- Bitcoin is up by more than 40 percent since halving on May 11
- Bitcoin escapes miner “death spiral” because of increasing transaction fees
- The mining network of Bitcoin continues to grow stronger
Bitcoin News Today – The price of Bitcoin (BTC) is up by more than 40 percent since its halving in May this year. The digital currency market was expecting the miner “death spiral” caused by the unexpected doubling of the cost of mining each Bitcoin, but it never happened. However, data is currently showing that increasing Bitcoin fees might be the reason the “death spiral” never came.
Bitcoin Mining Network Is Stronger Than Ever
At the lunch of Bitcoin, Satoshi Nakamoto developed a proof-of-work consensus algorithm to power the Bitcoin network; this was to ensure the digital currency requires no intermediary or third-party to validate tractions and keep the network secure. To lure miners to keep pouring energy into powering the Bitcoin network, the founder of BTC created an incentive mechanism that unlocks more coin with the generation of each block.
Bitcoin (BTC) Price Today – BTC / USD
The inbuilt deflationary mechanism of the digital currency further reduces its supply by half about every four years. Since the last mining in 2016, miners have been earning 12.5 BTC has mining rewards. On May 11 this year, the mining reward of the network was reduced by half, bringing the reward to 6.26 BTC. Since then, the price of Bitcoin is up by more than 40 percent.
Digital currency analysts, based on data from previous halvings, expected the price of the digital currency to surge significantly, as supply reduces. However, that was not before a miner induced “death spiral” took place. Many expected the “death spiral” to cause a widespread capitulation in the weakest miners, making them sell their BTC holdings to fund their operations. However, that did not happen, as the death spiral never happened.
Bitcoin Rising Fees Is the Reason It Escaped Death Spiral
Back when Bitcoin hit its all-time high of $20k, the skyrocketing transaction fees and congestion of the network were the major catalysts that sent the BTC bull run tumbling. As traders rushed to purchase Bitcoin and send to other trading platforms to trade for altcoins, the Bitcoin network was congested and transaction fees went up.
This time around, however, fees may have prevented the crash. According to data, fee-based revenue has surged enormously since the halving event on May 11. The average transaction fee on the network averaged $0.81 earlier this year, before the halving. However, after the halving of the digital currency, the average transaction fee has surged to $2.31. The only way the death spiral can catch up with miners is if the blockchain activity happens to fall.
Princess Ogono is a writer, lawyer and fitness enthusiast. She believes cryptocurrencies are the future. When she's not writing, she spends time with her adorable cat, Ginger and works out often.