# Death by halving
## Summary
If miner's income margin are less than 50% (which is a healthy situation
when mining hardware is readily available), we might experience
catastrophic loss of hashpower (and, more importantly, catastrophic loss of
security) after reward halving.
## A simple model
On Sat, Oct 25, 2014 at 2:06 PM, Alex Mizrahi alex.mizr...@gmail.com wrote:
Hashrate might drop by more than 50% immediately after the halving (and
before difficulty is updated), thus a combination of the halving and slow
difficulty update pose a real threat.
Flag day herd behavior like this
It is an overly-simplistic miner model to assume altruism is
necessary. The hashpower market is maturing in the direction of
financial instruments, where the owner of the hashpower is not
necessarily the one receiving income. These are becoming tradeable
instruments, and derivatives and hedging
We had a halving, and it was a non-event.
Is there some reason to believe next time will be different?
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Gavin Andresen
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Some thoughts about Alex's analysis:
- bitcoin price may increase (though doubling immediately might be
unlikely) after the halving (because the new coins are in short
supply). Apparently there is some evidence of a feedback loop between
number of freshly mined coins sold to cover electrical
On Saturday 25. October 2014 21.06.32 Alex Mizrahi wrote:
If miner's income margin are less than 50% (which is a healthy situation
when mining hardware is readily available), we might experience
catastrophic loss of hashpower (and, more importantly, catastrophic loss of
security) after reward
On Saturday 25. October 2014 13.27.30 Adam Back wrote:
- alternatively you might say why not 1/100th reward reduction per 2
week period rather than 1/2 every 4 years, a difficulty retarget could
be a convenient point to do that.
mining equipment has a much shorter lifetime than 4 years, so the
For the sake of argument, lets assume that somehow (quite unlikely)
Why is it unlikely? Do you believe that the cost of electricity cannot be
higher than expected mining revenue?
Or do you expect miners to keep mining when it costs them money?
half the mining equipment gets shut off.
The
On 25 October 2014 21:53, Alex Mizrahi alex.mizr...@gmail.com wrote:
We had a halving, and it was a non-event.
Is there some reason to believe next time will be different?
Yes.
When the market is rapidly growing, margins can be relatively high because
of limited amounts of capital being
Interesting analysis! I think there are a few important effects that aren't
being considered.
1. When the block reward is halved, inflation is halved as well. Is this
halving already priced in by the market or will it result in an upward
pressure on the price?
2. It was acknowledged that the
On 26 October 2014 00:10, Ross Nicoll j...@jrn.me.uk wrote:
I'd suggest looking at how Dogecoin's mining schedule has worked out, for
how halvings tend to actually affect the market. Part of Dogecoin's design
was that it would halve very quickly (around every 75 days, in fact), so
it's
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