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The Halving – And What To Expect As A Miner


“How would you feel if you got a 50 percent pay cut? What if you knew in advance exactly when it was going to happen, and still there was nothing you could do to stop it?

It’s an unpleasant idea for anyone, but it’s pure reality for anyone deep into crypto.”
– Philip Salter, Head of Operations, for Hackernoon. October 3rd 2019

As you probably already know the reward for mining Bitcoin will drop from 12.5 BTC to 6.25 BTC sometime in May 2020. This is what us miners are facing all over the world. Blockhalving is hardcoded into how Bitcoin operates. It’s business as usual and it only means that Bitcoin is doing exactly what it’s supposed to do according to the original design of Satoshi Nakamoto.

There can only ever exist a maximum of 21 million bitcoins. Therefore, the reward for making new ones needs to be reduced periodically in order to bring sustainability to its value. That’s exactly what blockhalving accomplishes once every 210,000 blocks (roughly every four years).

Thanks to the Halving, generating new bitcoins slows down. This is a good thing, because unlike fiat currencies that can be printed in infinite amounts, Bitcoin is scarce. The fewer bitcoins are circulating or the scarcer the supply, the more they could be worth – making bitcoin a deflationary currency.

Bitcoin Halving in May 2020 will be only the third in its existence. Since only two Halvings have ever taken place in the history of Bitcoin, it is difficult to draw generalized lessons. But we can try!

So far we’ve had two Halvings, in 2012 and 2016. The times and circumstances were different, but it’s still interesting to look back.


In 2012, the main tools for miners were GPUs and only a few large scale farms existed. The first Halving occurred on November 28, 2012. The Block reward dropped from a massive 50 bitcoins to 25. A month later mining difficulty had dropped by ca. 12%, even though the bitcoin price was going up. Bitcoin’s value gained almost 50% in two months.

But the real upward movement started two months after the Halving, and that was the start of a bull run which lasted until the end of 2013 when Bitcoin reached an All-Time High of around $1200.


The effects of the 2016 Halving were somewhat different. ASIC miners were practically the only way to mine. Mining difficulty was growing less radically but more steadily than in 2013, both before and after the Halving. Large miners already had the benefits of cheaper and more efficient farms due to economies of scale.

One month after this Halving during which block reward dropped from 25 to 12.5 Bitcoin, mining difficulty decreased by approximately 5%. Surprisingly, the Bitcoin price also dropped by about 10%.

It took around three months before confidence returned and prices stabilized again. That was the start of another bull run, longer and more volatile than the one in 2013, but it also led to a New All-Time High of about $20,000 per Bitcoin by the end of 2017!

Market Cap

Around the time of the first Halving, the market cap of Bitcoin was about 1 billion USD. By the time of the second Halving, that market cap had increased to 10 billion. Interestingly enough, for the current, third Halving, the market cap is again 10 times more than that of the previous Halving! With that kind of money involved, a Halving can be nerve-wracking for some, causing immediate turmoil. This would mean that the Bitcoin price would take more time to stabilize and pick up speed again after the Halving. In 2012 two months, in 2016 three months, and in 2020 …?


On the mining side, the economies of scale of large miners have become more important than ever before. Possibly the increased efficiency means somewhat lower impact on mining difficulty, though that might be compensated again by price fluctuations.

The fact is that after both Halvings, a bull run caused Bitcoin to reach a New All-Time High.

The two previous Halvings have enabled us to make some assumptions and therefore imagine scenarios about the effect that the third Halving may have on the Bitcoin price. Only time will tell which of the assumptions will come true.

You must be aware of the short term outcomes that will influence ALL MINERS, including you.  As you are mining with us, one of the strongest miners in the world, your hashpower will stay active during and after the Halving, and until the end of your contract.  

WE will also take care of the necessary technical aspects, such as keeping an eye on the Bitcoin blockchain and reducing all possible hiccups.

The Halving – And What To Expect As A Miner

However, the halving of the reward will affect your mining revenue. 

The price fluctuations will affect you. 

The changing difficulty of mining will affect you. 

These are all external factors that you, or us, or anyone have no influence on. They can either go in a negative direction, or a positive direction. The smartest thing to do is to hope  it goes the positive way, but to be prepared for the negative outcomes. 

The extent of these effects will depend on your mining plan terms (whether you pay maintenance fee, how much, and what your upfront fee was). 

