this time as well.
Gregory Klumov, CEO, Stasis.net: Obviously, any hardware that uses 8 to 10 cents or more of electricity is not going to be profitable. Before the halving, use this equipment to get the most bang for your buck, because later it will have to be scrapped or sold to one of the countries where the electricity rate is 2% to 3 cents, and there are only a few of them.
Ahead of the halving, the Bitcoin hash rate hit a new all-time high (ATH). However, many experts believe that the hash rate will drop after the halving. Do you agree? If so, how low could that drop be and how long will it take to recover current levels?
Danny Scott, CEO of CoinCorner: Of course, the halving will have an impact on miners, and some miners may have to close their doors until the price is high enough for them to reopen. That's not bad news, though, as the system is carefully designed and built to survive with incentives.
We can see how potentially profitable miners look after the halving (using assumptions and some rough numbers as an overview):
Average electricity bill: $0.06
Mining machine: Ant Miner S19 Pro
Bitcoin Price: $9,700
The profit margin on doing this is roughly +25%, which shows that even at current Bitcoin prices, this is not all cloud. Furthermore, most miners will be confident that they will see the value of Bitcoin rise in the next few months (otherwise why would they be mining?), and most miners will likely continue to function normally with little impact.
Ivan Maslov, Head of Development at Bitfury Russia: The hash rate will definitely drop. The extent of the drop depends on the bitcoin price, among other things, but I believe it won't be more than 30% to 40%. It will bounce back as indicated by the previous halving. Due to the high degree of decentralization, it will not pose a threat to network security.
Joshua Scigala, founder and CEO of Vaultoro: If you have experienced the time when you can use CPU mining, I am very glad that you participated in Bitcoin very early. But even then, mining wasn't always profitable, because Bitcoin's market value wasn't high. The same thing will happen now. Miners will mine and hold, speculate and pay the electricity costs until forced to sell. Mining is fairly predictable, aside from the BTC price. Miners know that profits will halve every four years, and they take this into account when deciding to build their operations. The mining industry is simply looking for cheaper and greener electricity, such as geothermal and hydroelectric power, and to consume excess electricity that is wasted in power plants.
At the end of the day miners who are not making a profit will just sell their rigs to someone who has access to cheaper electricity, so I don't get the feeling that hashing will decrease. Greener, cheaper power supplies will be discovered. It is worth mentioning that the older generation of miners may be offline forever.
Poolin Vice President Alejandro De La Torre: I hope the hash rate goes down. Unless we see a significant increase in price, the weakest miners will have to shut down. The previous difficulty adjustment was also at an all-time high. I've come to the conclusion that about 15% to 30% of the devices will shut down. I suspect some miners will turn on again after the first difficulty adjustment. As better new machines come online, the old ones will eventually shut down. These new machines will push the difficulty higher, which will make the smaller older machines unprofitable. I expect this to happen within a few months of the halving.
Yang Haipo, CEO of CoinEx: Many old mining machines, especially the S9, will gradually fade out of the market unless the BTC price doubles. I think it's almost impossible under the current circumstances. In this case, many mining machines will be shut down and the hash rate will definitely drop. It will probably fall somewhere between 20% and 30%.
While most S9s will be off, not all of them. Electricity prices vary from region to region. Some mining farms may get free electricity so they can still run the S9. Mining farms have become over-invested over the past few years and have a lot of redundant machine slots. After constructing the mining farm, they may have some agreement with the electricity provider. They pay a fee no matter how many computers they run. So, in this case, some mining farms will buy used mining machines.
It is difficult to say how long it will take to return to current levels. It depends on the price of BTC and the supply of new mining machines. In addition, the recent epidemic has also had a major impact on both the manufacturing and logistics industries.
Wright Wang, Marketing Director of MicroBT: If the price remains the same, then the halving will inevitably affect the current mining revenue and affect the machines that are almost shut down to really shut down. Shutting down a large number of computers will inevitably cause the hash rate of the entire network to drop. A conservative estimate is about 20% to 30%.
