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Bitcoin Cash Undergoes ‘Halving’ Event, Casting Shadow on Miner Profitability

Published

9 Monaten ago

April 8, 2020

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Bitcoin Cash – the blockchain that forked off Bitcoin in 2017 – has just reduced its block rewards by half, causing many miners to see gross margins drop to near zero.

The world’s fifth largest cryptocurrency network by market capitalization reached block height 630,000 at roughly 12:20 UTC on Wednesday – by design triggering the so-called “halving” event that reduced the network’s mining reward from 12.5 bitcoin cash (BCH) per block to 6.25.

That means miners competing for block rewards on the network will see their immediate mining revenue reduced by half, resulting in no or slight returns despite investments in costly mining equipment.

The mining difficulty and hash rate on Bitcoin Cash – a measure of how much miner power is participating on the network – has recently been on a downward trend in the run up to the halving, dropping from around five exahashes per second (EH/s) in mid-February to 3.3 EH/s currently.

The trend is in line with the price decline of BCH, which dropped from $492 around mid-February to as low as $165 in mid-March – though it’s since bounced back over $250. At press time, BCH is changing hands at $268, according to CoinDesk’s price index, a 2.7-percent jump over the last 24 hours.

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).

Even some of the most recent models that hit the market late last year and in early 2020 are seeing gross margin drop to around 10 percent. Only those most powerful models like MicroBT’s WhatsMiner M30S or Bitmain’s AntMiner S19 or S17 Pro would be able generate a margin above 30 percent, but the manufacturers have not yet been able to deliver these models to the market in large numbers.

That said, as more unprofitable miners unplug from the Bitcoin Cash network as is expected, mining difficulty will further decrease, dynamically increasing the mining revenue for those who can afford to stick to the game.

Furthermore, specialized mining devices (commonly known as ASIC miners) based on the SHA-256 algorithm – which is adopted by Bitcoin, Bitcoin Cash and Bitcoin SV – are able to switch between different networks that use the same algorithm.

The Bitcoin Cash event foreshadows the halving scheduled for the Bitcoin network in about 35 days, which is 26 times larger than BCH in terms of market capitalization.

The 14-day rolling computing power connected to the Bitcoin network is currently at 105 EH/s, which has seen a five percent uptick after having decreased by nearly 16 percent late last month.

Meanwhile, Bitcoin SV, the network that forked off the Bitcoin Cash blockchain in late 2018, is also scheduled to go through a block reward reduction in about a day. The price of BSV has jumped by 9 percent to $209 over the past 24 hours ahead of the scheduled event.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Related Topics:Bitcoin Cash Casting Event Halving Miner Profitability Shadow Undergoes

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Market

Grayscale’s AUM Hits $19B, Up from $16.4B Announced Week Ago

Published

9 Minuten ago

Dezember 29, 2020

While it may be too early to project the possible performance of Grayscale in 2021, the spate of patronage the company recorded in the last two quarters of 2020 looks quite inspiring.

In what confirms the continued embrace of Bitcoin (BTC) and altcoins by institutional investors and the big-money clients, Grayscale’s total Assets Under Management (AUM) has been reported to top $19 billion, a significant uplift from the $16.4 billion reported a week ago. According to a report by CoinDesk, Grayscale hit this AUM milestone on December 28, and Grayscale’s Bitcoin Trust holds by far the largest chunk of the total assets at $16.3 billion.

The recent rally of Bitcoin to new highs as recorded in the past days started as a chain reaction that took its precedent months ago when Wall Street firms and institutional investors began betting big on Bitcoin. The investment made by the likes of MicroStrategy Incorporated (NASDAQ: MSTR), Square Inc (NYSE: SQ), and PayPal Holdings Inc (NASDAQ: PYPL) did not just help put Bitcoin in the limelight through mainstream media, it also prompted the embrace of the digital assets by other firms.