The way the Bitcoin price  reacts to the event determines pretty much everything else, so here are the most likely scenarios that might happen directly after the Halving, considering Bitcoin price movements: 

This is the most anticipated scenario in the Bitcoin world. With the decrease of the reward for miners from 12.5 BTC per block validated to 6.25 BTC, the creation of new Bitcoins will become slower.


Some believe that due to a decrease in supply, the demand for Bitcoins will increase (at least relatively), which could have a quick impact on moving the Bitcoin price upward.


Inefficient miners are less likely to drop out, therefore difficulty will remain the same or might increase (depending on how much the price increases). When the price shoots up, difficulty usually rises sooner or later too, as mining Bitcoins – even for inefficient miners – will still be worth it. 

In any case, this is a good scenario from the miners’ perspective.

The second possible scenario would be that the Bitcoin price would not be affected. 


Many believe that liquidation by miners has already begun weeks (if not months) ago, and therefore the Halving won’t have such a huge impact. This Halving has been so anticipated by investors for several months that it could very well be priced in by the market in the current value of Bitcoin. Moreover, the volume of newly created Bitcoins sold by miners on a daily basis is ultimately not as large – compared to the size of the market – as to have a significant influence on the BTC supply.


Perhaps the decrease in the reward that is given to miners will not have as great an impact on the Bitcoin price as some people expect.

Many people believe that a variety of factors influence the Bitcoin price that Halving alone will not have as great an impact. In this scenario most old miners will drop out, and difficulty is likely to fall, at least temporarily.

This is an unlikely scenario, but it could happen. 


A large portion of people strongly believe that the Halving will raise the Bitcoin price sharply, which will lead them to buy a lot of Bitcoins in anticipation of Halving.

As a result of the Bitcoin Halving, if the price doesn’t increase in the proportions they expect, these people may be disappointed and eventually exit the market by selling their Bitcoins. Such a move could cause the Bitcoin price  to fall.


In a scenario in which the Bitcoin price falls, miners may no longer be able to pay the costs of their mining activity with the reward falling to 6.25 BTC per validated block. Inefficient miners will drop out. Only the most efficient miners will keep mining, which will then cause the difficulty to decrease substantially, leaving active miners with larger parts of the pie. 

In any case, difficulty reacts to price. Miners also react to price, which in turn influences difficulty again. It’s a never-ending back and forth, and the system is always trying to move towards an equilibrium. 

Any short term scenario discussed above might happen, but in the long term (4-6 months) it is expected that the market will stabilize. After probably 2-3 months of stronger fluctuations, things will cool down and stability will arrive. 

The previous Halvings suggest that the likeliest scenario is for the price to stay relatively stable or drop in the short term after the halving, but then gradually/exponentially increase over a period of 6-12 months.

As we are all strong believers in the Bitcoin and cryptocurrency industry, we at Genesis Mining are certain that after a short period the market will find its equilibrium and things will get back to normal. Just like it happened with the previous Halvings. In retrospect, the Halvings caused less of a frenzy and price decrease than the Crypto Winter of 2018. In fact, Halvings are mostly associated with price increases, either before or after the event.

Due to the Halving your coin rewards will drop, just like for all miners worldwide. The magnitude of this drop depends on your maintenance fee. Hopefully the BTC price will rise to make up for this and the USD value of your rewards will stay the same or even increase. It is also possible that the network hashrate and therefore the difficulty will drop and you can mine more coins.

In any case, your mining plan will last for its whole runtime. Runtime is guaranteed, and terms will not be changed. In our 6 years of operation, we have always fulfilled the contracts with our customers.

1. How these plans normally behave

The Classic type of mining plans have a low upfront fee and a daily maintenance fee. This plan is usually chosen by people who 

  1. Want to enter mining with the least possible commitment (low upfront fee) 
  2. Believe that the BTC price will keep rising (maintenance fee is fixed in USD but gets deducted DAILY in BTC from the mining outputs, so if the price of BTC is higher, the maintenance fee “becomes” relatively smaller in BTC and you get a bigger chunk of the mining output at the end of the day)

Since the pricing of this kind of plan is like a downpayment (your initial cost is low, but then you pay the maintenance fee from whatever you are mining daily), the performance of these kinds of mining plans heavily depends on the daily BTC price.


