Bitcoin’s third reward halving is coming up soon but it is still over a month away. Unlike Bitcoin (BTC), its fork Bitcoin Cash (BCH) and BCH’s fork Bitcoin SV (BSV) will be going through block reward halvings next week on April 8 and April 9.
Currently, Bitcoin (BTC) is trading at $6,800, Bitcoin Cash (BCH) at $236, and Bitcoin SV (BSV) at $178.
Interestingly, just days before its halving, Bitcoin Cash laid off 50% of its employees.
Both Bitcoin Cash and Bitcoin SV will have their halving one month before Bitcoin’s in May. It is because of the “rapid block generation” which started right after Bitcoin Cash was forked in August 2017, however, the block production rate was normalized with a difficulty adjustment algorithm update.
These early halvings could have a “dramatic effect” on the hash rate of both Bitcoin Cash and BSV, according to Arcane Research. The majority of the SHA-256 hash rate, nearly 95% belongs to Bitcoin while BCH and BSV each have less than 3% of the hash rate share.
This could see the miners making a temporary switch to Bitcoin, until BTC’s halving that will cut down block rewards from 12.5 to 6.25 coins, because the world’s leading cryptocurrency will be more profitable to mine than its forks.
In order to get hold of more miners, either the fees or price of these digital assets need to increase drastically or the hash rate must halve.
A decline in hash rate would mean both these crypto assets will be “drastically” more exposed to a potential 51% attack. However, it would be until Bitcoin’s halving occurs in mid-May.
As Coin Metrics notes in its report where it discusses the effect of halving, “miners are a continuous and significant source of selling pressure that has a pro-cyclical impact on prices.”
The crypto analysis company points out that miner-led selling pressure on all three of the cryptos is currently high. And it is only expected to increase as they undergo their halvings because they all share the same SHA-256 mining algorithm and miners can “seamlessly” redirect their hash power to the cryptocurrency that provides them the highest return on investment.
BCH and BSV halving next week will force miners to direct more hash power to Bitcoin. This may increase bitcoin’s network difficulty and further squeeze the profits for all miners who have recently turned profitable after falling into unprofitable territory due to the price crash.
“We expect miners to follow a cycle of decreased profit margins, increased selling, capitulation, and a culling of the least efficient miners from the network. Once this cycle is complete, the miner industry should return to a healthier state that is supportive of future price increases,” Coin Metrics stated.