Bitcoin Cash Hash Rate Declines by Over 70%, Marching Towards its “Ultimate Demise”?
On April 8th, Bitcoin fork, Bitcoin Cash (BCH) had its halving that cut down its miners’ reward into half to 6.25 BCH.
However, as expected since the halving, its hash rate has dropped dramatically. From 3.58 Th/s BCH’s hash rate has fallen more than 70% in just two days of the halving to below 1 Th/s, last seen in December 2018. As such, it now represents less than 2% of the power dedicated to mining Bitcoin.
The main factor behind the majority of this hash rate decline could be Roger Ver himself. His pool has seen its hash rate drop by more than 90%.
BTC.com, the largest margin pool on the Bitcoin Network operated by the hardware manufacturer Bitmain is the main contributor to the hash rate. This resulted in BTC.com mining 20 out of 36 blocks which put the network at a risk of 51% attack.
This hash rate plunge also has the cost to attack Bcash for one hour from $22,000 on April 8th to $7,500 yesterday but has now risen to $11,649 in comparison to $577,596 of Bitcoin and $9,736 of BSV. BSV had its first halving yesterday and its hash rate has also started declining.
As we reported, before even the halving, the block mining started delaying which went on even after the halving and took two hours to mine the first block after the event. The network block time went 10 times more than the normal 10-minute at one-point.
Short and long-term demise of both BCH and BSV
While pointing this out, Benjamin Celermajer, the CMBI Manager of data tracker site Coin Metrics said that after Bitcoin Cash, it’s BSV’s hash rate time to fall through the roof. He also shared his earlier evaluation where he said that the halving could lead to both BCH and BSV’s “ultimate demise.”
He explained that three months following the Bitcoin Cash fork, block production was abnormally high resulting in the blockchain having 9,887 more blocks than Bitcoin despite the latter’s block production being faster. These gaps won’t close by the time of halving.
On the assumption that crypto mining is a competitive market and rational markets will mine the most profitable chain, miners will jump to BTC. They can switch between Bitcoin, Bitcoin Cash, and BSV very easily and seamlessly because they all use SHA-256.
Because BCH and BSV had its halving over a month before Bitcoin, the leading network is most profitable as such miners will switch to BTC which can be seen by the hash rate decline in both BCH and BSV.
Now if marginal cost miners start capitulating, and sell their bags as revenue decreases, this could further push BCH and BSV prices lower, further reducing their mining profitability.
This cycle will see more miners shifting to Bitcoin, making both the crypto assets vulnerable to security threats, “especially given their already low distribution of mining relative to Bitcoin.”
“This could lead to massive market fear and capitulation for Bitcoin Cash and Bitcoin SV, potentially leading to their short term and longer term demise,” said Celermajer.