A study by Binance Research analyzed the economy behind digital mining. The analysis considered the time elapsed since the execution of both forks.
A report prepared by Binance Research, the subsidiary of the exchange house Binance dedicated to studying the crypto market, noted that the miners that abandoned their work on Bitcoin (BTC) to engage in the mining of Bitcoin Cash Satoshi’s Vision (BSV) and Bitcoin Cash (BCH) had lost the opportunity to receive more than USD 20 million.
The report, entitled “Bitcoin Mining Allocation,” is a research study aimed at making known the reasons why some miners are “economically irrational” when allocating computing resources among these three cryptocurrencies. In the case of Bitcoin SV, Binance Research explained that, in less than a year, the miners could have raised between USD 12 million to USD 13 million if they had acted rationally when allocating mining resources,” referring to the functions that were no longer executed in the Bitcoin network.
Regarding the miners that moved to Bitcoin Cash, the researchers emphasized that the estimated cost is around USD 7.7 million. The analysts consider that the situation could have been avoided if the BCH miners “had been completely rational when allocating their computing resources.”
The study, released on Wednesday, December 18th, considered the 13 months that have elapsed since the hard fork of Bitcoin Cash, taking place on November 15th, 2018, which resulted in two versions of the chain: the one called Bitcoin Cash ABC and Bitcoin Cash SV.
Another part of the report considered the period of time between August 2017 and December 2019. It should be noted that this is the case of the first Bitcoin fork from which Bitcoin Cash emerged.
According to Binance Research, there are several reasons why the allocation of processing power is not in line with its theory of efficiency. Its analysis points to liquidity and markets, miners’ expectations, intrinsic differences, and game theory.
In its conclusions, it is worth highlighting that the market price was the main driver of the number of computer resources allocated to secure a blockchain under the Proof of Work (PoW) modality.
Between the mining of BCH and that of BSV, the former would be more rational from the economic point of view while the latter has suffered a loss of opportunities in 2019. According to the researchers, BSV mining has lost the opportunity to receive 15% during this period of time, when compared to its total mining proceeds after the fork occurring in 2018.
The report also noted that the cryptocurrency mining industry has become a billion-dollar sector and that it has grown more specialized over time, especially due to the arrival of ASIC equipment.
The comparison considered that Bitcoin and Bitcoin Cash, as well as Bitcoin Cash SV, use the SHA-256 algorithm. According to data from blockchain.com, the processing power or hash rate of Bitcoin is currently about 100 EH/s (100 trillion hashes per second), while that of Bitcoin Cash is 2.5332 EH/s and that of Bitcoin Cash SV is 1,111 H/s.
By Willmen Blanco