Proposal of Halving of Bitcoin andMiner Digital in Venezuela

Hello friends, I have an idea that could be of benefit to the world's great miners The most important process in the Bitcoin economic system is Halving , and for connoisseurs of Economics it is important to clarify that this deflation force is what drives the stability and price increase as the years go by.

The Halving It was created to encourage undermined by working trial. This by the establishment with each certain number of blocks, the emission must be reduced by half. Currently each block is rewarded with 12.5 BTC approximately $ 108,000 some think that in 2032 it is possible that a single bitcoin is worth at least $ 100,000.

I sent this proposal to several mining companies but I had no answer, I'd better make it public to see if it caught the attention of some interested parties who could improve this idea.

Which Consequences brings the Halving of this year a User with a machine Miner

Miners are more important actors in this case. In a few days we will see if the same computing power is maintained by mining in the network or if a part of the miners will stop mining due to the high cost and low reward (counting that the price of a bitcoin does not rise in price)

Given that every 10 minutes they will receive 50% less  bitcoins , research and the path to more efficient miners could increase. It also opens a very wide and exciting range, full of possibilities, for all companies in the sector.

Consequences for Speculators

For speculators a halving can be a perfect time to start raising the price of  Bitcoin , because the new reward will make Bitcoin increasingly scarce. This is clear, because the issuance of Bitcoin is reduced and this leads to demand being greater than supply, thus increasing the price of the BTC. In a nutshell, “It is fishing in troubled waters,” and those who know how to handle themselves in these circumstances will be able to make great profits

What problems does Halving present for mining companies?

The increase in the pre-reduction values ​​indicates a greater number of people who adhere to the mining network. As the reward will be cut in half, miners will receive less profit for the same amount of effort by encouraging them to exploit BTC (instead of other currencies) in the short term in anticipation of future decline.

While this could be good for the security and decentralization of the blockchain , the months after halving are usually accompanied by a drop in mining participation . The potential decrease in miners can lead to a greater risk of a 51% attack if the hashrate is reduced to a critical point. Although the cost and the logistic process of carrying out a 51% attack on Bitcoin is practically unfeasible, it is always a plausible possibility in this type of fundamentals.

On the other hand, the fall in the hash rate after the block reduction forces inefficient miners to leave the network. At the time the halving  occurs , the reward that miners acquire will be reduced by 50% but the mining difficulty will remain constant for a short period of time. During that period the mining groups will have to spend the same amount of electricity to get less bitcoins , drastically reducing the profit margins that they perceive as a group and raising the cost of equilibrium above the cost of production for older equipment.

However, as inefficient miners leave the network, the aggregate efficiency of the remaining miners increases, generating a side effect on Bitcoin prices. The monetization of BTC through mining acts as a series of economic cycles: In a bull market, the number of miners selling their extracted bitcoins to cover operating costs (mainly electricity costs) are lower than those who keep them.

However, in a bear market, miners represent an important and continuous sales force for any currency that works with the Proof of Work (POW) algorithm. Since mining represents a perfectly competitive industry where profits constantly seek a state of zero surpluses. , most block rewards must be sold by fiat to cover those expenses. When halving occurs, not only the reward per block is reduced but also the maximum amount of BTC that can be sold , increasing the profit margins of the miners that remain active once the inefficient teams leave the network.

This pressure on sales is usually significantly higher in networks as complex as Bitcoin . Between January 2018 and September of that same year the estimated income that accrued the mining exercises is estimated at about 4.7 billion. While the actual amount of BTC sold varies according to the development of equilibrium costs in relation to current prices and the degree to which miners speculate on future prices. The maximum amount that miners can sell will be reduced by half, which entails a 50% discount on sales pressure

About Operating Expenses for Mining

The main problem to undermine always electricity and this seems to be the test of difficulty most great for the entire mining process, but we must not leave him alone in the cost of this service, which incidentally is not decentralized, always dominated by the government and it depends on both quantity and quality and also the issue of legality.

But assuming that there are legal conditions to operate and the cost can be measured according to the profits of the miners, as we do a mental exercise where 100 machines get a reward of 10 thousand dollars a month, in any country this would cost for electricity ; or the same amount obtained , or half of this would be approximately 5,000 per month. We have not taken into account the climate, drought, humidity factor that of course affect the investment due to these factors and we are not taking into account the value that the same process affects due to the volatility of bitcoin .

The Halving Solution of 2020

Venezuela during the last 5 years has proven to be one of the cheapest countries to mine bitcoin , to start the climate is much more stable than any other, there are very good professionals who apply the work of digital mining and it goes without saying that Electricity is the cheapest in the world.

Even in Venezuela it is cheaper to invest and more profitable because in less than 1 year you can see twice as much as you invested, the distortion in inflation causes the values ​​to increase from 1 month to another, and also the exchange rate in Venezuela makes All things in Venezuela turn out to be cheaper if you invest in dollars.

Solution for Mining Companies

The companies that are currently mining Bitcoin and earn 1 million dollars, and pay for example in the US a bill of 200 thousand dollars for electricity, are getting a profit of at least 800 thousand dollars that is not much but enough for this so competitive world.

But after halving these mining groups will begin to receive half in reward approximately 500 thousand dollars and paying a bill of 200 thousand, they will have to update their equipment, these equipment come with more efficiency but with greater energy consumption, in summary for November of 2020 any company that mines bitcoin and does not update its equipment will be losing and those that do update will earn the same as before but with greater payment in the electric bill. The company will always have to pay more than 300 thousand dollars, and that if you want to earn a lot of money or enough to stay in the competition.

The Bitcoin Cash House Proposal

In Venezuela there is the opportunity to solve the problem of mining machines that no longer give enough money.

If the company that mined before with halving now receives 500 thousand but paid 200 thousand of electricity, I think that with the same machines can be installed in Venezuela about 10 thousand machines and will receive the same amount but the bill would cost about 10 thousand dollars, which is the most expensive thing they would pay to an industry of that nature.

I think then it profitable to invest in machines that install leafminer by the halving of bitcoin no longer serve companies that until a few days earned, and the scale of green in the sails of bitcoin the risk is minimal.

We propose to install 10,000 machines or an approximate to generate more than 100,000 dollars a month here in Venezuela, we have a place where the Light does not go, and also with ideal conditions of electricity and internet connection.

Note: If you liked my idea, vote and share on your social networks

Note: If you have any questions, leave it in the comments, this is an idea open to discussion

https://sclate.com/venezuela/what-is-halving-the-reward-for-blogging-and-its-impact-on-bitcoin/