Bitcoin profitability: Miners at crossroads ‘every day and not just at the time of halving’
As the halving is just around the corner, questions like ‘Can miners conspire to avoid the halving?’, ‘What happens if miners use software that removes the halving feature and keep producing blocks with 12.5 rewards’, ‘Can miners change consensus rules?’ are receiving a lot of traction.
Bitcoin educator and analyst Andreas Antonopoulos in a recent podcast addressed these questions and asserted that no miner can conspire to avoid the halving as it isn’t just a piece of code that miners run. He stated,
“It’s a piece of code that every Bitcoin node that participates in the consensus mechanism runs and these consensus rules are not optional. So if miners mine the block with 12.5 bitcoin reward and propagate it across the Bitcoin network, miners who are not part of this scheme would look at this block, evaluate it using the piece of code, and reject it.”
This mechanism is quite simple. When the two block subsidies don’t match, other miners throw away that particular block and consider it invalid. When such invalid transactions observed by one of the other miners, they ban that miner as a “defense mechanism”. Elaborating on how Bitcoin operates by a mechanism of checks and balances where the five parties [miners, exchanges, merchants, developers, and wallets or users with economic activity] need to participate in deciding what consensus is, Antonopoulos stated,
“All these five parties have to agree, and if one of the constituents tries to break the rules, the other four will reject their, transactions and blocks and they will lose a great deal of money.”
Highlighting that the decision of whether to continue to mine at the profitability rates happens every day and not at the time of having, Antonopoulos stated,
“Halving or no halving – the decision depends on a dozen of different parameters. Cost of electricity, Bitcoin- fiat price, operating efficiency of the staff, the equipment, the facilities, the mining density, and equipment that you have. Just five years ago, things like the LN and other upgrades weren’t even a glimmer of an idea, so it’s impossible to predict how Bitcoin will change and how the mechanisms of consensus will change.”