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Bitcoin cash halving event leads to a drop in miner’s profitability

The much-anticipated bitcoin cash halving event has led to a contradiction of expectations. It has made the mining reward to drop from 12.5 BCH to 6.25 BCH, which translates to lower profitability. According to market capitalization, BCH is the fifth-ranked cryptocurrency. This was the first halving event after the hard fork of Bitcoin in 2017.

Bitcoin Cash came into existence for the scalability of the network. Its halving event is earlier than that of Bitcoin because it uses a different algorithm to determine the mining difficulty, which makes the creation of blocks much faster than that of Bitcoin.

A halving event is a much-anticipated event in the crypto world, especially for miners. It is expected to increase the difficulty level, which leads to an increase in the rewards.

What entails a halving event?

Halving event was originally made to happen every four years after 210,000 blocks have been mined. The main idea behind a halving event is for inflation control, which controls the supply of Bitcoin in the market. Halving controls the demand and supply of the coins since it reduces the number of bitcoins in the market. The halving event is also to control the block rewards of miners, which can cause a price crash.

Halving is an idea that was brought about by Satoshi Nakamoto, who is the creator of Bitcoin, due to the inflationary nature of cryptocurrencies. The central bank also has measures f controlling the supply of centralized currencies to create scarcity.

BCH halving in 2020

On Wednesday, 8th 2020, BCH produced the 630,000th block, which led to the halving of the miner reward. Bitmain’s pool is the leading mining pool for BCH. The CEO commented that the price, in theory, fails since the number of users in the market is still growing.

Apart from a drop in the miner’s reward, it is likely that many miners will opt-out, which will affect the BCH blockchain. So far, there has been a stagnation of mining the next block, which is the 630,001 block, as it took two hours to create it. Initially, the BCH blockchain could support up to 116 transactions per second. Currently, there is a lag as the rate dropped to 1.11 transactions per second.

There is a high likelihood that the rate will drop even further since there will be a slowdown of economic activity in the network. The block time has also been affected, reducing from 100 minutes to 18 minutes.

In the initial phases before the halving event, BCH gained about 11% as investors anticipated more profits. After the halving event, BCH has dropped by 5%, and the rate is likely to fall further.

Image from Flickr.com

Marcia

Marcia

Marcia is a real crypto fan, specialized in bitcoin and NFT news.

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