With this chain reaction, the price of Bitcoin continued to soar in response to boosted demand for the coin, and institutions like Grayscale that serves institutional investors benefited from this new demand, and hence, the continued increase in the firm’s AUM. Besides BTC, Grayscale’s Ethereum (ETH) AUM is now worth $2.1 billion, while the bulk of smaller holdings in Litecoin (LTC), XRP, and ZCash amongst others helped Grayscale’s total AUM to reach the new milestone.

Grayscale’s AUM May See More Boost in 2021

While it may be too early to project the possible performance of Grayscale in the coming year 2021, the spate of patronage the company recorded in the last two quarters of 2020 makes the case for improved performance provided the tempo is sustained.

Just as has been noted earlier, the continued embrace of cryptocurrency assets by highly liquid companies will continue to have a positive reaction on the price of Bitcoin, and by extension, this will even make more people pick interest in BTC. As a relatively young asset class, Bitcoin and altcoins have tremendous room to grow as the adoption rate is still not optimized owing to certain regulatory provisions in most countries, Grayscale and other hedge funds have enough room to compete for new clients entering the space.

With Grayscale been among the institutions at the forefront of helping to drive the acceptance of BTC, ETH, and other digital currencies, enjoying the dividends of its works through impressed AUM figures does not come as much of a surprise.

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Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.

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Market

eToro Said to Be in Talks With Goldman About Possible $5B IPO: Report

Published

54 Minuten ago

Dezember 29, 2020

The crypto trading/investment management platform is also considering the possibility of a merger with a special purpose acquisition company.

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Market

Altcoin Rally Dimming Bitcoin’s Shine, Polkadot Gains 34% in One Week

Published

2 Stunden ago

Dezember 29, 2020

Polkadot (DOT) saw daily gains of 22.5% wrapping up an impressive week with an almost 34% rise in its value.

Bitcoin bullish run looks to have come to a halt amidst an altcoin rally which has seen relatively lower coins put up impressive performances in the past few weeks. Bitcoin dominance is gradually fading as many experts believe the biggest digital coin is backing down as some top altcoin are showing strong “moves” or signals.

Bitcoin hit an all-time high over the weekend, the third time its price has done so in just over 2 months. The price of the biggest digital coin touched $28,400 on December 27, before a lightning drop took it to $27,000 just hours of that incredible feat.

Bitcoin failed to hold onto the $27,000 mark as its price further dropped to $26,000 a day after and is now testing lower levels centered on $26,000 as immediate support. Reports from crypto exchanges revealed BTC/USD trading at lows of $25,830 during the early hours of December 29.

While Bitcoin has seen red over a couple of days, some altcoins are putting up impressive numbers, giving off signals of a strong altcoin rally. Despite XRP’s current issues, the altcoin market is showing glimpses of its glory days as some digital coins are poised to see major gains over the next couple of weeks. Ethereum (ETH) is at the forefront of the rally, with its price climbing above $700 for the first time since May 2018.

Polkadot (DOT) also saw daily gains of 22.5% wrapping up an impressive week with an almost 34% rise in its value. The coin is now the seventh-largest token by market cap. Kusama (KSM), a cousin of Polkadot, also saw its price gain 46% last week, pushing its price from $43.1 to $63. The digital token is currently trading at $56 but experts are adamant a breakout above $65 is possible as the token has rebounded off the 20-day exponential moving average ($50.90)

Speaking on the possibility of a long term altcoin rally, analyst Van de Poppe stated that altcoins are next in line to see greens. He added that the next “impulse wave” on Bitcoin next year should be able to take the market to $40,000 or $50,000, but until then, the possibility of a continuance altcoin rally is very much likely.

Although many factors could be in play with regards to the latest Bitcoin price dip, it’s recent fallout with Ripple’s XRP leads the way. Ripple was hit with a lawsuit from the United States Security and Exchange Commission (SEC) and subsequently suffered drops that left its price in a pit. XRP, the fourth-largest cryptocurrency by market cap, is now trading at $0.20 as news broke that Coinbase, a major US cryptocurrency exchange has decided to suspend its trading from next month.

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Crypto fanatic, writer and researcher. Thinks that Blockchain is second to a digital camera on the list of greatest inventions.

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