Bitcoin (BTC) halvings are a little spooky, sort of like the witching hour, and one of the prophecies being murmured about last week was something about a Bitcoin network death spiral. This idea, which isn’t really new, premises a mass exodus of BTC miners whose work creating new parts of the blockchain no longer pays because of a reduction in their rewards.

As put forth most recently by Zach Resnick, a managing partner at venture capital firm Unbounded Capital and a prominent supporter of Bitcoin SV (BSV), and summarized by Cointelegraph:

“As the halving cuts the block reward, a large number of miners will leave the network. As the network hash rate drops, the block time increases, the network becomes congested. This, in turn, makes Bitcoin less attractive, as participants do not want to wait forever to have their transactions processed. This leads to the Bitcoin price falling, which pushes more miners off the grid. This process repeats itself until the network dies.”

The May 11–12 halving reduced miners’ block reward from 12.5 BTC to 6.25 BTC and came and went without any calamity, of course. But some of Resnick’s predicted market behavior — falling hash rates, peaking transaction fees, lengthening block time and a congested mempool — were still evident a week after the event. Maybe there was something to the “death spiral” hypothesis?

Just business as usual

Christopher Bendiksen, the head of research at asset manager Coinshares, told Cointelegraph: “Lower hash rates, increased block times and, in the absence of some exogenous immediate drop in transaction demand, increased fee pressure, are very well-known effects of drops in mining reward.”

Moreover, this has happened “at significant scale” before, on Black Thursday, March 12, 2020, for instance, when BTC’s price fell dramatically, which was fueled by coronavirus fears. Miners are paid in Bitcoin; therefore, when the BTC market price drops 50%, so does their block reward. “Another…

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