What are the 3 Challenges and Predictions for Bitcoin Mining?

By Matthew Lam   May 24, 2019 4 Min Read

Various blockchain and financial professionals joined our event “Can Bitcoin Sustain Its Positive Price Run? How does it affect miners?” on 23 May 2019 held in Genesis Block, Hong Kong. This event looked at the current investment landscape and regulatory challenges on Bitcoin mining and a hot topic for all BTC holders: What is the price of Bitcoin going forward?

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The night commenced with the introduction of the Crypto Asset Federation (CAF) and Blockchain.News, followed by keynotes and panel discussions on Bitcoin price run and its impact on mining.

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JoAnn Yip, Vice President of the Crypto Asset Federation (CAF), delivered the key mission of CAF: To promote crypto assets as a viable institution-grade investment class

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Yulande Choi, Marketing Manager of Blockchain.News, explained the diversity of blockchain contents from three main sources: exclusive interview with crypto leaders, blockchain columnists worldwide and in-house research team.

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In the first keynote session, Cynthia Wu, Investment Director of Bitmain first outlined the evolving needs of miners. She indicated that miners nowadays look for sophisticated financial services to generate liquidity for the coins they mined, such as spot trading and custody services, derivatives and asset management services.

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Cynthia then illustrated the relative scale of mining market against other financial services in cryptocurrencies. The daily PoW mining reward and transaction fees amounted to approximately USD 25 mn and total asset under custody is less than USD 20 bn.

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Cynthia predicted that the market for financial services will receive a massive boost by 2021, especially in custody and derivative trading. The custodian and derivative trading market are estimated with a total of USD 400 bn and a daily turnover of USD 120-150 bn, an 20x estimated increase than where we are today!

In the second keynote, David Tang, CEO of Standard Kepler concluded the current state of mining with 3 challenges and 3 predictions:

1st challenge: The rise of PO”X”

Prediction: Truly decentralized blockchains will struggle, cryptocurrency will become less minable

2nd challenge: Censorship resistance and regulation

Prediction: Miners will need licenses in order to help government to impose regulation on crypto

3rd challenge: Tradeoffs in public and private blockchains, in terms of degree of decentralization

Prediction: Less mining opportunity as private blockchains continue to grow

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David presented the 3 key challenges and predictions for mining going forward.

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In the first challenge, David concluded that cryptocurrencies are less minable if they adopt a more scalable consensus algorithm.

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David made a bold prediction that regulation on mining will be tighter due to many sensitive information and illegal transactions involved in the mining process.

In the third keynote, Pius Lam, CEO of Batmine first mentioned the impact of Bitcoin halving every 4 years on the production per block. He indicated that the price of Bitcoin went up over 30 to 90 times within a year when each Bitcoin halving occurs.