Report: Miners Will Turn to Bitcoin After BCH, BSV Block Halvings

Bitcoin (BTC) miners will continue to leave the industry due to low prices, but forthcoming halvings for Bitcoin Cash (BCH) and Bitcoin SV (BSV) will shake the ground even further, according to a new prediction.

In the latest edition of its State of the Network reports on March 31, Coin Metrics stated that Bitcoin entered a spiral of miner capitulation. This, it said, would get worse before it got better.

Coin Metrics anticipates “pattern of capitulation”

Despite BTC/USD recovering more than 70% in two weeks since falling as low as $3,700, prices are still “almost certainly declined below the breakeven price” for less efficient miners.

This is evidenced by the recent drop in Bitcoin’s mining difficulty, which is at around 16% (more than 14% expected) was the largest negative move since 2011. Before the mining sector recovers, more dips are ahead.

“We expect miners to follow a cycle of decreased profit margins, increased selling, capitulation, and a culling of the least efficient miners from the network,” the report states, adding:

“Once this cycle is complete, the miner industry should return to a healthier state that is supportive of future price increases.”

Bitcoin Cash and Bitcoin SV drop havling bomb

In the short term, however, tough times will continue to impact miners and Bitcoin. This month, hard forks BCH and BSV will both see block reward halvings, reducing the number of coins awarded to miners for 50% per block.

Bitcoin’s own halving is expected in mid-May, and the amount of supply given to miners will fall from 12.5 BTC to 6.25 BTC.

This gives a one-month window for miners to direct more hash power to Bitcoin, as its block reward will be higher in spite of the increased costs, Coin Metrics states.

“When Bitcoin Cash and Bitcoin SV halve their block rewards, this should force miners to direct even more hash power to Bitcoin as it will still have a 12.5 native unit block reward (instead of 6.25) for about a month longer,” the report notes, continuing:

“Therefore, we should expect difficulty increases for Bitcoin that should further squeeze profit margins for all miners.”

Analysts, especially those who believe in the Stock-to-Flow price model for Bitcoin, are keenly awaiting the impact of the halving. At some point in 2021, and until 2024, according to Stock-to-Flow, BTC/USD should reach an average of $100,000.