Bitcoin Cash has had its first organic difficulty adjustment 19 days after the chain was created on August 1st through a chain-split hardfork.
Difficulty adjusted downwards today to around 7% of what it was on August 1st as the required numbers of blocks for the usual protocol level difficulty management was reached.
The adjustment occurred at block 479,808 at around 5AM London time today, further increasing mining profitability of Bitcoin Cash to some 125% more than Bitcoin Core at the time of writing.
However, it is very likely its hashrate at this stage is far higher than the difficulty suggests because Bitcoin Cash has found an incredible 22 blocks within one hour.
That’s not a one off. In the past hour, some 13 blocks were found, more than double the usual rate of six blocks per hour.
It’s too early to say whether this is having an effect on the Bitcoin Core chain. There were some periods when blocks became sporadic there, with just two found in one hour, but that’s not a common occurrence as far as we can see at this stage.
However, their blocks might start becoming more rare until their own difficulty adjustment which might exacerbate congestion in that chain.
Today, luckily for Bitcoin Core, is a Sunday. A day when transaction demand is usually lower than weekdays, but that could very quickly change depending on many factors.
The question in everyone’s mind is how will miners behave. They have been mining Bitcoin Core, so probably hold plenty of btc, which means they’d like its value to increase.
If they all collectively quickly move, then the opposite of a price increase for btc is likely. But for an individual miner, it probably makes more sense to move considering the far higher profitability on Bitcoin Cash.
As such, an equilibrium of sorts might be reached, but that might depend on the price action. Traders like front-running, so they may act accordingly in anticipation, which may place the remaining miners in a tough spot.
Miners themselves are traders of sorts too. They are also betting on the profitability not just for now, but a month from now or more. Explaining the mining of Bitcoin Cash even while it was extremely unprofitable in the early days.
Whoever did so was betting his mining at a loss at the time would pay off. He/she or they was or were right considering the way things have evolved.
As such, miners have to consider whether the free market will continue to give value to Bitcoin Core or Bitcoin Cash and if so at what levels.
Which is why it is probable most of them, if not all of them, will hedge and proportion their hardware dependent on current value and what they think the future value of the two will be.