Bitcoin mining just became more difficult, on purpose
If you have computers chugging away as bitcoin mining machines, don’t be surprised if your output just fell through the floor. Reuters notes that code built into the digital currency system has cut the mining reward in half as of July 9th. Where there were previously 25 bitcoins (roughly $16,000) to be mined every 10 minutes, you now have to fight over 12.5. The measure automatically kicks in every four years as part of an attempt to curb inflation that would come from both a growing number of miners and ever-faster computers.
To no one’s surprise, reducing the reward could have serious consequences for dedicated miners. As you have to work twice as hard to get the same money, companies with not-so-efficient operations may have no choice but to restructure or even close shop entirely. KnCMiner, for instance, declared bankruptcy in May after warning about the impending profit loss. Those miners most likely to survive are the ones that keep costs to a minimum through lower-power computers and minimal staff.
You’d think that the industry would have anticipated the halving given that it will happen every four years like clockwork, but that’s not necessarily the case. Although bitcoin isn’t quite as celebrated as it was a while back, it’s still far more mainstream than it was in 2012. There are many more people mining than there were four years ago, and not all of them realize that they’ll have to factor in those reward cuts. The bigger question is whether or not the bitcoin business will be better-prepared when 2020 rolls around. Miners will either have to trim costs yet again or hope that they can make money from transaction fees.
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