Bitfinex warns of potential centralization of mining power amid concerns over the upcoming Bitcoin’s halving, which could increase financial pressure on small miners.
Bitcoin’s upcoming fourth halving scheduled for around Apr. 20 might force smaller miners to exit the market, with remaining mining operations likely to be accessible only by publicly traded miners.
According to a recent report by Bitfinex, the upcoming halving event could prompt smaller miners to exit the market altogether, leaving the field dominated by publicly traded mining companies. This concentration of mining power, Bitfinex cautions, is “contrary to Bitcoin’s ethos.”
“Centralization risks could mean the potential censorship of transactions and increased vulnerability to coordinated attacks or regulatory pressures.”
Bitfinex
However, Bitfinex also posits that the halving could yield positive outcomes for Bitcoin’s price, citing the reduced pace of new coin generation which exacerbates supply scarcity.
“If the price of Bitcoin rises sufficiently, it could offset the reduced block reward, maintaining or even increasing mining profitability. This price appreciation is critical for encouraging continued investment and participation in mining activities.”
Bitfinex
Nonetheless, uncertainty looms over whether the fourth halving will follow patterns seen in previous instances. Crypto exchange Coinbase, for instance, asserted in a recent research report that this time everything may be different, attributing the shift in market dynamics to spot Bitcoin exchange-traded funds (ETFs) which have established a new demand anchor for BTC.
“We believe the current price move is only the beginning of a longer bull run and that it will take further price appreciation in order to drive supply vs demand dynamics into balance.”
Coinbase
At the time of writing, Bitcoin (BTC) is trading at $68,000, according to CoinMarketCap data. Despite a slight retreat from its all-time high, industry executives remain united in their anticipation of Bitcoin’s continued rally, with expectations soaring far above $80,000 for the remainder of the year.
