Bitcoin Cash, which forked off from Bitcoin back in 2017, has reduced its block rewards by half, leading many cryptocurrency miners to see their gross margins drop to nearly zero.
The world’s fifth-largest cryptocurrency network by market capitalization recently reached block height 630,000 and this led to the so-called “halving” event that reduced the network’s mining reward from 12.5 Bitcoin Cash per block to just 6.25.
As a result of the halving, miners competing for block rewards on the network will see their current mining revenue reduced by half which will result in slight returns or possibly none at all despite the investments they’ve made in costly mining equipment.
The mining difficulty and hash rate on Bitcoin Cash has been on a downward trend recently as those in the cryptocurrency mining business prepared for the halving. At the same time though, the cryptocurrency’s price has also declined from $492 per coin in mid-February to as low as $165 in mid-March. At the time of writing, Bitcoin Cash is slightly up at $258, according to CoinDesk’s price index.
No longer profitable
By using data from F2Pool, CoinDesk was able to determine that a wide range of cryptocurrency mining equipment from 2018 and early 2019 is now generating negative daily profits at Bitcoin Cash’s current price and the network’s latest hash rate.
Even some of the more recent models that arrived at the end of last year and in early 2020 are now seeing gross margin drop to around 10 percent. More powerful models such as MicroBT’s WhatsMiner M30S or Bitmain’s AntMiner S19 or S17 Pro could be able to generate a margin above 30 percent but unfortunately, both manufacturers have been unable to deliver their newest models to market in large numbers.
As miners who can no longer make a profit unplug from the Bitcoin Cash network, mining difficulty will further decrease which means that mining revenue will increase for those who can still afford to stay in the game.
The Bitcoin Cash halving event is just a taste of things to come though as the Bitcoin network is scheduled to experience a similar event in around 35 days.