I've been thinking on this topic for a while, as many of us have. This post isn't much different from the many others out there, but I wanted to share my thoughts on what could very well happen over the coming days with BTC.
Seeing that the halving just happened this morning, we're only a few hours in and nothing has changed much. Yes, there was a big dump right after the halving, but it was quickly met with buys that brought the BTC price back to where it started prior.
Now, does this mean that we're going to completely survive this halving without any turmoil? Maybe, but I'm skeptical and here is why...
There is simply too much money at stake here, and with an event like a halving, the power to manipulate the markets for one's gain is too great of a temptation. Large mining farms stand a lot to gain or lose from this halving. If the price of BTC tanks, their business could really hurt, or even be destroyed. That could very well spell disaster for BTC as well, but that's besides the point here.
Because these large mining farms have so much at stake here, they're going to be playing hard-ball. Over the last couple months, mining farms have been making about 2x the profit than previous months from their mining activity. Now, that's diminished some over those months as more miners came online b/c the inflated price made it profitable enough to warrant. However, compared to previous months, large mining farms were making a lot more money leading into the halving.
You'd be crazy to think they weren't aware of the temporary nature of this pay-day, and most surely saved up what they could to weather a potential storm, post halving. Now, that storm hasn't hit - possibly never will, but I'm going with action leading to the storm.
You see, these mining farms that have saved up this BTC, some have invested in new chips that improve efficiency and hashing power that will result in greater profits. This will allow them to better weather a storm, should the BTC price crash. Others have already done this, or will be more pro-active in the interim.
Consider the following...
You are a BTC miner with a pile of BTC you've been saving up in anticipation of the halving. You already have newer chipsets because you've upgraded your servers and stay on top of this pretty well. The halving hits and you start to see your payouts drop. You're still profitable, or just barely so, so it's not a big deal - things are great. But you're not making what you were the previous months, which is upsetting.
Now, remember that stash of BTC you have sitting around, because the last couple months were really fruitful? You start to realize what you can do with that stash, and how that could effect your payouts. You could cash out that money and hold again, for the long haul, or you could play a little more risky, as I suspect many will do.
Dumping all your BTC on the markets at an opportune moment, post halving when fear is at a high, would contribute to a spiral effect that would bring BTC down even further. This would have many benefits for you and your stash of BTC. Firstly, you'd be able to sell your BTC and cash it out, secondly, you'd be able to buy more BTC back at a cheaper price, but most importantly you'd be able to create a non-profitable situation for smaller and less sophisticated mining farms.
If the price of BTC can be dropped low enough to create that situation, you'd be able to run off a fair portion of the hashing power, decreasing the overall difficulty and improving your own payouts. Then, by buying back cheap BTC, you'd be able to stockpile before the rebound.
Now, don't get me wrong, this could have some dramatic effects on the BTC network as a whole, but even with 30 min block times, BTC could survive for a while. It may not be pleasant, but it could survive. Additionally, at that time, in an effort to create a more favorable situation, the stockpiling that would happen at those levels would eventually drive the price back up, which would create a more favorable mining environment, returning block times back to healthier levels.
IMHO, if you're a large mining outfit, you'd be crazy to not try and take advantage of this opportunity. And because, of that, this is why I think we'll see something similar over the next week.
