Bitcoin (BTC) miners will continue to "surrender" due to low prices, but the upcoming events of Bitcoin Cash (BCH) and Bitcoin SV (BSV) will promote turmoil.
In the latest version of the report State of the Network On March 31, Coin Metrics argued that Bitcoin was in a vortex of mining surrender. This will get worse before it goes in a more positive direction.
Coin Metrics envisages a "model of surrender"
Although the BTC / USD pair has recovered more than 70% in the two weeks since hitting a low of $ 3,700, the price remains "almost certainly below the breakeven price for smaller miners".
This has been linked to a decline in Bitcoin mining difficulty - a drop of nearly 16% just a few days ago, and this is also the largest decline since 2011. Before the mining industry can recover, maybe It will see more losses ahead.
"We expect exploits to follow a cycle of reduced profits, increased sales, surrender, and ineffective miners will be removed from the network," cited the report.
"When this cycle is complete, the mining industry will return to a healthier state, supporting future price increases."
Bitcoin Cash and Bitcoin SV will undergo halving this month
However, in the short term, turbulent times will continue to attack mining companies and impact Bitcoin. This month, both Bitcoin's hard forks BCH and BSV will undergo halving - a 50% reduction in the bonuses awarded to miners when digging a new block.
Bitcoin's halving will only occur in mid-May and the event will halve the supply for miners from 12.5 BTC to 6.25 BTC.
This will open a door for a month in which miners will direct more hash power to BTC, as BTC's block reward will be higher, despite the increased costs, Coin Metrics said.
“When Bitcoin Cash and Bitcoin SV undergo halving, this will force miners to direct more hash power to Bitcoin, since it still has a block reward of 12.5 (instead of 6.25) in the range. another month, ”the report adds.
"Therefore, we should expect increased mining difficulty for Bitcoin - which will increase profits for all miners."
As Toiyeubitcoin reported, analysts, especially supporters of Bitcoin's stock-to-flow pricing model, are waiting for the impact of the halving event. At some point in 2021 to 2024, Bitcoin can trade at an average price of $ 100,000, according to a stock-to-flow model.
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According to CoinTelegraph
Translated by ToiYeuBitcoin