BCH and BSV halving, hash rates both dropped sharply

Source: LongHash

At 12:19 (UTC) on April 8, the Bitcoin Cash (BCH) block reward was halved for the first time. According to the code written into the blockchain, when the block height reaches 630,000, the miner reward will be reduced from 12.5 BCH per block to 6.25 BCH. Subsequently, miners quickly abandoned the network.

Miners don’t work for free. Managing thousands of mining machines also costs money, time, and electricity. The consequence of the Bitcoin Cash block reward halving is that miners will immediately lose 50% of their income, forcing operators to shut down their machines due to meager returns or turn to other networks, such as Bitcoin.

According to the cryptocurrency mining data website CoinWarz, at the moment the halving began, the block difficulty and computing power (hash rate) of the Bitcoin Cash network began to plummet in free fall.

The hash rate, or the computing power allocated to mining blocks, reached 785 petahashes per second, down 80% from the peak of 4001.5 petahashes per second on April 8.

Block difficulty, a dynamic measure of how hard it is for miners to compute blocks, plummeted to 269 billion, nearly 50% lower than 528 billion on April 8.

As both block difficulty and hashrate drop, concerns are rising about Bitcoin Cash’s network security — something that LongHash’s Kyle Torpey anticipated last April.

According to data from Crypto51.app (a website that tracks the cost of launching a 51% attack to forge or delete blockchain transaction records), as of 16:30 Beijing time on April 13, it only cost $9,121 to attack the Bitcoin Cash network for one hour, equivalent to the price of 41.11 BCH at the time. It is estimated that the cost of attacking the Bitcoin network during the same period would be $520,000, 57.39 times that of attacking Bitcoin Cash. In addition, the cost of attacking the Ethereum network for one hour is $85,377, which is also one digit higher than the cost of attacking Bitcoin Cash.

Crypto51 came up with these numbers by calculating the cost of renting enough computing power from NiceHash to control 51% of the network. It should be noted that NiceHash alone does not have enough machines to provide the computing power to occupy a major blockchain in the short term, but the point is that the data from this website can quantify the security of the blockchain network.

After launching a 51% attack, the attacker can naturally control the blockchain and easily withdraw or delete certain transactions. In this case, exchanges or similar service providers are likely to suffer losses because the attacker can deposit coins into these platforms to obtain accounts and credit, and then withdraw the transaction to double spend, doubling the money in hand.

At 20:48 Beijing time on April 10, BSV also ushered in its first halving. The number of tokens received by miners was reduced from 12.5 BSV per block to 6.25 BSV per block - BSV miners' income was actually reduced by 50%.

The miners responded quickly.

24 hours before the BSV halving event, BCH experienced its own halving and saw a similar trend, with its hash rate falling 80% and difficulty decreasing 50% at its worst point.

Data from BlockChair shows that since the halving, BSV’s hash rate has dropped by about 40% from 3.06 exahashes/s to 1.83 exahashes/s at 16:30 Beijing time on April 13. The hash rate measures the computing power allocated by miners to the network through hash value.

This has been reflected in the network difficulty, or how hard it is for miners to process blocks on the blockchain. According to Satoshi.io, the network difficulty has dropped from 420 x 109 to 212 x 109.

It is worth mentioning that only 35 BSV blocks were mined in the 15 hours after the halving, which is 55 fewer than the normal number of blocks that could be mined in the same period. Since the blockchain uses network difficulty to ensure that an average of 6 blocks can be mined per hour, it should continue to dynamically adjust the difficulty to ensure that transactions are processed on time.

The reason for the simultaneous decline in hash rate, difficulty, and block time is related to miners' profitability.

The halving caused the revenue of miners operating on the BSV chain to drop by 50%, forcing those operators with meager profits to shut down or move to other networks for mining. Fewer mining machines means fewer computers processing blocks, which ultimately leads to slower transaction speeds.

As BSV prices have fallen, the coin is now priced nearly $40 lower than BCH, while both network security has rebounded since the significant reductions in hash rate.

Despite the rebound, both chains are less secure than they were two days ago. Meanwhile, Bitcoin’s hash rate has risen, at least according to CoinWarz, suggesting that the Bitcoin fork’s halving event has pushed miners to other, more profitable blockchains. In this case, that other blockchain is Bitcoin.

Original source: LongHash: BCH and BSV halved, hash rates both dropped sharply