I need to stack my armor before reading. Some specific project names will appear in this article, but the intention is only to share ideas, not as investment advice.
According to current estimates, the next Bitcoin halving will occur at the end of April 2024, but the specific time will fluctuate slightly depending on the difficulty of block production. After the halving, the Bitcoin block reward will be reduced from 6.25 to 3.125, and miners' income will be cut in half. At the same time, the halving is often accompanied by the iteration of new mining machines. Faced with the situation of reduced income and increased costs, miners actually have few choices.
The first option is to continue to expand production scale, purchase new mining machines, and increase the computing power ratio to obtain higher block rewards. However, considering that the profits in the financial reports of US mining farms are not ideal, the miners who choose this direction are almost only the top mining companies.
The second option, as I said in my last article, is that miners need to find new sources of income, so what is reflected is that miners practice to promote the development of the Bitcoin inscription ecosystem. In just three months, the proportion of handling fee income brought by Bitcoin inscriptions has increased from 1% of total income to 19.7%. I believe that after the block reward is halved, the proportion of handling fee income will increase to more than 50%. The new source of income brought by the Bitcoin inscription ecosystem will also become another major source of income for miners. For more details, please refer to my last article, which can be viewed from the link at the end of the article.
The third option will be the choice of many long-tail small miners, that is, switching computing power to other PoW currencies. Bitcoin's income has been greatly reduced, but there are still many other PoW projects to mine. As the pressure of computing power competition increases, these long-tail miners can easily shift their targets and mine PoW projects that do not have much competitive pressure. This is the computing power overflow brought about by Bitcoin halving.
This article mainly talks about the idea of finding the Alpha of the PoW track derived from the third option of miners. The idea is a personal subjective opinion, please consider it at your own discretion.
First of all, many people will think of Bitcoin fork projects, including BSV, BCH, etc. I do not deny that these Bitcoin fork projects are likely to rise with the overall market trend, but in the above logic, BSV and BCH will also halve during this period, and the specific halving time will fluctuate according to their respective block times. But they are all halved from 6.25 to 3.125.
The most important point is that the cost of BSV and BCH is not low, which does not meet my definition of Alpha. I bought KAS in the PoW track in May 2023, and it was listed on Binance six months later. After receiving a seven-fold increase, I sold the principal (no investment advice), and planned to wait until the halving market comes before making plans.
Therefore, my definition of Alpha in the PoW track is that, first, the circulating market value and valuation are very low, and second, personal computing devices can still participate (regardless of whether the output can cover the cost). I believe that readers can understand the first point, but the second point may be more difficult to understand for readers who have no mining experience, so I will explain it in detail.
First of all, the general idea is that "there must be a market in the PoW track", and then select Alpha that is likely to increase in the PoW track. One of the necessary conditions for a large increase is sufficient participants. I believe everyone has experienced the important influence of the number of participants on the increase in ORDI and SATS.
Therefore, if a PoW project cannot be participated in with personal computing devices, it means that participants need to purchase so-called official mining machines and other designated algorithm equipment, which results in a significant increase in the threshold for participation, resulting in insufficient popularity of the project and making it very difficult to be listed on exchanges. In the worst case, the so-called PoW project may be completely fictitious for the purpose of selling specific mining machines, turning into an outright scam.
The concept of halving will definitely be a focus of all major exchanges. There will be posters and banners asking miners to come out and build Space. Therefore, it is very important to choose a PoW with a low participation threshold, which is one of the important foundations for traffic.
After knowing what type of PoW project is considered Alpha, you should start screening and searching. Because it is easy to have strong investment guidance here, I will only talk about the method and ideas, not the specific projects that have been screened out.
1. Search public information channels. Including X, rootdata, mining pool information, etc. I will post two screenshots so you can understand.
There is a PoW topic label in rootdata. Look at all the projects in it, and then look at all the related projects. Then go to the public information page of each major mining pool to see the output information of specific PoW projects and the requirements for mining machines. For example, is it CPU mining, GPU mining, or dedicated ASIC mining machine mining. The screenshot below is from F2Pool.
The above two steps will allow you to screen out relatively mature PoW projects that have already been listed. Of course, some readers may ask, what about the earlier, more Alpha projects that are not listed on exchanges and can be mined by themselves? No problem, keep reading.
2. Open bitcointalk, click on the Mining (Altcoins) section, and check the posts with [ANN] first. Bitcointalk is a sacred place, and many overseas projects will choose to launch here, and it is also very active. The most famous person here is Satoshi Nakamoto. However, because the projects here are too early, there is generally no GUI, and you need to have a certain computer foundation to use the command line to configure. But the advantage is that such new projects often do not require specific ASIC-exclusive mining machines, and ordinary home PCs or high-end PCs can participate. You can imagine the scene where you used your computer to mine 100 BTC in 2010 and kept it until now.
As a demonstration case, I randomly searched for a PoW project called LNCR. Generally speaking, ANN posts will provide the project's official website and various links. But please also keep in mind the Dark Forest Law. There are many download links from unknown sources here, which may contain malware. If you want to try it, please do not install it on a computer with assets.
Well, there is still half a year until the halving cycle. If you calm down and study and screen, I believe you can definitely find Alpha. If you think the content is helpful to you, please help follow, like and share.
