Bitcoin Cash, the controversial Bitcoin fork that took place in August of 2017, has seen its first halving event today. The halving sees the reward for mining a new Bitcoin Cash block reduced from 12.5 BCH to 6.25 BCH, a reduction of 50 percent. This halving event is vital to Bitcoin, as well as its associated forks, as it adds to scarcity, but it also makes mining far less profitable.
For the original Bitcoin chain, the halving is seen as an event that can cause a renewed price action as the scarcity of the coin could lead to a spike in demand from the reduced supply and thus boost its price. However, for Bitcoin Cash, famously not seen as a commodity, this halving may have adverse consequences.
For the incentives of miners, there is now 50 percent less money to be made mining Bitcoin Cash, and with mining profits such a fine margin already, many miners of the BCH blockchain would have seen their profits stripped to zero and less.
In fact, a closer look at the block explorer for Bitcoin Cash shows a bit of a slowdown straight after the halving as no blocks were mined for over an hour and a half an hour after the block halving took place.
In the run up to the Bitcoin Cash halving, there were a number of issues that were worth considering that showed less interest from the miners. First of it, it was seen that even with the mining halving for the original Bitcoin being months away, it was still more profitable to mine Bitcoin.
Additionally, the Bitcoin mining difficulty has been in a steady decline in the run up to this halving, dropping from around five exahashes per second (EH/s) in mid-February to 3.3 EH/s recently. This is against what would be expected as Bitcoin’s mining difficulty has been steadily increasing barring the fall from the market conditions.
Based on data from F2Pool, at BCH’s current price and the network’s latest hash rate, a wide range of the mining equipment that was launched in 2018 and early 2019 are now generating negative daily profits, if assuming an average electricity cost of $0.05 per kilowatt-hour (kWh).
However, it is not all doom and gloom for the BCH mining ecosystem as even with the now unprofitable miners unplugging due to reduced margins, the mining difficulty will drop significantly which will dynamically increase the mining revenue for those who can afford to stick to the game.
When the difficulty drops enough, it could reattract some of those miners back