2020 is a concentrated outbreak year of “production reduction” of the original network of encrypted assets. In March and April, etc, BCH and BSV will enter the half cycle; In May, the much anticipated coin King BTC cut production, and dash also cut production this month; In October, the production reduction will continue to Zec.

In addition to bitcoin, several other mainstream encryption networks are halved mining rewards for the first time. From the past price trend of BTC, its price will rise every time it is halved. However, according to the current currency price, the cost of BTC miners will double in a short time after the production reduction. On the eve of the production reduction, every miner will face a “gamble”, and the key to winning is the rise of bitcoin.

Wang Ruixi, founder of Hufu wallet, believes that the reduction in production does not constitute a sufficient reason for the rise of a currency. He told beehive finance, “one of the factors affecting the price of bitcoin is supply. In fact, in a full free market, it is difficult for us to judge the change of supply-demand relationship.”

Six mainstream networks welcome “halving” within the year

“After all, it takes four years to catch up with bitcoin reduction for half a year. I intend to adjust the pocket money for fixed investment from 3000 yuan to 6000 yuan per month.” on January 9, the microblog user “bitpie wallet” increased the investment in fixed investment bitcoin, which aroused the resonance of many commentators.

It is about four months before bitcoin’s third block award is halved. According to the estimation of bitcoinblockhalf.com website, as of 18:00 on January 9, it is 124 days before bitcoin’s third halving. The official halving time is expected to be 6:30 on May 13, 2020. On the fire coin global station, the current BTC quotation is US $7900.

In short, “halving” refers to “block reward reduction”, which has been reduced twice in the history of bitcoin. The first occurred on November 28, 2012. The block reward was reduced from 50 BTCs to 25 BTCs, halved, and the BTC quoted us $12.22 on the same day. One year later, on November 30, 2013, the BTC price reached the highest point of $1175 after the first halving, which lasted 367 days.

The second halving occurred on July 10, 2016. The block reward was reduced from 25 BTCs to 12.5 BTCs. On the day of halving, the BTC quoted us $648. On December 16, 2017, BTC hit another record high of US $19891 for 525 days.

In the long-term trend, after each halving, the price will rise, and the cycle to reach the peak is also lengthening. Generally, the price is determined by market supply and demand. Halving the reward once every four years will undoubtedly break the original balance between supply and demand of the currency and stimulate the rise of currency price. Last August, Wright coins took the lead in reducing the production of mainstream coins. From the low point of $22 at the beginning of 2019, the currency price soared all the way to the high point of $145 on June 22, an increase of more than 500%, leading the currency market for a time.

Much like the football World Cup held every four years, the production reduction of bitcoin is also a grand event in the coin circle, which awakened the enthusiasm and cry of fans. Different from previous years, in addition to bitcoin, BCH, etc and other mainstream encryption asset networks will also embark on the journey of production reduction this year, which will be halved for the first time.

Among them, in March, the block reward of ether classic (etc) will be reduced from 4 to 3.2; In April, the block awards of BCH and BSV will be reduced from 12.5 to 6.25; In May, the block award of dash will be reduced from 3.6 to 3.34; In October, Zec’s block reward will be reduced from 12.5 to 6.25.

Therefore, some people call 2020 the “outbreak year” of halving encrypted assets.

Is the "production reduction" in 2020 a good thing or a bad thing

Six mainstream currencies to be reduced in 2020

Guo Hongcai, an investor who has experienced the bitcoin halving market twice, told honeycomb finance and economics that among the digital currencies that will reduce production this year, what he most expects is bitcoin. “Only the bitcoin halving price will soar, and other Shanzhai currencies may not rise. For bitcoin, my idea is very simple, that is, when it should rise, it will rise.”

Liu Changyong, director of the blockchain Economic Research Center of Chongqing University of technology and industry, also held the same view. He told honeycomb finance and economics that the reduction of production in currencies with small market value has little impact on the price, because the substitutability is too strong, and if the price rises slightly, the funds may flow to other currencies. “The key is to halve bitcoin.”

The cost of bitcoin miners may double and BTC production will be reduced. In other words, the amount of coins produced by the network will be reduced, which directly affects the miners. Although the industry is generally optimistic about the future of production reduction, no one can guarantee the rise. If the current currency price is estimated, the cost of miners will double in a short time.

