Economics of blockreward halving

[btc_enigma]

Wanted to discuss http://www.truthcoin.info/blog/mining-heart-attack .

Author is predicting no price rise after halving and sudden decrease in block fees will wipe out miners and create havoc

[1715155991]

1715155991

[zodiac3011]

I myself think that when Satoshi create this he has thought about this actually and in my opinion, the halvings are created to increase the value of the coin although the quantity may decrease. Along with the value of bitcoin, comes the increase of fee which will keep the miner mining the blocks and getting the blockchain move. There's no way that they will abandon this for sure

[SFR10]

Interesting article even though it was from last year but I believe that there will still be some spike after the halving (not double it's value but 25% of whatever value it has prior to halving itself) instead. Anything that makes it's achievement harder, will surely add value to itself.

[tyz]

...block fees will wipe out miners and create havoc

If miners get wiped out then mining difficulty will decline what brings miners back. I do not believe that this what the author described in the article could happen.

[croato]

Halving newly generated coins will decrease supply so if nothing bad happen, that should lead to price increase. Lot of ppl think that price increase will happen magically at same time with block halving (or close to that) but that is wrong. Bitcoin is still pretty small so lot of factors dictate price. For all we know price is maybe already corrected for halving event or will be months after event happen. By the way, in my opinion, block size debate, attacks related to it and shit around that debate have same if not bigger influence on price than halving event it self.

[richardsNY]

...block fees will wipe out miners and create havoc

If miners get wiped out then mining difficulty will decline what brings miners back. I do not believe that this what the author described in the article could happen.

Exactly this. Mining is purely about earning money. If something happens where mining isn't profitable anymore for certain pools, then they simply shut down (temporarily) their hardware. If enough large miners shut down their hardware, the difficulty will come down and that will attract other miners as result. Everything will sort itself out.

[Yakamoto]

...block fees will wipe out miners and create havoc

If miners get wiped out then mining difficulty will decline what brings miners back. I do not believe that this what the author described in the article could happen.

Exactly this. Mining is purely about earning money. If something happens where mining isn't profitable anymore for certain pools, then they simply shut down (temporarily) their hardware. If enough large miners shut down their hardware, the difficulty will come down and that will attract other miners as result. Everything will sort itself out.

This is what my thoughts have been, the most efficient miners would be able to continue mining, even if they are just breaking even, while other miners would have to either increase their efficiency or back out of the mining game, which would allow for the remaining miners to keep the network moving.

It's pretty cool seeing how Bitcoin was designed with so many scenarios in mind.

[richardsNY]

...block fees will wipe out miners and create havoc

If miners get wiped out then mining difficulty will decline what brings miners back. I do not believe that this what the author described in the article could happen.

Exactly this. Mining is purely about earning money. If something happens where mining isn't profitable anymore for certain pools, then they simply shut down (temporarily) their hardware. If enough large miners shut down their hardware, the difficulty will come down and that will attract other miners as result. Everything will sort itself out.

This is what my thoughts have been, the most efficient miners would be able to continue mining, even if they are just breaking even, while other miners would have to either increase their efficiency or back out of the mining game, which would allow for the remaining miners to keep the network moving.

It's pretty cool seeing how Bitcoin was designed with so many scenarios in mind.

Yup, but unfortunately only a very few people realize/understand this. They directly think in terms of Bitcoin being damaged just because of their ignorance. Imagine what it would mean for the adoption of Bitcoin when people spend some time in getting to know what Bitcoin is and how it works. They will realize that Bitcoin takes care of every problem the current financial world can't deal with.

[Hazir]

Wanted to discuss http://www.truthcoin.info/blog/mining-heart-attack .

Author is predicting no price rise after halving and sudden decrease in block fees will wipe out miners and create havoc

As far as we could tell he can be right. There is no dogma, no previous case like this. Bitcoin is something new and we only have assumptions of what will happen after halving.

Most people automatically thing that halving=less bitcoin which will cause every bitcoin to be more valuable. But that is not the case in my opinion.

With over 15 millions of bitcoins in circulation already, we already have huge supply - but will demand be higher suddenly? I don't think so.

[btc_enigma]

...block fees will wipe out miners and create havoc

If miners get wiped out then mining difficulty will decline what brings miners back. I do not believe that this what the author described in the article could happen.

Please read the paragraph Combined

In short, we will reach a day when all miners have small profit margins, and then a blockreward-halving will slash their revenues in half. The result will be that not half, but all miners will shut off their mining rigs.

You see, the difficulty won’t re-adjust (decrease) until (on average) 1008 blocks later. (In fact, we always know exactly the number of blocks.) So, even miners who plan to turn their mining rigs back on, post-difficulty-decrease, would have them off for this brief unprofitable period.

The problem is that it might not be brief. The difficulty adjustment period, which would normally last two weeks, is counted in blocks, not human-time. So it could actually last forever.

