Smaller BTC Miners Might Close Shop Post-Halving: Bitfinex Warns
Hong Kong-based crypto platform Bitfinex warned BTC miners on March 15 of a potential centralization of power post-halving.
Bitfinex published a comprehensive blog report forecasting financial pressure on small miners.
The fourth Bitcoin halving is a widely anticipated event in the crypto sector. The halving, expected around April 19, will slash the current reward in half, from 6.25 Bitcoins per block to 3.125.
Although the deflationary feature is expected to contribute to Bitcoin’s scarcity and value, new challenges are inevitable.
According to the report, the upcoming halving event could prompt small miners to exit the market, leaving the field for publicly traded mining companies and causing a high level of centralization.
Since the halving would result in a 50% slash in revenue for miners, continuing mining operations may be unprofitable unless there’s a meteoric rise in BTC’s price or a decrease in operational costs.
The trading platform noted that this high centralization of mining power goes against everything Satoshi Nakamoto outlined in the original whitepaper.
The concentration of mining power among a few entities could trigger potential censorship of transactions. The cause-effect of reduced block rewards is an increase in transaction fees.
Large mining companies will rely on transaction fees as an income source. If the demand for transaction processing scales above available block space, fees could rise further, leading to BTC’s reduced attractiveness for small transactions.
On the flip side of Bitfinex’s pessimism, the exchange still believes the halving event could trigger price appreciation. This will reduce the offset of reduced block rewards and mitigate the emergence of centralization.
Additionally, the trading
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