It is said that this Bitcoin halving is the most brutal yet, is that true?

Now, Bitcoin’s issuance rate has dropped by 50%, with miner rewards dropping from 12.5 BTC to 6.25 BTC over the next four years, which could have a significant impact on the entire network.

Miners flee Bitcoin network to avoid losses

Charles Edwards, digital asset manager at Capriole Investments, said the massive supply reduction shock Bitcoin has experienced is the “most brutal” in its short history. The analyst maintains that production costs for miners will double to $14,000, which is more than 60% higher than current price levels.

Edwards expects that miners will capitulate soon, which will then push down BTC prices.

“During the last halving, the price was only 10% below the cost of production, and the price and hashrate crashed 20% at that time. If there was no ‘FOMO’ sentiment now, more than 30% of miners would be expected to capitulate,” Edwards said.

In fact, Blockware Solutions CEO Matt D’Souza explained that after the recent halving, there will be a “healthy cleansing of the network.” Since the previous generation of miners from Antminer S9, Innosilicon, and Canaan will no longer be profitable, all mining pools will be forced to deploy more efficient miners in the coming months.

This is why a large number of mining pools choose to close because they are already losing money. Alejandro De La Torre, vice president of Poolin, confirmed that unprofitable miners account for 15% to 30% of the entire Bitcoin hashrate.

De La Torre added: “Unless mining is done with almost free electricity, or the price of BTC increases by 2x or more, all the old mining machines will no longer be profitable.”

Price impact after halving

Pushing prices up 200% to keep miners alive may seem like a speculative move, but to Decred project director Jake Yocom-Piatt, it’s likely to happen because these key industry players will do whatever it takes to keep their revenues the same.

“Miners’ costs are effectively fixed, so in order to maintain the same profit margin, they are incentivized to double the price when they sell their Bitcoin,” Yocom-Piatt said. “I expect the supply shock caused by this halving will significantly increase the price that miners are bidding, and therefore the price of Bitcoin.”

Given the current turbulent state of the global economy, it is uncertain whether the upcoming halving will be the catalyst for the next Bitcoin bull run. However, if scarcity drives up prices as PlanB’s S2F model suggests, then Bitcoin’s market cap could soon grow 10x.

Note: Cryptocurrency analyst PlanB believes that according to the S2F (Stock to Flow) model, every time Bitcoin is halved, its "Stock to Flow" will double, and its expected market value will increase 10 times. PlanB once said: "According to this model, the market value of Bitcoin is expected to reach 1 trillion US dollars after the halving in May 2020, when the price of Bitcoin will reach 55,000 US dollars."

Gold's S2F model suggests that gold's inflation rate is around 2%. After the halving, Bitcoin's inflation rate will drop to nearly 1.66%. In addition, Bitcoin's S2F ratio will be higher than gold after the halving. Currently, gold has the highest S2F ratio of all commodities. If Bitcoin continues to be seen as a safe haven or digital gold, then it is expected to usher in a bull market.