Hopes and Strategies In Play As Miners Prepare For Bitcoin Halving
The Bitcoin (BTC) halving is fast approaching, and already miners are swooping into action. Some are phasing out older mining hardware, while others are preparing to take equipment offline if the bitcoin price falls below certain thresholds after the halving.
But while the halving will obviously reduce mining rewards by 50% and a chunk of mining rigs will be turned off, miners hope to regain equilibrium in the event of any short-term volatility and bet on rising bitcoin prices.
As of writing, one bitcoin is worth around USD 7,170. Not bad, but it doesn’t sound like an awful lot when it is compared to an estimation by TradeBlock that the average cost of mining a single bitcoin stood at USD 6,851 in February and increased to USD 7,300 by the end of March.
At these prices, after the halving, it would cost miners almost USD 46,000 (again, on average) to earn the new BTC 6.25 block reward. This would leave successful (meaning, those we get the reward) miners with a loss of around USD 1,000 per block. As a reminder, there are around 144 blocks mined per day.
If hashrate and mining difficulty keep rising and miners swap their rigs with newer models (which obviously cost money to buy), things may end even worse than this after the halving. At the end of March, TradeBlock estimated that the gross cost of mining a single bitcoin might even reach USD 12,000 – USD 15,100.
Clearly, something has to give, and a range of miners and mining pools tell Cryptonews.com that they’re preparing to switch off mining units to decrease Bitcoin’s hash rate and, by extension, their costs.
“The BTC halving will have some impact on our business,” explains Qingfei Li, F2Pool’s chief marketing officer. “There will be a part of the mining machines switching off, and the hashrate of BTC will be reduced after the halving.”
Li also predicts that, during the first two weeks after the halving, “the speed of Bitcoin block generation will drop sharply, and the speed of Bitcoin transaction confirmations will decrease.”
As for how many mining machines will likely go offline after the halving, Li says that, for the industry as a whole, he foresees “40% or even more mining machines switching off in the first two weeks after the halving,” assuming that the BTC price remains stable.
But after these two initial weeks, Li suggests we will witness a gradual re-equilibration. “The hashrate and mining difficulty will be dynamically adjusted and reach a balance eventually,” he predicts. “At that time, the BTC network hashrate will stabilize between 65% -75% before halving.”
Of course, not all miners and mining pools share exactly the same outlook as F2Pool. For example, OKEx Pool is hoping to switch off less than 40% of its mining capacity.
“Our mining capacity and hashrate will remain nearly unaffected even if the bitcoin price reaches a lower level,” says Alysa Xu, the chief strategy officer at OKEx.
“I believe Antminer S9 will be the first lower-end mining rig model to be shut off since they make up about 30%-40% of the total Bitcoin hashrate. However, more than 90% of our users mine Bitcoin with higher-end models instead, such as Whatsminer M20S, Whatsminer M21S, and Antminer S17.”
As with Li, Xu says that, eventually, a new state of equilibrium will sooner or later follow, even with larger dips in bitcoin’s price.
Likewise, BitRiver – a Russia-based provider of co-location services for Bitcoin mining – is also expecting the Bitcoin halving to have a more modest impact on its operations.
“Only 15-20% of our total capacity would be under question here if the price dropped lower than our lowest estimates,” says CEO Igor Runets. “With access to likely the lowest electricity costs in the world and with advance risk calculations […] we are in a position to provide our clients with comfortable financial terms to phase out older generation hardware.”
But aside from reducing hashrate and dropping older hardware, how will miners adapt to the Bitcoin halving, particularly in cases where the price of BTC plunges?
“We have prepared some methods to increase mining revenue,” explains Qingfei Li. “The most direct one is the ‘BTC/BCH/BSV Auto-Switch’ function, which allows miners to keep mining the highest profitable coins and greatly improving the mining revenue.”
There’s also a possibility that some miners may sell their stocks of bitcoin in order to maintain cash flow during periods of reduced (or negative) profit. However, at least some miners say they’re unlikely to do this.
“We do not hold large stocks of BTC, but estimate that BTC and other scarce assets will continue attracting investors even when other markets generate losses,” says Igor Runets.
F2Pool’s Qingfei Li also believes that rising demand for bitcoin will compensate for the halving. Meanwhile, BitRiver’s Igor Runets says that other strategies besides offloading bitcoin will help miners maintain revenue streams.
“We offer a risk hedging service on OKEx Pool to help miners secure yields in advance with a maximum period of up to 180 days,” he explains.” They can lock in profits by hedging in a bearish market.”
Runets also hopes that bitcoin should appreciate in value over the longer term as it did after the two previous halvings. If this is the case, even if miners may have a rough few weeks following the Bitcoin halving, things will gradually pick up in time.
