Bitcoin miners will start hedging risks due to halving


What Happens to Miners After Bitcoin Halving. Global Meltdown to Effect Next BTC Market Cycle?

Bitcoin miners will start hedging risks due to halving

Bitcoin miners will start hedging risks due to halving

  • Due to the excessive influence of halving on the cryptocurrency industry, miners will start hedging their businesses as assets.

  • Now the market does not have a single standard for calculating hash powers that would solve the issue of bitcoin volatility..

  • The index is expected to allow miners to better prepare for unpredictable events like halving.

International consortium of news organizations developing transparency standards.

Bitcoin halving is cutting the number of new coins miners create and earn by half. This happens about every four years and … More bitcoin for the cryptocurrency market is nothing more than entertainment, but for miners, the reduction plays a vital role.

According to Coin Metrics, as reward cuts and large investors from the traditional market come in, mining companies will be forced to look for ways to hedge their risks..

Now miners do not know how to calculate the hash power in such a way as to effectively reduce the risks, but also preserve the profitability of mining.

Bitcoin miners will start hedging risks due to halving

For example, the BitMEX exchange believes that if the price of bitcoin after halving does not increase, the hash rate in the bitcoin network may collapse by about 30-35%.

Business hedging

Coin Metrics claims to have created the CMBI Bitcoin Index, a tamper-resistant way to measure mining performance.

The index has the potential to serve as a foundation for financial products that can provide markets with the tools they need to trade or hedge mining computing effectively and efficiently..

Usually, miners can calculate costs, which are mostly hardware and power dependent, given a fixed number of hash values ​​on the network. However, the total number of hashes in the bitcoin network is not always identical and predictable. Over time, the power changes significantly and does not always correspond to the price of bitcoin.

For this reason, the ability of miners to hedge the hash rate and improve their ability to maintain profitability through a wider range of hash price and rate scenarios is critical.. 

Harnessing the unpredictability

The average block generation time in the bitcoin blockchain network is 10 minutes, and every two weeks the bitcoin difficulty is adjusted in such a way as to maintain the average generation time precisely on this time range.

However, the block generation time is not always equal to these 10 minutes and sometimes the time gap between blocks can vary greatly..

This difference can lead to instability in determining the hash rate on the network. Today, the industry standard for hash rate analysis is to view the average over the last 24 hours..

However, such a time period for cryptocurrency is too unpredictable and unstable, and therefore Coin Metrics increased the hash power analysis to 48 hours..

Bitcoin miners will start hedging risks due to halving

Coin Metrics expects the index to make it easier for miners to survive halving by adjusting capacities in advance to match market trends.

Index launch date has not yet been announced.

Earlier, the editorial staff of BeInCrypto wrote that ASICs will continue to gain a share in the cryptocurrency mining market. Now almost 50% of all ASICs are focused on Bitcoin mining.

Despite the fact that recently the network of the largest cryptocurrency has seen an increase in activity on a number of indicators, including an increase in price, hash rate, trade volumes and search queries, the lack of momentary growth after halving can hit hard both miners and hodlers.

What do you think? Will miners be able to mitigate the risks associated with Bitcoin volatility, or will it fail to curb the uncertainty of the cryptocurrency? Share your thoughts with us in the comments.


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