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The Bitcoin (BTC) halving is about to change the mining landscape, potentially leading to further centralization of power. Jag Kooner, head of derivatives at Bitfinex, said the expected squeeze on miner margins will force smaller operations to exit and the sector to be taken over by larger, better-capitalized companies. We estimate that there is a possibility.
“However, this change also presents opportunities for innovation and efficiency improvements within the industry. Miners may be able to explore new regions with cheaper energy sources or develop more efficient mining techniques to maintain profitability.” “We might invest in it,” Cooner added.
Additionally, mining facilities can invest in the development of more cost-effective machinery and use that supply to upgrade mining equipment.
There is still a downside that transaction fees may increase due to reduced block rewards. Rising fees could make Bitcoin less attractive for small-scale transactions, as miners increasingly rely on transaction fees as a source of income.
Cooner said he also foresees negative security implications if miners withdraw from the market. “A significant and long-term decline in hashrate could undermine confidence in the security of the Bitcoin network and could also impact price and adoption,” he said.
However, in the short term, the historic rise in Bitcoin prices, fueled by the slowing pace of new BTC generation, may offset the decline in block rewards, resulting in miners still having to rely on the network's security. interested in maintaining.
“This outcome will depend on a variety of factors, including market demand, investor sentiment, and macroeconomic conditions that impact liquidity and investment flows into cryptocurrencies. Another important factor in this mix is , the regulatory landscape remains a wild card, with changes on the horizon that could have a significant impact on the operational dynamics and profitability of Bitcoin mining companies large and small.”
Price after halving
Jag Cooner also commented on how prices will react after this halving. A “selling news” event typically occurs when there is a market consensus against it, and as tensions in the Middle East increase, this may be the case. According to Bitfinex's head of derivatives, the overheating situation in the Middle East led to two days of one of the largest market-wide liquidations ever experienced by investors between April 12 and April 14.
Nevertheless, after the recent downward move, the trend of long-term holders and whale investors diversifying their holdings may cease until Bitcoin prices return to an upward trend.
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