Bitcoin Cash Undergoes Halving, Miner Profitability In Shadow

Bitcoin Cash (BCH), the first offshoot of the Bitcoin core network, has undergone halving of its own network on Wednesday, April 8. Cryptocurrency halving is a periodic process in which the mining rewards are reduced to half as the blockchain algorithm updates itself getting more complex to crack the code and enter new blocks in the network.

Bitcoin Cash is currently the world’s fifth largest blockchain network in terms of market capitalization. On Wednesday, this blockchain network reached a height of 630,000 thereby triggering the “halving” event wherein the money rewards have been reduced to half from 12.5 BCH to 6.25 BCH for every block unlocked.

The mining difficulty and hash rate for the Bitcoin Cash network has been recently on a downtrend indicating lesser miner participation on the platform. Well, it is clear that miners participating for block rewards will see their revenue reduced to half after the halving. Besides, with the cost of the mining equipment’s being high, this leaves miners with little to no profits.

BCH’s lesser miner participation has been in line with the cryptocurrency’s falling prices. The Bitcoin Cash (BCH) price dropped from $492 during mid-February to now at $165 in mid-March.

However, it has recovered in the last two weeks as BCH is currently trading at a price of $265 with the market cap of $4.87 billion as per the data on WorldCoinIndex.

Another data from F2Pool shows that considering Bitcoin Cash’s current price, its latest hash rate, a large range of mining equipment’s launched in 2019, and the current electricity costs, then BCH miners are now generating negative daily profits.

Besides, some BCH mining models launched last year of early this year are witnessing major margin drop of around 10%. Only the powerful mining models like Bitmain's AntMiner S19 or S17 Pro and MicroBT's WhatsMiner M30S have generated profits above 30%.

However, one problem with these manufacturers is that the lockdown due to the Coronavirus outbreak in China had forced the miners to shut down their production. As a result, they are not able to deliver the mining equipment in large numbers.

Now as unprofitable miners find it difficult to continue with their losses, the mining difficulty will decrease further. This will significantly benefit the miners who stick to the game as they can mine more tokens with lesser complexity and wait for BCH’s price to increase in the future.