What is your personal view on the halving 2024 year, and its impact on the difficulty?
The great halving of 2024… for those of you who are not quite familiar with this, every four years, the amount of subsidy in each Bitcoin block decreases by 50%.
We started with 50 bitcoins per block; we are now in the era of 6,25 bitcoins per block. We will enter the era of 3,125 bitcoins on approximately May 08nd 2024.
One of the interesting things about Bitcoin is that we know what the monetary policy will be in 2140. With the Federal Reserve, we don’t know what the monetary policy will be this Friday. Or with any of the other central banks.
Although, I have a premonition that it will probably involve more stimulus and more printing money, because that hasn’t worked yet, but it probably will on attempt #141.
So what happens in the halving? As I said, miners pre-pay for electricity in many parts of the mining ecosystem. It is not universal, but it is one of the common choices of miners which has some really serious implications on their decision-making process, as sunk capital.
Secondly, we have now gone through a series of changes from CPU to GPU, FPGA to ASIC, with performance increases of 100 or 1000 fold, until we accelerated straight into Moore’s law… and that is a wall because we have reached 5 nanometers, done, now where do we go?
Now we slow down to a 2x increase in performance every eighteen months, and everyone can get the same chip; there is no advantage in pre-ordering, and you no longer need to switch chips every three to six months. Therefore, capital connections to silicon fabrication and centralization of purchasing no longer matter.
This started at 2020. We will go into the halving with the situation of haves and have-nots: those who have 5 nanometer chips and those who don’t have them. Those who do not have 5 nanometer chips will find themselves unprofitable very quickly. The rest will not.
I predict the price will go up… and down.
And then it will probably go up and down again.
Because the primary driver of price is still by great extent sentiment: “The Halving is coming. I think that bitcoin’s price will go up. Buy! Buy! Buy!” Everyone sees that and everybody buys! Price is going up this is great! “Oh, no. I’m not too sure. I’m a bit worried.” “Sell. Sell. Sell! Sell! SELL!”
Up and down we go. The bitcoin price will be a roller coaster. Volatility will probably increase right around the halving time period. Until then we will be in a period of pretty low volatility for quite some time.
The volatility of 2011 and 2013 is in our past, and as time passes volatility is generally speaking going down. We have been relatively stable for a tiny, $300 billion global currency. But we will see increased volatility around the halving.
When halving time approach, my suggestion is: take a deep breath and relax. Don’t try to play the casino unless you are an experienced gambler, in which case: good luck to you!
Sit back and relax, watch the fireworks. Read the news about how Bitcoin is dead or about to die (again), because of the halving. Then wait until right after the halving, when Bitcoin is not yet dead.