Topic: [2017-08-30] Why Miners Are Mining Bitcoin Cash – and Losing Money Doing It (Read 3507 times)

Correct, most of the price action is coming from Asian exchanges. No one else really cares, unless they are dumping it for their local currency. "Altruistic Mining" is laughable, since this shitty alt-coin is sponsored by corporate interests and a primary actor in Japan.

Just part of a power-grab by those who think money will buy their influence.

20% or so is not significant. People anticipate the price of the Bitcoin cash will appreciate, thus they mine for the future price. Which is not strange at all.

But the question is they once mined Bitcoin, and why switch to other coin that is somehow less profitable from the one they used to mine.  I would agree that some point in time BCH is more profitable the Bitcoin that is why massive hashrate move towards BCH to mine the coin.  I guess they have read the pattern and be able to switch coins whenever which one is profitable.  Since someone I knew keep switching his miner from BCH to BTC then vice versa.

Those huge pools have only one reason, politics.

BCH is mined mostly by Bitmain, and they have to continue supporting it both via mining and buying it on exchanges to prevent it from failing. It's a mystery whether this whole venture was profitable for Bitmain, or it was all done with a goal of leveraging their position in the scaling debate with Bitcoin community and devs. If Bitmain has stopped mining it, it would quickly crash, as market would see it as lack of confidence. Similar reason why people mine Bitcoin no matter the profit of other chains - it protects their investment both in terms of coins and mining equipment.

The EDA is a flawed mechanism and that is being revealed by the cycles of mining hashrate.

Reference - https://www.reddit.com/r/Bitcoin/comments/6vxbse/we_may_have_to_accept_higher_fees_until_september/

This will cause BCH to have downward selling pressure as the cycle continues.

It's equally confusing why miners were mining Bitcoin, because at one point it was more than double as profitable to mine Bitcoin Cash than Bitcoin.

Come to think of it, this situation really hurts the Nash equilibrium of Bitcoin, because miners are incentivised to mine whichever chain happens to be more profitable to mine at the time, which could:

-Reduce the security of the less profitable chain and make it subject to 51% attacks (in this case, about three quarters of Bitcoin Cash's last 144 blocks have been mined by an unknown entity - this could either be the work of miners with a large amount of hashrate trying to support the chain, or attackers).
-Significantly slow down the mining of blocks until the next difficulty adjustment.

Over the weekend, the bitcoin cash blockchain experienced a notable technical change.

Like the bitcoin blockchain from which it forked, bitcoin cash is hard-wired to adjust how hard it is for miners to claim its rewards, and on Saturday, it saw such a change. As a result, bitcoin cash was made 300% more difficult to mine.

This, in turn, caused the profitability of the coin to decrease dramatically. Many miners left for bitcoin, and for about 10 hours only a few blocks were found.



As a result, emergency difficulty adjustments (a technical mechanism unique to bitcoin cash) were triggered, causing the difficulty to drop enough for miners to begin switching back.

What's interesting, however, is that at the time, bitcoin cash was still less profitable to mine than bitcoin by about 20%. Still, many miners, including those using pools like BTC.Top, ViaBTC and AntPool continued dedicating computing power to the blockchain.

This means these miners were likely giving up profit that they could have earned had they been mining bitcoin. So what gives? And why are miners mining at a loss?

This is not an easy question to answer and my analysis here is speculative. But, here are some possibilities:


Miners may be committed to making the new cryptocurrency work, as they may have now accrued a large bitcoin cash position.

Armed with this vested interest, they may believe slow blocks will cause bitcoin cash to tank, so they may be mining to keep the network working smoothly.

The argument against this is that during the 10-hour window after the non-emergency difficulty adjustment, many of the same miners left. If consistent blocks were the major concern, there should have been more mining power on bitcoin during that interval.

The miners mining now may be thinking that the bitcoin cash price will increase in the near future to make mining worthwhile. A 30–40 percent increase in the bitcoin price relative to bitcoin would certainly make their mining profitable, and they may be waiting until then to sell.

These miners may have insider information about a large buy order or may be just hoping for larger fluctuations of bitcoin cash price.


Another theory is that there may be bitcoin cash supporters that are subsidizing mining in some way, behind the scenes.

This could be something like an over-the-counter market for bitcoin cash where buyers are paying a higher price than the exchanges to incentivize mining. If the buyers demand freshly minted bitcoin cash, this would effectively make it so miners were the only supply that could satisfy this particular demand.

Similarly, bitcoin cash supporters could simply be paying pools to point hash power the blockchain network.


Ultimately, there are now more questions than answers.

We don't really know why miners are mining bitcoin cash instead of bitcoin. But, we know that at the very least, they aren't making as much money as they could, and this means these miners are paying some opportunity cost in order to mine bitcoin cash.

https://www.coindesk.com/miners-mining-bitcoin-cash-losing-money/