Bitcoin Cash Miners Just Lost Half of Their Reward (UPDATED)
The fifth-largest cryptoasset by market capitalization and a Bitcoin (BTC) hard fork, Bitcoin Cash (BCH), just went through its first halving, seeing the mining reward cut by half, to BTC 6.25 (USD 1,672) per block, which reduces the supply of new coins entering circulation. (Updated at 14:52 UTC: updates in bold).
As reported, this is the first of three major bitcoins to go through this event. The next one is its fork Bitcoin SV (BSV) on April 10, and then Bitcoin in May (in approximately 34 days). That said, some analysts believe that miners will switch from BCH and BSV in this month until Bitcoin’s halving, trying to compensate lost revenues.
While the next BCH halving will happen in 2024, “due to initial problems with the Bitcoin Cash difficulty adjustment algorithm in 2017, it got here a few weeks before BTC” this time, explained BitMEX Research. Crypto analysis firm Arcane Research also said that, in order to avoid slow block discovers because of a lower hashrate, a difficulty adjustment algorithm was included in BCH fork with more frequent difficulty adjustments than BTC. Because of this, some days had one block generated per hour and others one block generated per minute, which “allowed miners to inflate the BCH supply much faster than what was intended in bitcoin, by accelerating the generation of new blocks,” said the firm, adding: “This acceleration is the reason behind the early halving of BCH and BSV.”
Meanwhile, BCH supporters have been celebrating the event online, though some found that nothing much will change with it – “business as usual,” says ‘homopit’ on Reddit, with ‘hashoverall’ adding that what the halving will lead to is “Lower mining reward -> lower hashpower -> lower security -> lower price.” As for the miners, commenters are debating whether the price will remain the same in the short term, with a number of less efficient miners capitulating, and whether miners will come back if/when the price appreciates in the long term.
Jihan Wu, CEO of major crypto mining hardware manufacturer Bitmain and BCH supporter, said during a livestream (see below) today, that this halving is a huge milestone for BCH as it proves that it can handle such an event, despite some doubting it.
Also, he added that he doesn’t believe that BCH needs to take larger steps to become more DeFi-friendly. Upgrading the protocol would cause an inter-community fight and it’s generally better to stay away from “aggressive” steps on the protocol itself, he said. Rather, BCH should stay focused on the technological roadmap and making it highly scalable, Wu added. He also believes that once the pandemic is over, BCH will see a lot of benefits from the economic crisis – but not if people lose control over the pandemic and won’t be able to get back to work.
Meanwhile, the token’s chief proponent, Roger Ver, said during the same livestream that “the only thing BCH doesn’t have that BTC has is that big network effect.” According to him, BTC got the name recognition and “all of the infrastructure along with it,” and fighting that is “an uphill battle.” But “they’re doing all they possibly can to help us with it,” he added.
The price of BCH has appreciated 1.8% in 24 hours (13:31 UTC) and 21% in the past seven days, to almost USD 265. It’s one of only two coins currently green among the top 10 coins, the other being BSV.
That said, some analysts stated previously that this halving may not have much of an effect on the price. Simon Dingle, a cryptocurrency analyst and author of In Math We Trust, told Cryptonews.com that the decrease in supply has a meaningful impact if there is sustainable/growing demand for that asset, “and I can’t imagine BCH has much of either.” Meanwhile, Bitcoin Cash developer Jonathan Toomim told Cryptonews.com that were the markets rational, they would have priced in the halving, but that “the markets are dumb, reactionary, and whimsical, and I have no idea what they will do.” (Learn more: How Will Bitcoin Cash’s Halving Affect this Network?)