Valarhash Baite pools give up on BTC network

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Whether you’re a transaction processor, a trader, or a holder of the BTC token, at some point recently, you’ve thought of the upcoming BTC halving and worried about the impact it will have on the digital currency and infrastructure supporting the network. This major event, set to occur in mid-May 2020, will spark an exodus of supporters from the BTC network if there is no rapid increase in the price of BTC to mitigate the 50% reduction in the block subsidy reward.

Reports by local Chinese media say mining pool operator Valarhash Baite has already signaled its intentions to mitigate this reduction in revenue deserting the BTC blockchain entirely in favor of a scaled-down operation processing altcoins. Lack of a sustainable pathway to profitability and a present cash crunch contributed to the decision to leave the BTC transaction processing operation.

Based in Sichuan, the company operators two digital currency mining pools—Bytepool and 1THash—along with BTC cloud mining platform 1TMine. Both the mining pools were among the top 10 pools on the BTC network. Other operations under Valarhash Baite include Nelson dgital currency processing farm management software.

At their peak, approximately 9% of the total BTC hash rate was attributed to the company. As of late, Valarhash Baite hashrate decreased significantly from 4000 to 200 petahashes per second in March according to social media reports. When a large pool operator like Valarhash opts out of BTC processing, it sends a lack of confidence signs throughout the entire community. 

CoinGeek has long reported that we expect that the halving will cause many less efficient processors to shut off their hardware rigs. This event will cause a dramatic drop in hashrate and consequently reduce competition on the BTC network. Our stance on the halving has long been that “miners” must transition into transaction processors for the network to scale to support them financially. A network must have utility, which only the Bitcoin SV blockchain has. 

Habits are hard to build and harder to break. With BTC facing so many challenges ahead of the upcoming halving more processors will undoubtedly follow suit by exiting the sector instead of evolving. Their capitulation and departure will further push the centralization of BTC mining.

Chinese publication Securities Daily recently reported the miner withdrawal might have already started thanks in part to the double blow from the COVID-19 pandemic alongside the crypto market price plunge. A source told the publication that “roughly 2.3 million Antminer S9s have been shut down since March 10,” and over 40 operations have been forced to close due to a sudden fall in BTC prices in March.

One thing is for sure, the price movements in BTC will have dire implications for smaller- and medium-sized processing operations. For those that believe the upcoming halving will have no impact on BTC’s price, this scenario also spells doom for BTC processors. Once their earning are cut in half, few will have the capital or runway to operate suffering losses for a sustained period of time.