How will the BTC mining difficulty level affect validators (btc miners) due to 1/2 reduction in reward after the next halving and possible backlash on general ecosystem?
The halving has a minor effect on miners who actually want more bitcoin and a major effect on miners who sell it for fiat.
When the supply of newly mined bitcoin is cut in half from 6.25 bitcoin to 3.125 bitcoin, obviously all bitcoin miners will receive fewer sats for each block that they mine. This will obviously make it more difficult for some miners to mine at a profit so they will have to shut down because they will be spending more money on electricity than they receive from
the block reward. Imagine a miner spending $10 worth of electricity to mine $11 worth of bitcoin
before the halving but spending $10 to mine $5.50 worth of bitcoin
after the halving. They would simply get more bitcoin if they just bought it rather than mining it.
Any rational miner who actually wants more bitcoin would simply shut down their miner and spend the $10 to just buy $10 worth of bitcoin instead of buying $10 worth of electricity to mine $5.50 worth of bitcoin. This does 2 things.
1. It puts downward pressure on the hashrate when they shut down their mining hardware-
https://www.whatisbitcoin.com/learn/what-is-the-hashrate2. It puts upward pressure on the price of bitcoin when they buy-
https://www.whatisbitcoin.com/economics/the-price-of-bitcoinIf enough miners shut down and divert their resources to buying bitcoin instead of buying electricity to mine bitcoin, then the
difficulty of mining will adjust downward and the price will adjust upward until it becomes profitable enough for some of them to mine again.
Miners who only mine bitcoin to sell for fiat will be hurt much more because they don't actually want the bitcoin. They only want more fiat. What they are actually doing is just speculating on the price of bitcoin but they are using bitcoin mining to do so. They spend fiat to buy mining hardware and then they spend fiat to buy electricity to mine bitcoin and then they sell their bitcoin to hopefully get more fiat revenue than they initially invested. The halving will likely put a lot of hurt on these miners because they are ultimately speculating on the price of bitcoin with some extra steps.