The Bitcoin Cash fork, created just seven weeks ago on August 1, has introduced a dynamic new variable into cryptocurrency mining economics. With BCH trading at $428.50 as of September 23, 2017, and Bitcoin at $3,792, miners are carefully weighing profitability calculations that could reshape the distribution of hashpower between the two chains.
TL;DR
- Bitcoin Cash trades at $428.50, roughly 11% of Bitcoin’s $3,792 price
- BCH’s larger 8MB blocks attract miners seeking higher transaction fee revenue
- Profitability between BTC and BCH fluctuates hourly, causing miners to switch chains
- Emergency difficulty adjustment (EDA) algorithm creates mining incentive volatility
- Mining pools begin offering BCH-specific payout options to attract hashrate
The Fork That Changed Mining Economics
When Bitcoin Cash split from the main Bitcoin blockchain on August 1, 2017, it inherited the same SHA-256 mining algorithm. This means any ASIC miner capable of mining Bitcoin can also mine Bitcoin Cash — and miners will naturally point their hardware toward whichever chain generates higher returns at any given moment.
The economics are straightforward but the calculus is complex. A miner must consider the price of each coin, the current mining difficulty on each chain, block rewards (both 12.5 BTC/BCH per block), and transaction fees. With Bitcoin’s difficulty significantly higher than Bitcoin Cash’s, a given amount of hashrate produces fewer BTC blocks but more BCH blocks — creating an arbitrage opportunity that shifts with market prices.
Emergency Difficulty Adjustment Creates Swings
Bitcoin Cash implemented an Emergency Difficulty Adjustment (EDA) mechanism designed to prevent excessively slow blocks if hashrate dropped dramatically after the fork. While well-intentioned, this mechanism has created periods of wild profitability swings. When BCH difficulty drops sharply due to the EDA, mining Bitcoin Cash becomes temporarily far more profitable than mining Bitcoin, causing hashrate to flood into the BCH chain.
During these swings, some estimates suggest that up to 30-40% of total Bitcoin network hashrate has temporarily migrated to Bitcoin Cash. This hashrate migration causes Bitcoin block times to slow temporarily, sometimes exceeding 15-20 minutes, until BCH difficulty catches up and the economics rebalance.
Mining Pools Adapt to Dual-Chain Reality
Major mining pools have quickly adapted to the new reality. Antpool, ViaBTC, and other pools now offer miners the ability to automatically switch between BTC and BCH mining based on real-time profitability calculations. Some pools have also introduced BCH-denominated payout options, allowing miners to receive their earnings in Bitcoin Cash rather than Bitcoin.
ViaBTC, which was an early supporter of the Bitcoin Cash fork, has been particularly aggressive in offering BCH mining services. The pool has positioned itself as the go-to destination for miners who want to maximize returns by frequently switching between the two chains.
Hardware Costs and Long-Term Considerations
Despite the short-term profitability swings, the broader mining investment thesis remains centered on Bitcoin. The Antminer S9, which costs roughly $1,500-2,000 per unit, is priced based on Bitcoin mining returns. Miners making capital expenditure decisions are primarily modeling Bitcoin’s long-term price trajectory, with BCH mining serving as a supplementary revenue stream.
Energy costs remain the primary ongoing expense, and miners in regions with electricity prices below $0.05 per kWh continue to enjoy comfortable profit margins mining either chain at current prices. With BTC at $3,792 and network hashrate around 6 EH/s, even mid-efficiency operations remain profitable.
What Hashrate Distribution Means for Network Security
The oscillation of hashrate between Bitcoin and Bitcoin Cash has raised concerns about network security during transition periods. When significant mining power temporarily migrates to BCH, Bitcoin’s network is theoretically more vulnerable — though at current hashrate levels, even a 40% reduction would leave Bitcoin’s network more secure than it was for most of its history.
The Bitcoin Cash network, with its lower absolute hashrate, faces greater security implications from hashrate swings. Periods when miners return to the BTC chain can leave BCH with relatively few miners, resulting in slower block confirmation times until the EDA mechanism kicks in.
Why This Matters
The emergence of profitable SHA-256 mining alternatives to Bitcoin represents a fundamental shift in how cryptocurrency mining operates. For the first time, miners have a meaningful choice between competing chains using the same hardware, creating a market-driven mechanism for allocating computational resources. This dynamic is likely to become even more important as additional Bitcoin forks emerge and as Bitcoin Cash matures. The mining industry’s ability to fluidly allocate hashrate between chains may ultimately serve as a decentralized governance mechanism — one where miners vote with their computing power on which blockchain provides the most value.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Mining profitability calculations are subject to rapid change. Always conduct your own research before making investment decisions.