Bitcoin halving might trigger network congestion and high fees ?

By CryptoUser | CryptoPublisher | 9 May 2020

Bitcoin’s scheduled third block reward halving on May 12 at block #630,000 will drop the mining rewards from 12.5 to 6.25 BTC per block, decreasing the annual growth of the Bitcoin supply from 3.7% to 1.8%.

Bitcoin mining profitability has recently increased due to the price increase, devaluation of currency, low fuel costs and favorable policy changes in some countries, encouraging miners to dust off their old equipment. This, in turn has increased Bitcoin’s network total hash rate and network difficulty.

https://www.publish0x.com/cryptopublisher/bitcoin-mining-during-the-economic-crisis-and-post-halving-xpddyv

source: https://www.blockchain.com/

Fee Per Transaction (USD)

The surge in price was also coupled with increased network activity, leading to Bitcoin transaction fees spiking to an average of almost $3.173 per transaction as of today (May 09, 2020)

source: https://www.blockchain.com/

During the previous two halving events, most Bitcoin blocks had enough space to fit every pending transaction, but nowadays most blocks are at their maximum capacity. During this halving, people will compete with each other to include their transactions into new blocks. Under these conditions, it’s possible that the halving event could trigger network congestion.

If the Bitcoin price doesn’t move after the halving, then mining profitability will plummet forcing many miners to go offline. This will drastically decrease the network’s total hashrate and create a congestion of unconfirmed transactions. Such network congestion could temporarily increase transaction fees drastically until the next difficulty adjustment takes place approximately one week after the halving.

However, the potential surge in transaction fees will bring mining profitability back up, at least on a temporary basis, allowing some miners to switch on hardware back, increasing the network’s total hashrate and transaction speed.

It’s still unclear what will happen after the halving, but Bitcoin users should be ready for different scenarios including a surge in transaction fees and temporary network congestion.

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