BSV production cuts, hash rate competition changes

By Kyle

Source: Fengchao Finance

At 8:48 am on April 10, the BSV (Bitcoin Satoshi Vision) network ushered in its first block reward halving, and the miner block reward was adjusted from 12.5 BSV to 6.25 BSV.

Two days ago, BSV's "old rival" BCH was the first to complete its halving. After that, the price of BCH fell slightly in a short period of time, and the computing power of the entire network also lost some. TokenView data shows that the computing power of BTC and BSV increased accordingly during the same period.

There is still more than a month before the BTC halving. After the BCH and BSV halvings, it is almost certain that the computing power using the SHA-256 algorithm will flow to the BTC network with higher block rewards. This month will also become a "window period" for the performance of BCH and BSV prices.

As a forked coin of the "crown prince" BCH, the BSV camp has always believed that it is the "real Bitcoin" that conforms to Satoshi Nakamoto's vision.

BSV Official believes that as the block rewards of BTC, BCH and BSV continue to decrease, in the long run, BSV, which takes the route of large blocks and can package more transactions, can bring higher profits to miners. The reason is that when the block reward is negligible, the main income of miners will be transformed into the sum of transaction fees of all transactions in the block, and the role of miners will also be transformed into "transaction processors".

When BTC completes the halving, the block rewards of the three major networks will be at the same level. Qiu Shaoxian, a big V in the BSV community, believes that that will be the highlight. If nothing unexpected happens, the SHA-256 computing power of the entire network will undergo a new round of decisions, and the battle for the "real Bitcoin" will enter a new stage.

As the BSV network block height reached 630,000, BSV implemented the first block reward halving in history as planned. Like BCH two days ago, the amount of its block reward will be reduced from 12.5 to 6.25. For miners, with the price and cost of the currency unchanged, their income has been cut in half.

However, influenced by the perception that halving is a positive thing in the cryptocurrency circle, BCH and BSV both experienced a wave of rising prices before the halving. BCH rose by nearly 20% in the seven days before the halving, and BSV rose even more sharply, rising by more than 30% in the same period. In contrast, BTC, which is more than a month away from halving, has only risen by 10%.

The short-term rise in the price of the currency has reduced the losses of miners to a certain extent. Before the BTC halving, some flexible miners chose to switch their computing power to BTC to seize the one-month time difference and seek more block rewards.

The daily average computing power statistics of TokenView show that after the BCH production cut, the computing power was lost, from 3.51EH/S to 2.97EH/S on the second day of the production cut, while the computing power of BTC and BSV increased on the same day. If nothing unexpected happens, after BSV completes the halving, part of the computing power will also flow to the BTC network until BTC completes the halving in mid-May.

Qiu Shaoxian, the leader of the BSV Skull and Bones Club, told Hive Finance that the reduction in computing power will only result in slower block generation, but the accumulated transactions can be packaged in the next block to clear the memory pool, which will not have much impact on on-chain transaction users.

Another point of concern is the price of BSV after the halving. After the BCH halving, its price fell slightly from $280 to around $265. There is no shortage of market opinions that BSV will also follow a similar trend.

Judging from the market conditions, BSV did fall slightly after the halving, from the opening price of $215 on the day to $211, which is not a large drop.

As the youngest currency in the Bitcoin family, BSV has experienced sharp rises and falls many times since its birth a year and a half ago. On January 14 this year, BSV soared 119% in one day, reaching a historical high of $459, briefly surpassing BCH. But then, BSV fell rapidly, and now the price has been halved. This was ridiculed by investors as "the price halved before the output halved."

Of course, after the block reward is halved, some people believe that BSV is expected to achieve price increases due to the disruption of supply and demand balance. The coin price is also a key factor in determining whether BSV can continue to compete with BCH and BTC in the future.

In this year of halving, the halving of BCH and BSV has been settled. The two competing blockchain networks will continue to compete.

At present, since there is still more than a month before the BTC halving, the computing power of BCH and BSV is in a relatively weak "window period". Compared with BTC, whose rewards have not yet been halved, the competition between BCH and BSV is relatively equal. Under the condition of limited computing power, whichever of the two brings higher profits will attract more miners.

