It is less than three weeks until the upcoming Bitcoin halving occurs. Experts predict that it’s hash rate distribution will return to its pre-halving optimized state.
Just a few weeks before the next Bitcoin (BTC) halving event occurs, anticipation seems to be growing as Google Trends data for the event show that online searches are reaching an all-time high. The reduction by half of the Bitcoin block reward will occur after that of Bitcoin Cash (BCH) and Bitcoin SV (BSV), where miners transferred their computing power to the BTC chain.
The halving could have a significant impact on BTC’s spot price, according to several cryptocurrency experts. The two previous Bitcoin halvings (November 2012 and July 2016) have been a precursor to a new record BTC price.
However, the situation in the conventional cryptocurrency market in 2020 differs greatly from the other two halvings. The current COVID-19 pandemic has caused an economic recession, which adds to stressors such as the bearish market of 2018, the hash wars, and a stricter set of government regulations.
Lessons from BCH and BSV Halvings
The BCH and BSV halvings occurred this year on April 8th and 10th, respectively, as both chains reached the milestone of 630,000 blocks. These events triggered a reduction by half in block reward for miners in the chains.
After these halvings, miners reportedly transferred their computing power to the Bitcoin chain, which still operates under the 12.5 BTC block reward regime. The mass departure of miners led to a huge decrease in the hash rate for the BCH and BSV chains, while BTC’s share in the hash rate distribution among the three chains increased significantly.
Hash Rate Distribution after Halving
Similar trends after the Bitcoin Cash and Bitcoin SV halvings raised the question of whether both events provided an early indicator of the upcoming Bitcoin halving. Once the halving of the main cryptocurrency is complete, all three chains will operate with the same amount of block reward, that is, 6.25 units of their native currency. The mining profitability will probably be the main determining factor for miners to choose the chain once again.
Ali Beikverdi, CEO of cryptocurrency exchange deployment service bitHolla, believes that miners’ reaction to the Bitcoin halving will be different from the trend in the previous BCH and BSV halvings. The executive emphasized that BSV and BCH are undergoing “extreme centralization”, which makes them inadequate indicators of the outcomes of the upcoming BTC halving.
The area of mining is also included in this perceived centralization. In the case of BCH, heavyweights like Roger Ver and Jihan Wu from Bitmain own or support pools that control most of the network’s hash rate distribution. The situation is very similar for BSV, since some of its pools are affiliated with Bitcoin SV proponents, such as self-proclaimed Bitcoin creator Craig Wright and multimillionaire Calvin Ayre.
The mass departure of the BSV and BCH miners caused BTC’s share in the hash rate distribution among the three chains to be between 96% and 99%. Two weeks after the two halvings occurred, miners still dedicate their hashing power to the BTC chain. Some experts characterized the move of hash power to BTC as a temporary trend that would reverse once Bitcoin’s block reward drops by half.
By Alexander Salazar
