The total network hash rate graph on Bitcoin Cash is showing some unusual oscillations. What could be the cause? Watch the video to learn more: https://youtu.be/hpAO6SetXRo
Read the full transcript below.
Welcome, welcome to One Minute Crypto! I'm your host Chronos, and today we're going to look at an interesting pattern that's been showing up recently in the hash rate chart on Bitcoin Cash. This is the combined total hashing rate of all miners on the network, graphed over time, and we're seeing a strange oscillation in the mining power. It makes it look like miners are turning their equipment on and off with a consistent rhythm. So I had to ask around: why would they be doing this?
Take a look at the chart here. As you can see, things are bumping up and down all over the place, but around December 28, it starts to get really consistent. When I asked on the /r/btc subreddit, one user thought this was due to the fact that electricity can be cheaper at night. Turn off the equipment during the day, then mine at night. Well, the wavelength does kind of match up to a 24 hour period pretty well, so that's not a bad theory, but it's not a great one, either, because most miners simply don't turn off their equipment during the day.
Side note, the guy actually later admitted to being wrong, and that in and of itself is a rare and beautiful thing to see on the internet, so I think our friend Rudi here deserves a shoutout just for that.
Anyway, there's something more going on here, and Jonathan Toomim, an absolute Bitcoin Cash champion, has the answer. It's because miners can easily switch between mining Bitcoin and mining Bitcoin Cash to maximize their profitability. In Jonathan's own words:
"Sometimes the relative profitability of mining BCH is higher than BTC. Sometimes it's lower. When the profitability is higher, even if it's only 0.001% higher, the rational thing for every SHA256 miner in the world to do is to mine BCH until the difficulty increases again and the profitability drops below BTC, at which time the rational thing to do is to switch from BCH to BTC."
So this is actually something that can show up for any blockchain that shares its mining algorithm with another major chain. Miners jump back and forth, and the difficulty lags behind, so you get a wave pattern in the hash power graph. For more information, including ideas to mitigate this, check out Jonathan's full post in the link below.