Brave New Coin Weekly Bitcoin halving countdown update: 5th March

What is the Halving?

Bitcoin is a decentralized digital currency that enables instant payments to anyone, with no central authority. The Bitcoin network is secured by miners which are specialized computers that use a consensus mechanism called “proof of work” to verify each block of bitcoin transactions.

The miner that verifies each block is rewarded for their work with newly-created bitcoins. This ‘block reward’ is how new bitcoins are released into the system. A new block of transactions is added to the Bitcoin blockchain approximately every 10 minutes. The current reward is 12.5 bitcoins per block.

An average of 144 blocks are mined every day which means approximately 1,800 new bitcoins are generated every 24 hours.

The number of new bitcoins that are created via the block reward is reduced by half every four years. This is known as the Bitcoin Halving. The next halving will be the third halving, and the current block reward of 12.5 bitcoins will reduce to 6.25 bitcoins.

This week in the halving countdown

The Bitcoin network’s hashrate hit a new all time high of ~140 quintillion hashes per second

This week’s consolidated (across all Brave New Coin prediction models) Bitcoin block reward having prediction date is 09/05/2020 00:57.

The consolidated prediction date from a week earlier was 11/05/2020 03:37. This week’s predicted date is 50 hours and 40 minutes earlier. Each model is recalculated every day. The consolidated block halving prediction date has been brought forward significantly. The reason for this is due to a sharp pick up in the Bitcoin network’s hashrate around the middle of last week. The surge was so large that Bitcoin’s hashrate hit a new all time high on March 1st, a figure of approximately 140 quintillion hashes per second based on Brave New Coin’s internal Bitcoin hashrate monitor.

A rising hashrate means blocks are being processed at a slightly faster rate. This pulls back the ‘average daily block time’ based models that BNC uses to predict the halving date. The Bitcoin hashrate rose ~2% over the last week maintaining a steady positive long term macro growth trend. However, the large single day hashrate jump between the 29th of April and March 1st of ~28% did affect the model.

The current increase in the hashrate has surprised some in the industry. Bitcoin’s hashrate showed excellent growth in 2019, however, it has appeared to plateau in recent months and has struggled to get past the 120 quintillion hashes per second level. This week, however, the Bitcoin network had its largest single day gain of 2020. Miners may be joining the network now, before mining becomes more difficult post-halving.

The relationship between Bitcoin price and hashrate is a hotly debated one with the industry. Some suggest that hashrate can be led by price because a more expensive BTC price means higher profitability for miners. Others suggest that the hashrate influences prices because miners drive the inherent demand and supply for Bitcoin.

If for example miners begin to mine more in coming weeks because of higher expected short term profitability, they may choose to reinvest some of their newly earned profits back into the BTC markets, which adding further stimulus to the markets. The price of BTC has risen steadily since the hashrate spike, and it will be worth observing if the hashrate gains translate into price gains in the lead up to the halving.

https://bravenewcoin.com/data-and-charts/bitcoin-halving

Halving prediction dates

“Inconsistency across the models now given the extreme spike in hashrate on the 1st of March, there is no a clear outlier (prediction model 1)”

Average predicted block halving date 01/03/2020 across the 8 different models= 09/05/2020 00:57

Average predicted block halving date the week before across the 8 different models= 11/05/2020 03:37

Difference= 50 hours & 40 minutes later

Date Convergence charts

Scenario 1: Average Daily Block Time

This is the average execution time of all Bitcoin blocks mined the day before. This model estimates the number of days left until the next halving, by multiplying the average daily block time by the number of blocks left to be mined before the next halving. Using this measure we calculate the timestamp for next halving.

Dates put out by this model now sit well below the historical average. The Model is heavily influenced by inter-day hashrate volatility.

Average predicted halving date (first observation 01/01/2019)= 12/05/2020 16:19

Predicted halving date on 01/03/2020= 28/04/2020 19:36

Scenario 2: Cumulative Average Block Time

This is the cumulative numerical average of execution time of all Bitcoin blocks mined till the present day. In order to remove the long gap between the initial block execution, the average block time between those blocks is taken as 600 seconds. We estimate the number of days left until the next halving, by multiplying the cumulative average block time with the number of blocks left to be mined before the next halving. By using this measure we calculate the timestamp for next halving.

The uptrend in Cumulative Average block time countdown has now flipped downwards and continues to align closer with other models

Average predicted halving date (first observation 01/01/2019)= 08/05/2020 06:43

Predicted halving date on 01/03/2020= 09/05/2020 15:14

Scenario 3: Simple Moving Average Block Time 50 day

This is an arithmetic moving average of all block times calculated by adding the average block time of blocks executed each day for the last 50 days of the period. This is a lagging technical indicator which applies an equal weight to all observations over the period for determining if the block time will continue to have the same trend or reverse it. If the simple moving average points up, this will explain the increase in the number of blocks execution which means the halving date will arrive faster than expected. If it is pointing down it means that the blocks executed will decrease on a daily basis and the halving date can move further away.

Driven by an increasing hashrate the predicted dates from this model continue to sit below the historic average

Average predicted halving date (first observation 01/01/2019)= 13/05/2020 21:00

Predicted halving date on 01/03/2020= 12/05/2020 02:48

Scenario 4: Exponential Moving Average Block Time 200 day

This is a type of moving average where a greater significance is given to the most recent average block times. This provides good signals on crossovers and divergences from the historical average block time. This is a lagging technical indicator. When the average block time crosses the moving average block time, the large changes are expected in the average block time, where the trend changes direction. As EMA provides higher weight to the recent daily average block time than on older data, it is more reactive to the latest block time changes.

This predictor model has predicted a date of 11/05/2020. Given the smooth nature of the 200 day model (Less volatile than other predictors) it may have found a ‘steady state’ predicted date

Average predicted halving date (first observation 01/01/2019)= 15/05/2020 12:40

Predicted halving date on 01/03/2020= 11/05/2020 04:03

https://bravenewcoin.com/data-and-charts/bitcoin-halving

Network fundamentals

Bitcoin’s Hashrate hits a new all-time-high on 1st March 2020

Average Daily Hashrate from 23/02/2020-16/02/2020= 113,965,268,669 Th/s
Average Daily Hashrate the week before= 112,027,339,887 Th/s
Percentage change= 1.73%

There are less than 130,000 BTC left to be mined before halving

**Bitcoin left to be mined before the halving as of 16/02/2020= **128012.5 btc