Bitcoin Cash Miners Changing Camps Ahead of Its First Halving on Wednesday
The fifth-largest crypto network by market capitalization, Bitcoin Cash (BCH), is halving its mining rewards tomorrow for the first time while the network is seeing a drop in hashrate ahead of the event. The halving will likely lead some BCH miners to switch over to Bitcoin (BTC), but this may be a temporary deal.
One of the halvings expected this year is scheduled for tomorrow. Bitcoin’s halving is in May, but its fork, BCH and Bitcoin SV (BSV), a fork of BCH, (estimated for April 10) will be going through their own events. Therefore, on April 8, at block 630,000, the BCH mining reward will decrease from 12.5 to 6.25 coins (USD 1,619) per block.
As reported by Cryptonews.com, some industry observers esimate that this halving may not affect BCH’s price much, but that it will affect its hashrate (the computing power of the network), as its halving is occurring before Bitcoin’s. There have been concerns over hashrate leaving the BCH chain and heading over to Bitcoin, but this might re-balance as BTC heads into its own halving.
At pixel time (12:58 PM UTC), BCH trades at c. USD 259 and is up 6% in a day and 17% in a week. Also, it’s up around 7% this year, trimming its annual losses to 13%.
BCH price chart:
Like the price, both hashrate and mining difficulty have been dropping since mid-February.
Crypto market analysis firm Coin Metrics said recently that both Bitcoin Cash and Bitcoin SV halvings will increase miner-led selling pressure for Bitcoin. The earlier halving of their block rewards will likely force miners to direct more hash power to Bitcoin “as it will still have a 12.5 native unit block reward [USD 92,000] (instead of 6.25) for about a month longer,” and “we should expect difficulty increases for Bitcoin that should further squeeze profit margins for all miners.”
Meanwhile, crypto analysis firm Arcane Research also argues that, as more miners start mining BTC, the mining difficulty will increase, but that the effect will be small as:
a) the hashrate devoted to BCH is limited compared to BTC
b) the BTC difficulty algorithm takes two weeks to adjust.
“There is a real risk that the hash rate might be temporarily halved on both the BSV and BCH networks until the bitcoin halving in May,” says the firm, “unless the price of the coins or the transaction fees of the networks increases significantly relative to bitcoin.” They conclude that, although “the discussion of “is the halving really priced in” is one that will never settle, it is highly unlikely that the halving will result in a doubling of the price.”
Nonetheless, using the post-market-crash, second-highest drop in BTC mining difficulty, it seems that some BCH miners decided to use this chance to switch over already, which may have been short-term, particularly given that difficulty is expected to go up tomorrow.
Few other, internal issues should be noted in this overall new event for BCH. The coin was created in 2017 and hasn’t had a halving yet. Its first halving is happening before the Bitcoin Cash network upgrade in May, and it follows a dispute over a potential ‘developer tax‘ that could magnify the longer-term economic impact of the halving. Furthermore, there were reports that Bitcoin.com, headed by Bitcoin Cash supporter Roger Ver, fired half of its workforce. Ver, however, denied this and said that some 10% of people were laid off due to the economic crisis.