The difficulty of Bitcoin mining has soared by 7.08% again. All currencies that will be halved in 2020 have skyrocketed. Is the halving coming?

At 7:42 am on January 15, the difficulty of Bitcoin mining was raised to 14.78T, an increase of 7.08%, setting a new record high. Based on this, the total computing power of the Bitcoin network is about 105.76E (data source: BTC.com).

If we take one month as a cycle, the Bitcoin hashrate has increased by about 13E in this month. This means that although the Bitcoin price has fluctuated around $7,000 for two months, at least at the miner level, they have continued to invest in hashrate to prove that they are still optimistic about the halving expectation.

In the cryptocurrency market, there may be nothing that one big bullish candle can’t solve, but if there is, then two will do.

On January 14, when the market was generally gloomy about the halving expectations, the currencies expected to halve in 2020 soared across the board. As of 23:00 that evening, BTC rose 7.21% on the day, BSV rose 44.5% on the day, BCH rose 24.43% on the day, DASH rose 35.19% on the day, ETC rose 24.15% on the day, and ZEC rose 21.43% on the day.

It was that night that the cry of “the bull market is coming” once again appeared in the cryptocurrency investment circle.

Bitcoin is less than $15,000, will the halving cause “bloodbath”?

The computing power has skyrocketed. If we compare January 14, 2020 with January 14, 2019, with the same amount of computing power, the Bitcoin output obtained by miners today is only 2/5 of that time.

It is expected that Bitcoin will be halved as scheduled in May this year (only about 4 months left), at which time the output of Bitcoin will be reduced from 12.5 to 6.25.

The surge in computing power coupled with the halving of Bitcoin, is this destined to be an unprecedented mining disaster?

Previously, a Weibo post by Weibo celebrity Wintercoin attracted special attention. He said that currently, the entire mining circle is betting on the halving, that is, betting that the price of Bitcoin will skyrocket before and after the halving.

According to his calculation, Bitcoin is currently increasing at a rate of 10E+ per month, so by the time of halving, the total network computing power will reach 140E-150E. It should be noted that on December 15, 2018, the price of Bitcoin was about $3,155, the output was 12.5, and the computing power was 42E. At that time, miners surrendered, and the terrifying atmosphere of selling mining machines by kilograms permeated the entire industry.

Based on this calculation, after the halving, as long as the price of Bitcoin is below $20,000, the atmosphere of fear may reappear. Because once it is below $20,000, the income of miners will be the same as in December 2018. However, the price of Bitcoin today is only $8,700.

There is a problem here. The computing power may not necessarily grow as expected. In fact, the growth of Bitcoin computing power has slowed down since the fourth quarter of 2019. So, we assume that the computing power will remain at 100E. Based on this calculation, as long as the price of Bitcoin is lower than $15,000, miners will also enter the painful period of December 2018.

Previously, Yu Yang from the Mining Association said in an interview with Babbitt that because most miners do not have many strategies, mining accidents are bound to happen and are very scary, but everyone is betting that it will not happen to them.

Who will be the winner? Obviously, miners with strong financial strength, low electricity costs, high computing power and low power consumption mining machines, and good at flexibly using hedging and other financial means to lock in profits will win. It is very likely that the S9, a generation of magic machine, will exit the stage of history.

In the online live broadcast of "Can I still enter the mining market now?" in the CoinIn Guest Room on the 14th, Wang Li, co-founder of PayPal Finance, said that after the halving, most mining machines with power consumption of 80-100w/T will be eliminated, and will be replaced by a new batch of institutional miners and cloud computing platforms. The so-called 80-100w/T refers to the mining machines launched between 2016 and 2018, such as Ant S9. Currently, the most powerful mining machines are in the range of 45-60w/T.

