According to updates from Bitmex Research, BCH miners are spending millions in burnt electricity to fight for their respective fork, and these are conservative estimates. A hard fork took place in the BCH blockchain on the 15th of November, resulting in two competing coins – BCH ABC and BCH SV. The BCH mining war continues in the middle of a cryptocurrency market collapse, most likely triggered by the wider stock market freefall and negative events surrounding the US/China trade battle.
Both camps of BCH miners losing heavily
As per Bitmex Research, conservative estimates from the 19th of November put a total gross loss of roughly USD 6 Million for both camps of BCH miners. The research indicates that BCH SV cannot keep this up forever, with a whopping -352% profit compared to -58% for BCH ABC. Kraken have also pointed out that BCH SV is a high-risk investment and Huobi have let BCH ABC keep the BCH ticker. Most vendors and merchants seem to be on the side of BCH ABC as opposed to BCH SV.
It has been less than a week since the fork and both sides of BCH miners are burning around USD 500,000 daily. The research also failed to take into account the opportunity costs of mining a reputable cryptocurrency such as XMR or BTC. Additionally, the research accounted for the estimated profits of both camps, though in reality, these profits would be impossible to realize due to a lack of liquidity.
If they did attempt to realize profits then the price for the coins would decrease in line with supply and demand. Mining companies also have initial hardware costs, and expensive ASIC miners depreciate daily.
The implications of the hashing war
The takeaway is that both camps are losing heavily, though BCH ABC should win in the end. Bitmain has yet to enter the fray with its hashing power, though if this happened it could lead to legal implications (Bitmain CEO Jihan Wu is a supporter of BCH ABC). Craig Wright (BCH SV) indicated in an email to Roger Ver (BCH ABC) that he was willing to do no trade and wage continual war for two years, so it could continue despite the devastating losses.
In all likelihood, if this continues bitcoin cash will be destroyed or heavily diminished as other coins take more market share. Many have pointed to the comical nature of events where BCH miners spend millions in electricity costs to battle for a bitcoin fork. Cryptocurrencies were supposed to be a return to value, and the inflated value of such forks, with millions burnt though pointless mining, does not set the best example. Others have pointed out that the BCH hash war is hurting the wider crypto market.
Diehard bitcoin cash proponents are proposing a more conspiratorial theme in relation to the hashing war. The initial purpose of BCH was based on an idea that BTC had been taken over by vested interests, and that the Lightning Network solution would itself lead back to centralization. As such, an attack on BCH ABC had to take place so decentralized currencies would not continue to proliferate.
However, the vast majority of cryptocurrency advocates are fans of neither fork. Both are backed by large mining pools and hardware manufacturers. They are massively centralized and politicized, with few actual advantages over BTC or other cryptocurrencies.
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Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.