As the block mining reward halving event approaches, many people in the bitcoin space are excited because of the potential for an increase in the digital currency’s price. One miner, though, has expressed serious concern that, when the drop in the block subsidy occurs, it could trigger a chain of events that could lead to an inevitable hard fork.
Chandler Guo is the founder of Bitbank, a China-based digital currency company that runs one of the largest mining operations in the world, BW. On average, BW.com accounts for approximately 10% of the total hashrate, an impressive feat considering it launched only two years ago.
Guo said he fears that if the price of bitcoin does not appreciate significantly before or immediately after halving, too much hashrate will drop off the network due to unprofitable mining, making transaction verification virtually impossible.
He said: “If the price doesn’t go up very quickly, up two times, it means a lot of the older machines will be shut down. They must shut down.” Bitcoin halving is a roughly once-every-four-year event whereby the consistent supply of bitcoin released is cut in half. When pseudonymous creator Satoshi Nakamoto released bitcoin in January 2009, each block generated a reward of 50 BTC. On 28th November, 2012, nearly four years after the bitcoin blockchain was first launched, the reward subsidy fell by half to 25 BTC.
Satoshi added halving so that the code could continue to provide fresh bitcoins as the network scaled, but would also phase out the production of new bitcoin as it approached the maximum cap of 21 million. However, that sudden drop can shock miners that operate with low profit margins.
Guo believes that miners using less efficient hardware will be forced to drop off the network when the subsidy falls.
“There will be 300 petahash of older machines […]
