Welcome, welcome to One Minute Crypto!
I’m your host Chronos, and today we’re going
to look at an interesting pattern that’s been
showing up recently in the hash rate chart
on Bitcoin Cash.
This is the combined total hashing rate of
all miners on the network, graphed over time,
and we’re seeing a strange oscillation in
the mining power.
It makes it look like miners are turning their
equipment on and off with a consistent rhythm.
So I had to ask around: why would they be
doing this?
Take a look at the chart here.
As you can see, things are bumping up and
down all over the place, but around December
28, it starts to get really consistent.
When I asked on the /r/btc subreddit, one
user thought this was due to the fact that
electricity can be cheaper at night.
Turn off the equipment during the day, then
mine at night.
Well, the wavelength does kind of match up
to a 24 hour period pretty well, so that’s
not a bad theory, but it’s not a great one,
either, because most miners simply don’t turn
off their equipment during the day.
Side note, the guy actually later admitted
to being wrong, and that in and of itself
is a rare and beautiful thing to see on the
internet, so I think our friend Rudi here
deserves a shoutout just for that.
Anyway, there’s something more going on here,
and Jonathan Toomim, an absolute Bitcoin Cash
champion, has the answer.
It’s because miners can easily switch between
mining Bitcoin and mining Bitcoin Cash to
maximize their profitability.
In Jonathan’s own words:
“Sometimes the relative profitability of mining
BCH is higher than BTC.
Sometimes it’s lower.
When the profitability is higher, even if
it’s only 0.001% higher, the rational thing
for every SHA256 miner in the world to do
is to mine BCH until the difficulty increases
again and the profitability drops below BTC,
at which time the rational thing to do is
to switch from BCH to BTC.”
So this is actually something that can show
up for any blockchain that shares its mining
algorithm with another major chain.
Miners jump back and forth, and the difficulty
lags behind, so you get a wave pattern in
the hash power graph.
For more information, including ideas to mitigate
this, check out Jonathan’s full post in the
link below the video.
I’m Chronos.
Thanks for watching!