On April 8th, Bitcoin Cash underwent its 1st halving after its 630,000th block was mined. The network’s block reward was slashed down to 6.25 BCH from 12.5 BCH and as expected, a plethora of problems have followed the fifth-largest token aftermath of the event.
For starters, right off the bat, Bitcoin Cash’s hashrate and difficulty suffered a major freefall. Hashrate, in which the amount of computational power allocated to mining dropped down to 810 PH/s, and it was down by 78 percent from its peak on April 8th, 2020 which was roughly 4000 PH/s. such a drop over a 48-hour window is unheard of in the digital asset space.
Simultaneously, its block difficulty faced a major adjustment as well, as the dynamic fundamental metric registered a drop down to 270 billion from a high of 528 billion on April 8th.
Why did the hashrate and difficulty plummet so fast?
The number of concerns currently connected to Bitcoin Cash’s network is enormous and the drop in hashrate and difficulty is something that was foreseen before the halving.
As mentioned above, a halving event reduces the block rewards or subsidy of the miners indicating they will be making less profit from mining BCH blocks.
With respect to BCH’s current price, miners are looking at block rewards of $1491 per 10 minutes after the halving. In comparison, BTC miners are earning $86,687 per mined block at the moment and after its BTC halving, they will be earning around $40,000-$45,000, depending on BTC’s price.
The difference is appalling and such profit differences have possibly motivated BCH miners to shift their hash power to Bitcoin’s network at the moment. The huge drop is hashrate verifies the above fact as BCH miners were already taking off their hash power or facing a state of capitulation.
What can happen after Bitcoin Cash’s hashrate drop?
Glad you asked.
The problem with the drop in hashrate is that it directly increases the chances of a 51 percent attack on Bitcoin Cash’s blockchain. Even before the hashrate dump, BCH’s network had projected a weakened network state for a while now, and the recent slash in rewards has made it worse.
With miners moving out, the possibility of a 51% attack is legitimate and according to data, it is relatively cheap as well.
Data from Crypto51.app suggested that in order to conduct a 51 percent attack on Bitcoin Cash, the cost would be $9130 per hour. In comparison, launching an attack on Bitcoin is at $577,596, which is approximately 63 times more than BCH.
An attack on Ethereum is significantly high as well, with the cost being $11,649 per hour.
Hence, the vulnerability state of Bitcoin Cash’s network is a real dilemma and over the next few weeks, the picture will be more clear on whether BCH’s blockchain would face any real adversity for malicious actors.