Previously, Zhikuang University predicted that mining machines are essentially a kind of financial product. As a free market, the game between participants will effectively regulate the market:

1. Mining revenue declines, the payback period becomes very long, miners' demand weakens, and computing power stops rising; 2. Mining machines complete a wave of "metabolism", high-performance new mining machines enter the market, and low-performance mining machines are gradually eliminated; 3. Mining machine manufacturers' shipments far exceed demand, and financial crises may occur; 4. The price of coins continues to fall, and mining machines, especially old mining machines, will flow from high-cost miners to low-cost miners, completing a reshuffle; 5. The market emerges from the downturn and a bull market begins.

BSV price increased by 436% in one month, and computing power doubled

We know that BTC, BCH, and BSV all use the SHA256 algorithm. The same mining machine can mine these three cryptocurrencies. According to the principle of maximizing profits, the computing power will flow into the currency that has the greatest profit. Computing power does not have loyalty.

QKL123 data shows that as of January 14, the average hash rate of BTC is about 103E, the average hash rate of BCH is about 3.21E, and that of BSV is 2.43E. Interestingly, since December 19, 2019, the price of BSV has increased from $83 to $445 (early morning of December 14), an increase of 436%. While the hash rates of BTC and BCH have hardly changed, the hash rate of BSV has doubled.

Although the computing power of BCH and BSV is a fraction of that of BTC, and BSV is lower than BCH. However, at present, the total market value of BSV has surpassed BCH and ranked fourth. Therefore, it may only be a matter of time before the computing power of BSV exceeds that of BCH.

This shows another problem. After the halving, if the price of BTC does not rise to the sky, some BTC computing power will inevitably withdraw. Where will these withdrawn computing power go? Naturally, it will go to BCH and BSV.

It is foreseeable that there will be a battle for computing power between BCH, BSV and BTC. In theory, BSV and BCH are extremely unsafe, and a fraction of BTC's computing power can launch a 51% attack on them. This halving is likely to be an opportunity window for the two weak parties to compete for computing power, and price is the only weapon in this battle. If BCH and BSV want to succeed, their growth must exceed BTC. Who will surpass whom between BCH and BSV will also be determined by price.

It is expected that the halving time of BCH and BSV will be before that of BTC. Therefore, before the halving of BTC, BCH and BSV will take the lead in the competition of price and computing power.

▲Currency surges after halving

In 2020, eight major halving currencies are coming

In 2020, there are eight major currencies expected to halve, including the familiar BTC, BCH, BSV, as well as ETC, DASH, ZEC, XZC and BEAM. Except for BTC, the other currencies are halving for the first time.

▲Picture from Planet Daily

The most anticipated halving is naturally Bitcoin. According to the design, Bitcoin will experience a halving of mining rewards every 4 years. On November 28, 2012, Bitcoin's first halving occurred, with the reward reduced from 50 to 25. On July 10, 2016, Bitcoin's second halving occurred, with the reward reduced from 25 bitcoins to 12.5 bitcoins. The latest halving is expected to occur on May 13, 2020.

From historical data, each halving is accompanied by a price increase. For example, the price before the first halving was $2.55, and one year after the halving it was $1,037. The price of the second halving rose from $268 to $2,525 within a year, a nearly 10-fold increase. Even the highest point in 2017 was $20,074.

It is also because of this that the public is very enthusiastic about the Bitcoin halving.

BCH and BSV are both forked coins of BTC. Their operating mechanisms are similar to those of Bitcoin, so they will also be halved, but the time of both will be earlier than that of Bitcoin.

ETC is a fork of Ethereum ETH. It does not really halve. It will reduce production by 20% every 5 million blocks. The last time it reduced production was in December 2017. The total number of DASH issued is 18.9 million, and it has a fixed annual reduction of 7.14%.

ZEC has similar properties to Bitcoin, with a total supply of 21 million coins. After halving, the mining reward is also 6.25 ZEC. It is more anonymous than Bitcoin.

Halving occurs in all POW currencies, which means that the number of mining rewards is reduced and the mining cost is greatly increased, so in theory it will drive the price up. Judging from the past halving of Bitcoin, it seems to be true. However, mining cost cannot determine the price, and there is more evidence that halving does not necessarily lead to an increase in Bitcoin prices. We will not discuss this here.