CBDO Anna Moskaleva, Bizonex: The hash rate is indeed declining. The main reason this is happening is that older ASICs such as the Antminer S9 are being shut down. Although, I see no major issues. Back when Bitcoin was at $3000, the network lost 20% of its hash rate.
Gregory Klumov, CEO of Stasis.net: Unlike traditional fiat currencies, Bitcoin has a transparent inflation curve. No one knows how many dollars will be printed this year or next but everyone knows Bitcoin. If you plot the inflation curve for Bitcoin and the U.S. dollar on a graph, the curve for Bitcoin will fall while the curve for the U.S. dollar will rise. Also, the growth rate of the dollar supply changes suddenly: every ten years there is a crisis and new dollars are printed. The main problem with the U.S. dollar and other traditional currencies is that inflationary surges are not coordinated with the people who use the currency.
After the halving, opinions are mixed about the price of Bitcoin. What do you expect from a short, medium and long term perspective? Do you think we could see a new price high this year?
Danny Scott, CEO of CoinCorner: My point is to ignore short-term fluctuations, and in the medium to long term, through standard supply and demand theory, we will see natural growth. I agree with the Stock to Flow model proposed by PlanB, it's a simple theory and the best model I've seen for predicting Bitcoin's price over a large time frame. I hope that this year we can see a new price high. Historically, the chances of us seeing the previous new highs within 3 to 9 months of the halving are still very high. If you consider history, then by the end of the year it should be Can go up to $20,000.
Max Keidun, CEO of Hodl Hodl: It is reasonable to expect a price correction after the halving. Although, I didn't think it was the impact of the epidemic. Prices have indeed grown over the past month, but it's hard to say what will happen next. Likely due to the recent economic crisis, many people will invest in Bitcoin as a hedge, so the price may continue to rise. If the global financial crisis worsens and its real consequences become apparent at a later stage, if politicians and central banks will continue to try to stop it by printing money, there is a possibility that prices will rise. Nonetheless, I think Bitcoin will trade between $10,000 and $20,000.
Ivan Maslov, Head of Development, Bitfury Russia: Considering the two previous halvings, a new all-time high may be reached within 1–1.5 years after the halving.
Joshua Scigala, founder and CEO of Vaultoro: I don't think we'll hit an all-time high in 2020. Aside from a few FOMOs, the halving is most likely right now, but we're already starting to see a weak sell-off make the news. This correction comes amid a global pandemic that is killing global markets artificially backed by quantitative easing.
While Bitcoin is fundamentally a hedge against Wall Street and central banks, we have seen over the past few years that Bitcoin’s price discovery mechanism is loosely coupled to the profitability of financial institutions. When there is a global banking crisis or a stock market crash, people need to run to cash out other positions. That means they sold everything they could, including Bitcoin and even gold. A few months after a full-blown stock market crash, Bitcoin is poised to shine and become the new global standard for freelancers, especially in the developing world.
AlejandroDe La Torre, Vice President of Poolin: I think the price will fluctuate due to the uncertainty of the total Bitcoin hashrate.
Yang Haipo, CEO of CoinEx: During the March 12-13 crash, the surge in demand for USDT led to a high USDT premium. This premium not only appears in the RMB market, but also in the US dollar market. As the price has risen to its highest point, the market has been flooded with "going higher" and demand for USDT has diminished considerably, hence the negative premium.
Right now, it’s mostly an insider’s “carnival” ahead of the halving, rather than a real bull run. One has to be cautious about risk. Institutional buying of large amounts of Bitcoin does not signal a bull market. True bull markets are driven by individual investors, not institutions.
I think Bitcoin will enter an era of low inflation. Currently, Bitcoin has an annual inflation rate of around 3%–4%. After the halving, Bitcoin has a real inflation rate of less than 2%, and this inflation rate is lower than most fiat currencies. From the perspective of inflation rate or bitcoin circulation ratio, halving has less and less impact on the entire cryptocurrency market. This means that Bitcoin has entered an era of almost full circulation, an era of low inflation, which has had a profound impact on the future. So I don't think expectations for the halving should be too high. The higher your expectations for the halving, the greater your disappointment.
