Wars are dreadfully wasteful, and the current Bitcoin Cash “war” is no exception.
In this vein, the widely regarded BitMEX Research arm of the world’s largest bitcoin futures exchange, has estimated that miners of the newly spawned Bitcoin Cash “Satoshi’s Vision” (BCHSV) are currently mining at a loss of $280,000 per day.
BitMEX assumes the use of Bitmain S9 miners, which are some of the most common application-specific integrated circuit (ASIC) hardware sha256d miners; BCHSV liquidity at $100 per coin, which is currently a bit low; and the equivalent of $0.05 per kilowatt-hour power cost, which is a reasonable estimate for China, where much of the actual mining is probably happening.
Although the ABC SV split is entertaining, we estimate that SV miners are burning US$280,000 per day mining the SV chain.
— BitMEX Research (@BitMEXResearch) November 16, 2018
A Lean Time
CryptoGlobe has recently documented how unprofitable the cryptocurrency formerly known Bitcoin Cash (BCH) had become to mine, versus its sha256d cousin bitcoin. The rapid buildup of hashpower on the now-defunct BCH chain caused the comparatively nimble BCH difficulty adjustment software to increase the difficulty considerably, and thus reduce the reward rate and profitability for mining BCH – bitcoin remained profitable to mine while BCH did not.
The mining data website fork.lol shows that the BCHABC difficulty – still listed as BCH – has continued to rise after the fork, even higher than before, thus granting an even higher premium on bitcoin mining returns.
According to BitMEX, BCHSV mining difficulty is about half of that BCHABC’s; but SV is currently trading at nearly 1/3 of ABC’s price. Nonetheless, BitMEX estimates that the ABC side is losing even more money maintaining its chain.
Part of this loss could be Craig Wright’s, as he has repeatedly vowed to maintain hashing power both on the BCHSV network, and on the BCHABC network in order to attack it by mining empty blocks, thus making it useless. This could be why the ABC hashrate is holding steady after the fork, even as SV hashrate dips slightly.
A deep irony seems to be emerging from this fork: for all the hullabaloo about free markets coming from the Austrian-friendly leaders of Bitcoin Cash – from both sides – the economics of the forking war have become purely non-rational, which is to say purely political. Both sides of the fork have become utterly loss-making concerns.
One thing about the fork, these symbol names will stay. Binance will not support changing of trading symbols later. If anyone asks for it later, let's refer them back to this tweet. https://t.co/j1h3gb4edQ
— CZ Binance (@cz_binance) November 16, 2018
As fortunes are expended on ammunition for either side, the rest of the industry seems to be showing fatigue.
ABC “winning” the hash war and losing the BCH ticker.. is that what you call a phyrric victory
— Hasu (@hasufl) November 16, 2018
In a notable show of power, Binance will not bestow the former Bitcoin Cash trading ticker symbol, BCH, on either side; the BCHABC and BCHSV tickers will stick. Given the enormous amount of power Binance wields in crypto, this is not a portentous sign for anyone who would claim the former Bitcoin Cash name.