Bitcoin Cash (BCH) is facing a death spiral and the worst part of it is the crypto community’s total lack of concern for what holds in the future. Following the underwhelming BCH halving event at block #630,000 mined at around 12.00 UTC by Antpool, the block reward for miners reduced by half (from 12.5 BCH to 6.25 BCH) leading to a mass exodus of miners to other profitable coins such as Bitcoin (BTC) and Bitcoin SV (BSV).
After the halving, the first block appeared two hours later – normal block confirmations take 10 minutes – signaling the death spiral of miners or a move to other profitable coins. As at the time of writing only 23 blocks have been mined in the past 10 hours with the last over 1 hour ago.
Bitcoin is currently close to 80% more profitable to mine than the BCH token and miners are expected to switch to BTC – as they both use the SHA256 algorithm – which leaves the blockchain susceptible to a 51% hack. However, the window of this attack is set between now and Friday, 10th when BSV will also carry out a block reward halving. A solution however for BCH lies in its parent blockchain BTC, when halving occurs in May this year.
“Halving could be catastrophic for BCH”
While halving reduces the supply rate of PoW tokens such as BTC, BSV and BCH, miners’ revenue is also cut effectively to half as the block subsidy holds over 90% of miners revenue. The exodus of miners leaves the security of the network exposed and a 51% attack becomes easier. According to crypto analyst, Dan Held, also BD at Kraken FX, the halving could be “catastrophic for Bitcoin Cash”.
In a tweet sent out on Wednesday, Dan explained a possible doomsday scenario for Bitcoin Cash stating the chain is rolling as miners exit for BSV and BTC.
The halvening could be catastrophic for Bcash.
Bcash halvening occurs first > block subsidy drops in half > miners switch to Bitcoin (since they share the same hashing algo) > security spend becomes dangerously low > 51% attacks become very easy
— Dan Hedl (@danheld) April 8, 2020
BTC/BSV on the line for BCH?
Bitcoin may be the likely superhero for its fork. First of all, it’s crucial to understand that BCH 51% attack will require a sizable amount of cash to hack the platform – around $18,000 per hour in attack costs. However, all this is made obsolete as it would be simpler and cheaper to mine BTC instead of attacking BCH.
[1/2] In general, since BTC has a higher price than BCH/BSV, the proportional size of the hashrate swings on BTC should be lower & the network should be more stable
However, due to the different difficulty adjustment, BTC takes longer to correcthttps://t.co/VNPC2xqnoc
— BitMEX Research (@BitMEXResearch) April 8, 2020
Rational miners will switch to BTC and BSV, which means the two blockchains expect a spike in their hash rate in the coming days. However, post-Friday (when the BSV halving happens) and post-BTC halving, BCH may see the pre-halving mania rushing back.