But as many of you know, past performance is no guarantee of future results. Conditions today are not the same as they were during the earlier halvings in 2012 and 2016 when Bitcoin was less mature and less known.
“There exist various differences to consider regarding the 2020 halving; such as less mining operator influence today vs prior halvings, general market risk associated with economic decline around the COVID-19 crisis, and increased mining cost efficiencies to levels greater than we anticipated as well as other factors,” according to TradeBlocks.
Author: By Simon Chandler
- This Unfolding Occurrence on Coinbase Could Halt Bitcoin’s Uptrend
- Bitcoin Price Analysis: BTC Trading Safely Above $7000 – Can We See a New Monthly High Soon?
- Bitcoin Price Fighting to Close Week Above Key $7,200 Resistance Level
- Bitcoin spot volume is telling a bullish tale as analysts eye macro bottom
This Unfolding Occurrence on Coinbase Could Halt Bitcoin’s Uptrend
Following yet another extended period of sideways trading within the lower-$7,000 region for the latter part of the week, Bitcoin was able to incur some further momentum overnight that led it to highs of $7,300.
This ongoing upswing marks bulls attempt to push the benchmark cryptocurrency past multiple key resistance levels that were previously hampering its growth, with the next overhead resistance existing at $7,400.
One analyst is noting, however, that BTC may not be able to surmount these levels in the near-term, primarily due to a notable amount of large sell orders popping up on Coinbase – potentially placing some drag on the crypto that leads it lower.
At the time of writing, Bitcoin is trading up just over 2% at its current price of $7,220, which is around the level at which the cryptocurrency was previously facing significant resistance.
As BTC ranged sideways throughout most of Thursday and Friday, bulls attempted to push past this level on multiple occasions, with each one being met with significant selling pressure that resulted in rejections.
The break above this level has now led buyers to target the next key resistance, which sits at roughly $7,400 – according to one popular crypto analyst.
“BTC: Super exciting $150 range for BTC ever since the move up from sub $6600. Expecting some consolidation before the next move – still watching $7400 as the area to break,” the analyst noted.
If bulls are able to firmly flip $7,200 from resistance to support, this could spark a new wave of buying pressure that leads BTC to tackle the heavy resistance that lies just in front of its current price levels.
One factor that could stop bulls dead in their tracks is the increasing quantity of large sell orders popping up on popular cryptocurrency exchange Coinbase.
A pseudonymous trader on Twitter pointed out this phenomenon, explaining that asks are currently double the size of bids within a 5% price range, suggesting that BTC is poised to see a low-time-frame pullback.
“Big sells popping up on CB. Asks 2x bids (in a 5% range). Might be time for an LTF pullback on BTC,” he stated while pointing to the below graph.
Unless these sell orders vanish in the coming few hours, it is probable that they will be the impetus for Bitcoin to see further downside in the weekend ahead.
Featured image from Unsplash.
Bitcoin Price Analysis: BTC Trading Safely Above $7000 – Can We See a New Monthly High Soon?
Over the past days since Thursday, we saw Bitcoin safely trading about the $7000 mark. During last Thursday, Bitcoin surged to over $7K, breaking above the critical 50-days moving average line (marked pink on the following daily chart).
Since then, and together with the bullish wind form Wall Street (3% gains on Friday), Bitcoin topped at $7306 (Bitstamp) as of yesterday. Over the past hours, Bitcoin is having a small correction below $7200. However, the critical area from below is still the MA-50 line – currently around $6940, along with the $7K mark.
From the bullish side, we can mention the massive volume of Thursday’s reversal candle. That was the highest volume day since April 2nd. After gaining over $800 in two days, it’s reasonable to see Bitcoin correcting down.
As of now, the bulls will watch the crucial level of $7400 – $7500. The latter contains the monthly high from ten days ago, along with a mid-term descending trend-line. There is always the fear of a double-top pattern that can quickly turn to a bearish setting.
Total Market Cap: $208.4 billion
Bitcoin Market Cap: $132 billion
BTC Dominance Index: 63.4%
*Data by CoinGecko
– Support/Resistance levels: As mentioned above, Bitcoin reached $7300 and got rejected. From below, the initial support is the prior resistance at $7150 – $7200. Below lies the $7K price area, along with the 50-days moving average line (the pink line on the daily chart). Further below lies $6800, and $6600.
From above, after $7300, lies the significant resistance area at the $7400 – $7500 (April’s high), as discussed above. Further above lies $7700.
– The RSI Indicator: After breaking back above the 50 mark, the RSI looks a bit tired. There is a bit of bearish price divergence on the daily chart.
– Trading volume: As mentioned above, Thursday was the second-highest volume day, month to date. Friday and Saturday saw a decreasing amount of volume, in anticipation of the next big move.
