Bitcoin : BCHBTC Price on the Up is BAD NEWS for CSW/nChain/Coingeek
Don’t get me wrong, I have no idea if the bear trend has reversed to the upside or if the market is just riding off the stress test hype, regardless, the BCHBTC price rising is exactly what Coingeek/BMG do not want to happen.
“Why?”, you may ask. Quite simply, they are not mining “rationally” in the short term like most other BCH miners, they are throwing the same amount of hashrate at BCH no matter rise or fall. Of course, they have every right to do so, but they’d much rather the price continue to fall until November.
The reason for this is that due to the BCH difficulty adjustment algorithm, short term profitability comes from the market price. If BCH consistently moves upwards, more hashrate from rational miners hops over. Because of this DAA, we normally see the BCH price in percentage of BTC and the hashrate percentage of BCH in relation to BTC as nearly proportional. (Ex: BCHBTC price of 0.1 = 10% hashrate).
Because Coingeek/BMG do not switch between mining BTC and BCH, and solely mine BCH, as profitability to mine BCH against BTC goes down, their percentage of hashrate increases, as other miners swap over to BTC.
If BCHBTC continues on the uptrend, however, they have a problem keeping hashrate share, as they now actually have to compete with other miners coming over from BTC. BTC miners still take up a large percentage of the total SHA256 hashrate (about 90% as of now), meaning if only 5% of those BTC miners currently not mining BCH end up hoping over to BCH due to increased profitability before the fork (and thus increased market price) they cut Coingeek’s current hashrate percentage in half.
Now of course, Coingeek/BMG probably have the ability to scale up as well, but that’s far more expensive for them than letting the other miners abandon BCH as the downtrend in BCHBTC continues. They’d definitely prefer to see the BCH price go as low as possible before November.
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Author: lechango
Score: 10
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