Although bitcoin investors and enthusiasts are eyeing next bitcoin halving in the hope of a bull market, according to the co-founder and CEO of Bitmain, Jihan Wu, there might not be a bull market after bitcoin halving. The CEO believes that the price of bitcoin will rise later but not immediately after the halving.
While sharing his take on World Digital Mining Summit held in Frankfurt, Germany, Wu elaborated that every cryptocurrency had its own cycle. He explained that litecoin halving had its own cycle whereas the bitcoin cycle has its own. In this regard, his exact words were:
Having a long-term perspective is significant. If bitcoin’s price remains unchanged after halving, the efficiency of existing equipment must be improved to balance efficiency and computing power.
Bitcoin is the world’s first programmed digital cryptocurrency, introduced over a decade ago. Unlike fiat currencies with an infinite supply, bitcoin has a finite supply of 21 million. In addition to fixed total supply, the world’s truly decentralized digital currency also has a fixed production rate.
Whenever a block is added to the bitcoin blockchain, new bitcoins are minted. Roughly after every 10 minutes, a new block is added to bitcoin blockchain by miners. Bitcoin mining, a process where new bitcoins are created, holds substantial significance.
All the transactions made on bitcoin blockchain are verified by miners. For verifying transactions, high computing power is required. In return for mining bitcoin, newly created bitcoins are awarded to miners. As any miner in the world with sufficient computing power is capable of adding a block to the bitcoin blockchain, bitcoin’s decentralized nature is confirmed.
As bitcoin is a decentralized asset, the price of bitcoin is only dependent on the fundamentals of supply and demand. As the reward of mining halves after every four years, the supply of bitcoin can be expected to decrease after halving, therefore, increasing the price of bitcoin. While at the moment about 12.5 bitcoins are given to the miner, after halving, miners will be getting only 6.25 bitcoins.
Irrespective of everything else, as per Wu’s views, bitcoin mining is a prospective and profitable business. He himself showed an inclination towards mining and said:
There are many uncertainties, but now is a good time to invest in crypto mining. If I were a miner, I would not stop mining but continuing to invest in mining equipment. We are currently in a short-term correction of price.
Due to bitcoin mining, the need for a supervisory authority is eliminated. As transactions are validated by miners, there remains no need for a central authority to supervise transactions. Therefore, bitcoin mining deploying decentralized attributes to bitcoin makes it a perfect peer to peer payment.
Up till now, mostly mining activities are spread in areas where electricity costs are extremely low. According to an estimate, about 70% of mining takes place in China, however, the country doesn’t support the industry. Still, despite not supporting the mining industry and imposing a ban, the Chinese are still indulged in seeking mining opportunities.
On the other hand, Iran has been very supportive of the growth of the bitcoin industry in the country. Previously, after recognizing the mining industry as a valilable industry, Iran even gave tax exemptions to miners. Let’s see how bitcoin halving impacts not only the price of bitcoin but also the concentration and participation of miners.