OKEx Research believes that the fluctuation of the coin price can change the direction of the flow of computing power. If the price of BCH or BSV rises during the halving, the outflow of computing power will be reduced; if the price of BTC rises due to the halving expectation or other reasons, it will attract more computing power to flow to BTC. In addition, the reduction of BCH and BSV computing power will reduce the cost of 51% attack and increase network security risks.

Whether it is BCH or BSV, they certainly do not want a large loss of computing power, so it is necessary to maintain price stability during the "window period". Judging from the price trend before the halving, the BSV camp has a hidden momentum, and the increase has exceeded that of BCH. However, the price still needs to be supported by the actual application of blockchain. The on-chain applications and transaction volume of the two are the key to determine the winner.

Judging from recent trends, BCH has taken the lead. Earlier this month, AnyHedge, the first decentralized financial protocol for BCH, was announced. This protocol allows BCH users to mitigate price fluctuations in a peer-to-peer, decentralized, and fully collateralized manner. In extreme market conditions, BCH investors can hedge risks.

Although BSV has not launched any new blockbuster applications recently, over the past year or so, the BSV network has also built on-chain Weibo WeiBlock, weather data software WeatherSV, and various game applications.

In terms of on-chain transaction volume, BSV has a clear advantage over BCH. According to TokenView data, in the past month, the average number of daily transactions on the BCH chain was about 50,000, while the number of daily transactions on BSV was about 500,000, which is 10 times that of the former.

The average daily transaction volume of BSV is around 500,000

In the long run, maintaining the growth of the number of applications and the activeness of on-chain transactions is the foundation of the two major blockchain networks, and will also determine the market price and the stay of miners. Industry insiders remind that rational investors should focus on whether the digital currency and its technology have real utility, and whether they have reasonable survival logic and long-term vitality when evaluating the true value of digital currency.

In Qiu Shaoxian’s opinion, the current share of computing power occupied by BSV and BCH is relatively small, and the main event will only come after the BTC halving.

Data shows that on April 9, the total computing power of BTC was 107.55 EH/S, while that of BSV and BCH was 3.05 EH/S and 2.97 EH/S respectively. The sum of the two is only a fraction of BTC.

BTC's total network computing power far exceeds BCH and BSV

However, the successive halving of the three major networks may bring some uncertainty to the "computing power market".

In addition to BTC, BCH and BSV are both halving for the first time. Whether the two can have better market performance after the halving will determine whether there will be a targeted influx of computing power.

From the current situation, the three major networks have their own balance in terms of total network computing power, mining difficulty and market price. Generally speaking, computing power, mining difficulty and market price affect each other. BTC with higher consensus has the highest price, but the mining difficulty is also greater.

After the new halving node, whether the balance of the three major networks will be broken will be the focus of the market. Previously, many industry insiders, including Bitmain founder Jihan Wu, said that as the circulation of the currency gradually increases, the benefits of halving will become smaller and smaller. If the price of the mined currency does not increase significantly, profit-seeking miners must face new choices.

OKLink believes that in the long run, after the block rewards of BTC, BCH, and BSV are reduced, transaction fees will become the main compensation for block nodes. At that time, BTC, BCH, and BSV will compete on the transaction volume and price on the chain.

Taking this opportunity, BSV, which focuses on large blocks, began to promote the advantages of BSV after the block reward gradually decreased. On April 9, BSV Official published a document stating that the block reward was designed in the early days of the Bitcoin network to encourage miners to grow the network. When the block reward is halved again and again, miners will gradually reduce their dependence on block rewards and gradually turn to profiting from transaction fees. BSVOfficial believes that in the future, "miners" will transform into "transaction processors."

As a supporter of BSV, BSV Official said that BSV with a large block design will be able to carry as many transactions as possible in one block, so that miners can obtain more transaction fees, "which will enable miners to continue to operate and make profits."

However, in the short term, the real world does not have enough support for use cases such as cryptocurrency payments, and BSV’s so-called large block advantage remains to be verified.

Some industry insiders predict that although this round of halving will force miners to make new choices, BTC, which has a stronger consensus and a higher price, will continue to be the "gold mine" for miners. In contrast, BCH and BSV miners will continue to compete, and the result is more suspenseful. Under the attention of the market, the choice of miners will be revealed after the BTC halving.

Do you think the landscape of the three major networks will change after halving?

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