However, in the long run, I am still optimistic. More and more people are learning about cryptocurrencies. Furthermore, due to the unstable political environment in some countries (such as Iran), people need to find more ways to preserve the value of their currencies, and also need to find more safe-haven assets, which makes more people interested in cryptocurrencies. interest.
CBDO Anna Moskaleva, Bizonex: Historically, the Bitcoin price surpassed its all-time high in the second year after the halving. But the previous examples took place in a relatively normal world and economy. This time, the price may rise faster as more and more people view Bitcoin as a safe-haven asset due to the crisis. I think we'll see a real rebound in 2021.
Gregory Klumov, CEO of Stasis.net: The best price to buy Bitcoin is $4,000-$5,000. Chances are we'll never see prices like they did in mid-March again. I'm not sure if the price record will be broken this year, but over three years, $100,000 is achievable.
Do you agree with the Stockto Flow model proposed by Plan B?
Joshua Scigala, founder and CEO of Vaultoro: I think Bitcoin needs scalable use cases, and they are coming faster and faster. The Lightning Network is becoming extremely useful and bringing traffic back to the Stockto Flow model. If we (the community) manage to bring lightning payments to the masses with an easy-to-use user experience, we'll have all three things we need: scarcity, utility, and collectibility.
Ivan Maslov, Head of Development, Bitfury Russia: The biggest advantage of this model is its simplicity. But the real world is much more complicated. Like many other metrics, S2F can be used as a general metric and works better when combined with other models like EMH. Still, I don't think it is possible to create a reliable price prediction mechanism even when combined with existing models.
CBDO Anna Moskaleva, Bizonex: Like any other model, it's just a model. The price of Bitcoin is largely influenced by manipulation by large players. Of course, the money flowing into Bitcoin will continue to grow, but it is difficult to make accurate predictions about its price.
This time, the halving took place amid a massive economic crisis and fiat inflation in many countries. Should Bitcoin's Gaining Status in the Sun Be a Historic Moment?
Danny Scott, CEO of CoinCorner: I actually wrote an article in early April highlighting these exact points that Bitcoin is going to have an explosive year. Bitcoin is up 32% since then, and sentiment across the industry has only turned more bullish as the global financial crisis started to hit. We've even seen reputable billionaire hedge fund manager Paul Tudor Jones (Paul Tudor Jones), who now has his hands on Bitcoin, say, "The best profit-maximizing strategy is to own the fastest A horse.” It feels like we’re seeing a series of very powerful moves ablaze, which could be the reason for Bitcoin’s next strong bull run.
Max Keidun, CEO of Hodl Hodl: I've heard that if Bitcoin doesn't get its place in the sun by the correct meaning of the phrase (although I'm not sure which is correct in this case), then its The future will look grim. I don't agree that Bitcoin's fate is determined by this particular crisis, but it should be stronger than it was anyway. This means more people will use cryptocurrencies, leading to greater mass adoption.
So, it’s safe to say that this crisis is Bitcoin’s first real test. During the last crisis, it was still nonexistent or too niche. Now that Bitcoin is a mature asset used by Wall Street firms, I think it is ready to establish itself in some way.
Joshua Scigala, founder and CEO of Vaultoro: Absolutely, the problem I see is that if people wait too long to get out of fiat, it might not actually make that much sense. That's why I'm also very bullish on rare metals. The masses understand gold as a hedge against inflation. If they are not comfortable with Bitcoin due to the inherent learning curve and complexity, then they should also be jumping into any other rare asset now.
Ivan Maslov, Head of Development, Bitfury Russia: The combination of halving and the global financial crisis provides a fundamental reason for Bitcoin to gain strength compared to traditional instruments. Considering the uncontrolled emission of major fiat currencies, Bitcoin can be a good alternative due to its deterministic and immutable emission mechanism.
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