The computing power of ant S11 mining machine is 20.5tbtc.com. The data shows that the whole network difficulty of bitcoin is 13.8t, and the whole network computing power is 107.80 eh / S; The total output of BTCs in the whole network every day is 1800 BTCs (excluding the block handling fee income), and the daily income of each t computing power is 0.00001822btc. According to the calculation power of ant miner S11, the theoretical income of S11 of 20.5 t is 0.00037351 BTCs per day, that is, the output is 21 yuan per day (BTC is calculated according to US $7900). Assuming that the electricity cost is 0.5 yuan per day and the power of S11 miner is 1435w, the electricity cost of S11 is 17.22 yuan / day. This means that the current daily income of ant S11 mining machine is 3.78 yuan.

If the price of bitcoin remains $7900 after the production reduction, miners using ant S11 miner will lose 6.72 yuan a day under the condition that the mining difficulty remains unchanged.

Therefore, some media have predicted that “an unprecedented mining disaster” will break out after bitcoin production reduction in May, and even regard 2020 as the “year of life and death” of mining industry.

On December 23, 2019, longhash, an encrypted data analysis platform, said in the article “how bitcoin halving leads to mining accidents”. Due to the general expectation that “bitcoin halving promotes price rise”, many people have joined the mining industry and purchased mining equipment for mining, which will lead to the continuous growth of bitcoin computing power. The article believes that, according to historical records, there is no direct and clear correlation between bitcoin price and halving, but the continuous growth of computing power has increased the mining cost of miners.

On January 6 this year, bitcontinental, a mining machinery giant, laid off employees on a large scale. Some media said that “one third of the personnel will be optimized”. According to people familiar with the matter, one of the reasons for the layoffs in bitcoin mainland is that bitcoin will be halved in May this year. Founder Wu Jihan is not optimistic about the halving market, and the company will streamline its “winter”.

In the sound of anxiety, some miners were optimistic, “as long as the price of coins rises, you don’t have to worry.”

In addition, many industry insiders in the currency circle have also expressed their forecasts on the rise of bitcoin price. According to the macroeconomic model, PlanB, a well-known encryption analyst at twitter, speculates that when bitcoin is halved in 2020, its price is expected to exceed $10000, or even more than $100000.

Watch out for market sentiment and look at halving rationally. From the past production reduction history of bitcoin, the rise of currency price is a general trend. One question is, can the reduction of production constitute a sufficient condition for the explosion of a currency? In fact, there are counter examples. On March 1, 2019, Ethereum completed the hard bifurcation of “Constantinople” and “St. Petersburg”. The upgrade involves five different improvement schemes (EIP), of which the most concerned improvement scheme is to reduce the existing block reward by 33%, from 3eth to 2eth. On the day of production reduction, Ethereum offered us $135.33. After three months, it reached the highest value of US $366.5 in 2019, an increase of 170% over the price on the day of production reduction; After that, the downward trend was started. Up to now, it has been nine months since the first production reduction, and the ETH price has stabilized around $138, close to the currency price on March 1.

Within 9 months, Ethereum showed an inverted V trend after production reduction

Biki founder Li Xiandong believes that halving also represents a decrease in the daily new circulation and selling pressure of a currency, which can be expected from a rational analysis. But he also reminded investors through honeycomb finance that market manipulators may use the halving event to affect market sentiment, “so as to artificially make the market advance or lag.” Wang Ruixi, founder of Hufu wallet, believes that one of the factors affecting bitcoin price is supply. When the demand remains unchanged, the supply decreases and the price will naturally rise. He told beehive finance that halving by 2020 will not reduce the proportion of supply to the market. “In fact, in the full free market, it is difficult for us to judge the change of supply-demand relationship.” he believes that halving does not constitute a sufficient factor for bitcoin’s “inevitable rise”.

According to the characteristics of bitcoin, the demand will be stronger and stronger, and the bubble will continue. “Wang Ruixi believes that 2020 may be” the darkness before dawn “. On the whole, it is more advantageous to practitioners than advantages.

Expectations and concerns are like two sides of a coin. The same is true for bitcoin halving. It is the judgment of many industry veterans to treat the halving event cautiously and rationally.

Responsible editor: CT

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