Bitcoin Price Fighting to Close Week Above Key $7,200 Resistance Level
On Saturday Bitcoin (BTC) price punched a hole through the $7,200 resistance, rallying all the way to $7,293 to briefly escape the resistance cluster the price has been trapped within since April 6.
As the Bitcoin price surged on Saturday, altcoins also added commendable gains. Ether (ETH) rallied to $189.60 before pulling back to trade at $182.50. Chainlink (LINK) pushed to $3.82 and at the time of writing trades for $3.70 while Tezos (XTZ) surged to 12% to $2.37 before dropping to $2.23 in the last hour.
The overall cryptocurrency market cap now stands at $208.4 billion and Bitcoin’s dominance rate is 63.4%.
Crypto market daily performance. Source: Coin360
Bullish traders are now focused on pushing the price above the $7,258 resistance in order to target $8,000. $7,400 is the next important level and as shown by the volume profile visible range, above $7,433 there is a volume gap to $8,550 but as discussed in a previous analysis, the 100 and 200-day moving averages (both closely near the 61.8 Fibonacci retracement level) have been forecast as levels of resistance.
BTC USDT daily chart. Source: TradingView
For weeks now, traders on crypto Twitter have expressed their desire to open short positions from $8,000-$8,500 but only time will tell as Bitcoin has an uncanny tendency to chart its own path against the groupthink of many traders.
Some traders, such as Cointelegraph contributor Michaël van de Poppe, have even suggested that this weekend’s exciting price action is nothing more than a bull trap. Van de Poppe points out that the price is currently battling to overcome the zone surrounding the yearly open.
He also concedes that a move about this level strengthens the possibility of the price rallying to $8,000 the trader also reminds crypto investors that:
“Traders should also take into account that movements during the weekends are usually a lower volume and often “traps.” These are movements in one direction to take liquidity (which is lower during the weekend), which immediately reverse the other way around.”
BTC USDT 4-hour chart. Source: TradingView
While the price was successful in closing above $7,200, the weekly close approaches and a series of rejections at $7,253 could lead to the price pulling back below $7,000. In the event of a reversal, Bitcoin has soft support at $7,121 and below this level at $6,850-$6600, and $6,400-$6,300.
Going off the long-term descending trendline from the Feb. 13 high at $10,508, the $6,900-$6,750 area is especially important as a close below the trendline $6,715 would suggest that bears are on the verge of pulling off a trend change.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Author: Horus Hughes
Bitcoin’s overnight break above the resistance it was previously facing at $7,200 has allowed the crypto to significantly extend the momentum that was first incurred when BTC dipped below the support it has established at $6,600 earlier this week.
This rally is further confirming that the cryptocurrency’s early-March lows could mark a long-term bottom, as the subsequent uptrend has shown signs of being highly sustainable.
This notion is also bolstered by an interesting occurrence seen while looking towards the cryptocurrency’s spot volume, which saw unprecedented growth during the recent bout of capitulation.
In the time following Bitcoin’s monumental decline to lows of $3,800 on March 12th, the cryptocurrency has been able to post a sustainable rebound that led it to highs of $7,500 – the point at which the crypto was met with some significant selling pressure.
Although the visit to this level did force BTC to decline slightly, bulls were able to build a massive amount of buying pressure around $6,600 that has since led it to climb back to its current price of $7,250.
This momentum, which was extended overnight, has led BTC to surmount several key resistance levels, allowing the crypto to now retarget its high-time-frame resistance at its multi-week highs.
The sustainability of this rebound isn’t just illuminated by Bitcoin’s steady price gains, but can also be seen while looking at its rise in spot buying volume seen throughout the past month.
One popular pseudonymous trader named Bitcoin Jack recently took to Twitter to point to the rise in spot buying volume seen in the time following the drop, concisely calling it the “one divergence nobody told you about” while referencing the below chart.
While analyzing the recent trends surrounding Bitcoin’s spot volume, it is also important to note that the benchmark crypto saw a rise in buying pressure in early-March so significant that it rivals that seen during other historic market bottoms.
Mohit Sorout – a founding partner at Bitazu Capital – recently offered a chart displaying this occurrence, noting that it is “trying to tell something.”
“Spot volume on BTC is trying to tell something. Wonder what it means.”
The culmination of these factors does seem to suggest that Bitcoin’s ongoing uptrend could soon transform into something much larger than just a short-term rebound.
Bitcoin, currently ranked #1 by market cap, is up 1.74% over the past 24 hours. BTC has a market cap of $132.98B with a 24 hour volume of $32.54B.
Chart by CryptoCompare
Bitcoin is up 1.74% over the past 24 hours.
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Cole is a freelance journalist and university student studying philosophy. He focuses primarily on covering cryptocurrency and blockchain-related news. He owns a non-life-changing sum of Bitcoin and enjoys day trading.
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