The less than one-month-old digital currency Bitcoin Cash recently experienced a significant reduction in its mining difficulty following a difficulty adjustment. The code specifies that if not enough blocks are found in a certain period of time, a difficulty adjustment will occur.
As a result of this 60% reduction in difficulty, the cryptocurrency temporarily became more profitable than Bitcoin to mine. Bitcoin Cash, for a time, attracted nearly 40% of Bitcoin’s miners.
Because of the huge surge in hash power and the low difficulty, Bitcoin Cash’s network produced the requisite 2016 blocks very quickly, and now another difficulty adjustment has occurred. Bitcoin Cash is now much harder to mine and is less profitable than mining Bitcoin. Miners have now abandoned Bitcoin Cash in droves, causing block times on the network to exceed six hours.
Bitcoin Cash, was created in early August by developers who were unhappy with Bitcoin’s adoption of SegWit and its shunning of larger block sizes. Since both Bitcoin Cash and Bitcoin use the same proof-of-work to safeguard their transaction histories, both networks are now effectively competing for hash power as miners continue to mine the more profitable chain.
Bigger question looming
In November, the Bitcoin network is set to once again decide on an upgrade. At that time, the 2 MB blocksize of the SegWit2x agreement will be implemented. While the vast majority of miners and exchanges are apparently supporters of this, Bitcoin’s core development team is strongly opposed.
Since the 2 MB blocksize increase will be a hard fork, there’s a chance that Bitcoin’s core team and their supporters will continue mining the legacy chain after the upgrade occurs. That could result in two different networks competing for the “Bitcoin” name.
Meanwhile, Bitcoin Cash’s price has dropped to slightly below $600 from a high of $1,000. The price of Bitcoin, has maintained stability in the $4,000 to $4,500 range for several days.