Can someone explain to me why cutting the rewards for bitcoin mining in HALF is a good thing ? I…
Can someone explain to me why cutting the rewards for bitcoin mining in HALF is a good thing ? I dont get it. Why would cutting the rewards for mining bitcoin be good for miners ? AND why wouldnt miners just switch to another crypto currency ?
This mini video explain you what’s halving. https://twitter.com/grayscaleinvest/status/1252679099404955658?s=21
There are a number of reasons – let’s go broad and then narrow it down Firstly , bitcoin works on a supply and demand mechanism. A more fancy way to say it would be stock to flow. But let’s keep it simple Once mining halves , supply reduces. The assumption is that demand remains , and with the decrease run supply , price of bitcoin will go up. I assume you are asking from an investment return POV. So that is good Q2: it’s not technically good for miners unless the price increases. The assumption is that miners probably have their past mined BTC , increase in value. The point of halving is not to keep miners happy , but to maintain scarcity and in turn increase value 3. The miners can switch. But BTC has such a strong recognition now and so much liquidity. That spurs demand. Which other cryptocurrency has that? Switching is potentially a risk to the miner ( the crypto they mine might have no buyers )
more demand less supply increases prices, so less amount of bitcoins does not effect mining rewards, already happened twice in the history of bitcoin since its inception.
If alot of miners stop mining due to the halvening, the difficulty drops after maximum 2 weeks. Then its more profatable to mine again, and the miners who stopped mining, will turn it on again. That is why the difficulty go up and down all the time. Well, that and more effektive asics
I see alot of people I. the comments saying things that are totally wrong. This is definitely not the page to be on yo learn about crypto.
Take a look at the glut of ASIC miners for sale on Kijiji for your answer
if miners go away.. hashrate drops.. difficulty will adjust lower getting cheaper to mine and miners will come back.. just how the game theory works. besides there are many of us who will mine with gpu if asics miners go away so F…K the miners..
BTC mining requires sha256 operations. The hardware to mine most efficiently is specialised to this so the hardware is only transferable to another crypto if it also uses sha256 POW.
Theoretically it’s supply v demand. Values of tokens should rise. Not always it may take time. But yes miners change coins…
Don’t comment if you can’t answer the question. He is asking why won’t miners switch to another crpto if mining reward is more.
For example only, let’s say 100% of miners: Most people who are mining bitcoin will get the portion of bitcoin from the pool and instantly sell it – some people live off mining money. I think the current reward for bitcoin block is 12btc. So, that is 12btc that is being created and sold every new block. This creates more bitcoin on the markets. By halving the rewards this creates less bitcoin to sell off, making it more of an asset and thus the price will rise. Basically it’s the opposite of inflation. Why won’t they switch to another coin? Well bitcoin is the best for money obv. Why work in a pool and make a few dollars when you can make a thousand?
Opposite of getting inflated into oblivion like USD. Also this mechanism is known by all which makes it very predictable.
it cuts the rewards but it also makes the price go up therefore if youre earning less amount of bitcoin for a higher price its worth.
this price mechanism is built in, so as to appear the opposite of what happens to fractional reserve fiat. any cut in reward is imo made up for with the gradual increase in price.
Miners do move, it happens everytime. They give up and sell equipment or mine something more profitable. The thing to keep in mind is when bitcoin crashes so do alts… so where are you going to move your asics to? This is why there’s usually a harsh crippling drop of 40% ish after a halving for capitulation, the mining difficulty drops drastically and people slowly creep back in and start the cycle over.