Not sure what are the chances of this happening.

[zodiac3011]

Wanted to discuss http://www.truthcoin.info/blog/mining-heart-attack .

Author is predicting no price rise after halving and sudden decrease in block fees will wipe out miners and create havoc

As far as we could tell he can be right. There is no dogma, no previous case like this. Bitcoin is something new and we only have assumptions of what will happen after halving.

Most people automatically thing that halving=less bitcoin which will cause every bitcoin to be more valuable. But that is not the case in my opinion.

With over 15 millions of bitcoins in circulation already, we already have huge supply - but will demand be higher suddenly? I don't think so.

we don't really know but the halving won't create any troubles in my opinion. the demand may be won't get higher but the adoption of bitcoin is gradually increasing which makes bitcoin more valuable and the halving will push the fee up a little bit which will keep miners doing their business.

[Amph]

...block fees will wipe out miners and create havoc

If miners get wiped out then mining difficulty will decline what brings miners back. I do not believe that this what the author described in the article could happen.

Please read the paragraph Combined

In short, we will reach a day when all miners have small profit margins, and then a blockreward-halving will slash their revenues in half. The result will be that not half, but all miners will shut off their mining rigs.

You see, the difficulty won’t re-adjust (decrease) until (on average) 1008 blocks later. (In fact, we always know exactly the number of blocks.) So, even miners who plan to turn their mining rigs back on, post-difficulty-decrease, would have them off for this brief unprofitable period.

The problem is that it might not be brief. The difficulty adjustment period, which would normally last two weeks, is counted in blocks, not human-time. So it could actually last forever.

Not sure what are the chances of this happening.

this will hardly happen i see the opposite to be honest, right now the margin of any miners is around 4x the consumption if they are running s7 miner, so we can see that they have plenty of margin

the scenario described can happen only if the value will stuck there forever or worse, it will be lower, i think that the network is self sustaining enough to not allow this

[lottery248]

nobody knows what the bitcoin price will really be:

nobody could ever predict the bitcoin price very accruately.
demand is volatile based on the bitcoin development.
we need to have their psychology to be stable by ensuring the security of the bitcoin.
we don't know the trend of the bitcoin miners when the block reward halves.

[KiwiParty]

I myself think that when Satoshi create this he has thought about this actually and in my opinion, the halvings are created to increase the value of the coin although the quantity may decrease. Along with the value of bitcoin, comes the increase of fee which will keep the miner mining the blocks and getting the blockchain move. There's no way that they will abandon this for sure

BTC's rate is market price. Market price is controlled by demand, and supply.
Nakamoto's thoughts may have been about that, but there is no way he could take any influence this way.
Basic principles of a free market.

[Pitchblackroom]

I myself think that when Satoshi create this he has thought about this actually and in my opinion, the halvings are created to increase the value of the coin although the quantity may decrease. Along with the value of bitcoin, comes the increase of fee which will keep the miner mining the blocks and getting the blockchain move. There's no way that they will abandon this for sure

BTC's rate is market price. Market price is controlled by demand, and supply.
Nakamoto's thoughts may have been about that, but there is no way he could take any influence this way.
Basic principles of a free market.

Truly the demand is the most important aspect of the blockhalving. If demand is constant and supply goes down then the price will go up, if not.... Well then a neutral shock or an increase in supply will cause it to go down.

[ronaldinho_07]

The miners farms already readjusted to the marked maximizing their revenue ,reducings the costs near to 0 besides the miners and the cheap electricity they spend.Even with the halving keep going and reducing the reward, all the system concept from Satoshi were to give less coins making the coin go up,as the interest should keep and the coins circulating should decrease,making each coin more get more value at each halving and we all know mining will end someday ,and there isnt yet nothing about what developers will do to keep bitcoin safe and the miners hash to keep running .

[zodiac3011]

The miners farms already readjusted to the marked maximizing their revenue ,reducings the costs near to 0 besides the miners and the cheap electricity they spend.Even with the halving keep going and reducing the reward, all the system concept from Satoshi were to give less coins making the coin go up,as the interest should keep and the coins circulating should decrease,making each coin more get more value at each halving and we all know mining will end someday ,and there isnt yet nothing about what developers will do to keep bitcoin safe and the miners hash to keep running .

I have to agree this. Satoshi won't create a thing that will die because of its own rule. Bitcoin is based on some basic economy rules of demand and supply. If supply drops but demand stays constant, the value will be pumped up

[Kprawn]

The theory is that the halving will increase the price per Bitcoin and thus eliminating or softening the loss in miners reward and that the increased adoption will increase the fees

and also help subsidizing the loss a bit more. The further theory is that the halving will make it less profitable for some miners operating with thin margins and when these guys

leave, the bigger miners with the more effective operations will pick up their slack. This is why we still call this an experiment and not a final product.