{"id":11,"date":"2016-06-06T21:32:00","date_gmt":"2016-06-06T21:32:00","guid":{"rendered":"http:\/\/blog.holytransaction.com\/can-halving-event-cause-blockchain\/"},"modified":"2022-12-27T00:34:44","modified_gmt":"2022-12-26T22:34:44","slug":"can-halving-event-cause-blockchain","status":"publish","type":"post","link":"https:\/\/holytransaction.com\/blog\/2016\/06\/can-halving-event-cause-blockchain.html","title":{"rendered":"Can the halving event cause a blockchain collapse?"},"content":{"rendered":"
\"blockchain_collapse_halving\"<\/a><\/div>\n
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The reward halving<\/b> will arrive soon and some people believe that this event could boost the Bitcoin price.<\/div>\n
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But a miner of BitBank<\/b> is concerned because he fears the halving might lead to a collapse of the entire blockchain validation system.\u00a0<\/b><\/div>\n
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In fact, founder of the Chinese Bitbank Chandler Guo<\/b> fears that if the price of bitcoin does not appreciate significantly before or immediately after halving, too much of the hashrate will drop off the network due to unprofitable mining, making transaction verification virtually impossible.<\/div>\n
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Bitcoin Halving<\/h3>\n
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This event happens every four year: in January 2009 every new block generated a reward of 50 BTC. In 2012 the reward will drop down to 25 BTC.<\/div>\n
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The reason of the halving<\/a> existence is that there is a limit of 21 million of Bitcoin<\/b> to be ever generated by the system, so it exists to keep its price consistent and to protect the cryptocurrency from inflation.<\/div>\n
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But this drop will cause a lowering in profit margins for miners, that\u2019s why Guo believes that miners who use less efficient hardware will shut down as the reward is cut.<\/div>\n
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He explained:<\/div>\n
\u00a0<\/i><\/div>\n
\u201cWhen halving comes the cost of the electricity is the same, so it must shut down. For example, the S3 is working 24 hours, they cost $1, for example, and they can mine $1. So if mining equipment can only mine the electricity payment, they don\u2019t need to work.\u201d<\/i><\/div>\n
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Miners calculate their income as the difference between their reward and their electricity and machines cost; in order to maximize their profit, they need more hashing power at a given electricity cost.<\/div>\n
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To calculate the hashing power needed, Satoshi<\/b>\u00a0Nakamoto<\/b><\/a> created an equation in the code so it can analyze how much hashing power is on the network and increase \u2013 or decrease \u2013 the difficulty.<\/div>\n
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This is the reason why Guo is concerned: if more hashing power is added, blocks can be found sooner, increasing profits for miners and speeding up the time at which difficulty must be raised. But now the risk he foresees is exactly the opposite:<\/div>\n
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\u201cWhen the difficulty doesn\u2019t change, but the hashing power shuts down immediately, there will be no next block. If, after the halving, the price does not go up, but the prices goes down, there will be heartache. It means no next block, no blockchain, all of the blockchain will be shut down immediately.\u201d<\/i><\/div>\n
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So, if a significant share of the hashing power were to drop off the network, that would slow down the validation of blocks.<\/div>\n
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That would determine slower transactions, impacting on the confidence of the network. A crisis of confidence would generate a sell-off, causing a fall of the bitcoin price that would push more miners to the shut down, thus further reducing the hashing power and eventually leading to a total collapse.<\/div>\n
<\/div>\n

A Different Perspective<\/h3>\n
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Some other players in the mining business don\u2019t agree with Guo.<\/div>\n
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That\u2019s the case of Bobby Lee<\/b>, CEO of BTCC<\/b>, the third-largest bitcoin mining pool that controls roughly 16% of the hashrate. Lee believes that even though a drop in hashrate is likely to happen, it won\u2019t be as significant as Guo thinks.<\/div>\n
\u00a0<\/i><\/div>\n
“After mining, for sure the hashrate will come down a bit, it will probably come down by 5-10%. It won\u2019t come down by more than 30%. We\u2019ve seen it in other cryptocurrencies that at a block halving, the hashrate does come down. That\u2019s expected,” <\/i>he explained to Coindesk.<\/a><\/div>\n
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Another of the main mining companies, BitFury<\/b>, doesn\u2019t seem concerned about the halving.<\/div>\n
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“The important point is that the hashrate decline will not compromise the security of the network and will not make it susceptible to attack. We also firmly believe the upcoming halving event is good for the industry because it will motivate Bitcoin companies to innovate,”<\/i> said Valery Vavilov<\/b>, CEO of BitFury.<\/div>\n
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\n

One thing is sure: if the price will to rise when the halving occurs, there won’t be a problem, because\u00a0miners will continue to be rewarded enough to cover their cost and maintain profitability.<\/p>\n

<\/h3>\n

Multicurrency Wallet<\/h3>\n
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Normally, if you want to store several different cryptocurrencies (Bitcoin, Ethereum, Peercoin<\/a>, etc.) you need to have different wallets, which is difficult to manage.<\/div>\n
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HolyTransaction want to solve this problem, unifying everything in a single account.<\/div>\n
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So, do you want to store Bitcoin and other cryptocurrencies? Open here your wallet for free.<\/a><\/div>\n<\/div>\n
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Open your free digital wallet here<\/a> to store your cryptocurrencies in a safe place.<\/p>\n","protected":false},"excerpt":{"rendered":"

The reward halving will arrive soon and some people believe that this event could boost the Bitcoin price. But a miner of BitBank is concerned because he fears the halving might lead to a collapse of the entire blockchain validation system.\u00a0 In fact, founder of the Chinese Bitbank Chandler Guo fears that if the price […]<\/p>\n","protected":false},"author":2,"featured_media":351,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37,76,101,169,319,433,434,514,547],"tags":[764,793,852,996,1095,1096,1173,1205],"yoast_head":"\nCan the halving event cause a blockchain collapse? -<\/title>\n<meta name=\"description\" content=\"The reward halving will arrive soon and some people believe that this event could boost the Bitcoin price.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/holytransaction.com\/blog\/2016\/06\/can-halving-event-cause-blockchain.html\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Can the halving event cause a blockchain collapse?\" \/>\n<meta property=\"og:description\" content=\"The reward halving will arrive soon and some people believe that this event could boost the Bitcoin price.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/holytransaction.com\/blog\/2016\/06\/can-halving-event-cause-blockchain.html\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/facebook.com\/holytransaction\" \/>\n<meta property=\"article:author\" content=\"facebook.com\/ameliatomasicchiomarketing\" \/>\n<meta property=\"article:published_time\" content=\"2016-06-06T21:32:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-26T22:34:44+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/holytransaction.com\/blog\/wp-content\/uploads\/2016\/06\/jacklegdriller.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"400\" \/>\n\t<meta property=\"og:image:height\" content=\"266\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Amelia Tomasicchio\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@ametomasicchio\" \/>\n<meta name=\"twitter:site\" content=\"@holytransaction\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Amelia Tomasicchio\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/holytransaction.com\/blog\/2016\/06\/can-halving-event-cause-blockchain.html\",\"url\":\"https:\/\/holytransaction.com\/blog\/2016\/06\/can-halving-event-cause-blockchain.html\",\"name\":\"Can the halving event cause a blockchain collapse? 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