The maintenance fee gets deducted in USD at the daily BTC price, which changes every day. You get your mining reward in BTC, so if the price of BTC goes down, the maintenance fee fixed in USD goes up and might take up more of your daily mining reward. Vice versa, if the BTC price goes up, you pay relatively less for maintenance and end up with more coins. This is why usually the Classic type plans are chosen by people who believe in an imminent strong market with a high Bitcoin price. Classic plans work best when the Bitcoin price is increasing. 

2. How these plans will behave after the Halving

Simply put: if the BTC price stays as it is or decreases, the maintenance fee becomes relatively more expensive (see explanation above) and takes a bigger chunk of your daily mining reward. In this case you should expect heavily reduced (by more than 50%!) mining outputs until the market stabilizes. In case the BTC price goes up, the USD value of your reward will also grow, and then even though you get fewercoins they might be worth the same or more. Let’s hope for the best!

If you have a Zero type of plan 

1. How these plans normally behave

The Zero type of mining plans have a higher upfront fee and no other associated costs. 
This plan is usually chosen by people who would rather pay the full price of the hashrate upfront (including maintenance) so that they are less dependent on the daily price fluctuations. The advantage of this structure shows itself exactly when you are uncertain  about market developments and how fast they will occur. Simply put, it is usually chosen by people who want to stay on the safe side even if the Bitcoin price decreases. 

If you are a ‘Zero’ miner, as there is no maintenance fee deducted from the daily mining rewards you get 100% of whatever your hashrate mines. If the price is temporarily low, you may choose to HODL your outputs and wait for the price to go back up, thereby “increasing” the USD value of your returns. 

2. How these plans will behave after the Halving

‘Radiant Zero’ is the best type of plan to have at the time of the Halving, because you already paid for maintenance upfront, and now you are getting 100% of what your hashpower is mining. If you own this type of mining plan, the Halving will affect your daily rewards in the most straightforward way: You will receive 50% of what you used to get. Hopefully, the Halving will result in a BTC price increase, so that the USD value of your rewards might stay the same as before. 

We have absolutely no influence over the Halving. 

The Halving is a natural occurrence that happens automatically every 4 years and we cannot stop it from happening. The hashpower you purchased from us will start producing half of the coins that it used to, or less if you are paying a maintenance fee.

On one hand it seems like a severe outcome, on the other hand it serves a greater purpose. The cut will seem harsh at first, but eventually it will pay off for everyone in the industry.

We also have no influence over other market factors. We are facilitators providing hashpower for our clients and making it easier for them to mine cryptocurrencies. We do not affect the Bitcoin price or the global hashrate (difficulty), the two things that are responsible for the feasibility of mining. However, we wanted to provide you with all the information and let you know what is going to happen and what you can expect. 

It is important that you are aware of the short term consequences and that you stay optimistic about the long term outcomes. 

Even if your hashpower completely stops generating coins, for example when there is nothing left after deducting the daily maintenance fee, the coins you have already generated until this point may go up in value sometime in the future, thus ‘HODLing’ might be your best bet. It is also possible that the BTC price increases, or the difficulty decreases, so that your hashpower starts producing coins again. Remember, your hashpower will remain yours and active until the end of the contract term, no matter what. 

What we can tell you though, is that your hashpower is in good hands and we will manage it throughout the Halving, guaranteeing 100% uptime. If things go well, the market will make up for it. In the long term your rewards will be worth the same or more in USD than before the Halving. Therefore, HODLing might be the best strategy if you believe that the BTC price will go up significantly.  

You don’t have to do any preparations or maintenance work on your hardware, because you are mining with us, and we will do it for you. 

Regarding the decreased mining rewards, there is no avoiding it, no matter what you or us do. At the time you started mining, you made a decision how (with which contract type) you wanted to do it, and you made a bet on how the Bitcoin market is going to behave during your contract period. Only time will tell which was the better decision overall: Zero or Classic. 

But if you believe that the price of Bitcoin will go up significantly sometime in the future, the best thing to do right now is probably to HODL. As we mentioned, you should evaluate what you personally think is going to happen in the next few months. All that us miners can do is assume things at this point, and it’s everyone’s own decision on how to go forward. 

We wish all miners the best of luck in their cryptocurrency endeavour not just for this Halving, but for the next years ahead. 

Did we do a good job in explaining what is going to happen? Please let us know, and feel free to share your experience of these times. Send us a message at halving@genesis-mining.com or get in touch with our Customer Service via contact@genesis-mining.com


The Genesis Mining Team

Source: https://blog.genesis-mining.com/the-halving-and-what-to-expect-as-a-miner

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