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Why miners are choosing Bitcoin Cash Mining over Bitcoin

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Though bitcoin is the leading cryptocurrency in terms of market value and capitalization, its mining is turning out to be unprofitable for most miners.

Though bitcoin is the leading cryptocurrency in terms of market value and capitalization, its mining is turning out to be unprofitable for most miners. That is mainly after including the retail price of electricity since it consumes energy heavily. As a result, there is a question mark whether to mine bitcoin cash to make profit relative to mining bitcoin. While it might sound a little bit absurd until a few weeks ago, things are changing for the better.

 

Mining Is Difficult

Though miners of bitcoin generated record revenue of $5 billion in the last six-month period, they could not earn any profit for the first time. That is mainly due to costs involved and increasingly becoming difficult to mine whereas the rewards continued to be the same. The mining structure suggests that every subsequent block needs increased computing power than the preceding one thus making it a tough proposition to survive. A recent analysis suggested that bitcoin mining cost has exceeded the rewards for the electricity cost for most mining operators though they might have generated record revenue.

There is no doubt that the existing atmosphere is not conducive enough for miners and indicated a big change in perception for miners of the leading digital coin. Though China provides some relief in terms of subsidized and cheap electricity, the overhead costs make it tough for them to generate profit. There is also increased competition hurting profitability. Interestingly, Bitmain is the manufacturer of the majority of mining rigs, and the responsibility rests with it to boost computing power, as well as, efficiency level to make mining profitable again.

 

Changes in Reality

Until a few weeks ago, no one has ever thought that mining of bitcoin will become unprofitable and that mining in bitcoin cash will make it a profitable one. For instance, in the last 5-day period, the price of bitcoin cash surged 47.71 percent to trade around $634 levels. In fact, this is the only virtual asset that increased more than half among the top ten. On the other hand, bitcoin rose 3.5 percent only in the same period.

Therefore, it is the price that makes it less attractive to mine bitcoin since the reward factor remains the same. The recent price increase in bitcoin cash suggested that miners are getting more than two percent in mining bitcoin cash relative to bitcoin mining. The spread is likely to increase further in the upcoming days with respect to the fourth-ranked digital coin.

 

Downwards Adjustments

The reason behind it is that mining difficulty algorithms are adjusted towards downwards by as much as 50 percent. For instance, a block 479,808 could prompt difficulty adjustment by approximately 50 percent downwards. This would mean that if everything else remains equal, then miners could nearly double in mining bitcoin cash relative to bitcoin.

This would mean that more miners would be tempted to move towards bitcoin cash from bitcoin. As a result, the liquidity factor, which is the main plus point for bitcoin, will get eliminated in bitcoin cash. The trend is already seen, and there are already enough indications that bitcoin cash will continue to move higher whereas bitcoin will struggle and trend lower at least in the near-term.

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Donald Trump policies push Mexico to Bitcoin

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Mexico has seen a new all-time high trading volume on localbitcoins. This comes out on the back of the announcement from the Trump Whitehouse.

Mexico has seen a new all-time high trading volume on localbitcoins. This comes out on the back of the announcement from the Trump Whitehouse that remittance payments of Mexican migrants in the United States of America will potentially be the target of new restrictions essentially ending the possibility of Mexican migrant workers to be able to cheaply send money back home to their families.

 

Mexico adopting Bitcoin:

Mexico has been experiencing a massive increase in the number of transactions on localbitcoins. Mexican migrant workers are believed to be exploited by the remittance companies which are charging around 10% fees. What is essentially being discussed here by the Trump Whitehouse is a new tax on these migrant workers. The number that they are currently floating around is a 3% tax on the remittances going from the USA to Mexico. This may not seem super crazy but considering the $33.4 billion which were sent to Mexico in 2018 alone, that extra 3% could mean $1 billion more per year for the United States government.

 

98% of the transactions that were sent during the last year, were sent via electronic means which means that there is actually a very strong remittance route that is ready for mass disruption going from the United States to Mexico and Bitcoin could be the perfect answer. However, the average size of a remittance payment from the United States to Mexico is $322 last year and the problem is that if the fees rise again exponentially on bitcoin, then bitcoin might not be the ideal cryptocurrency for these kinds of smaller remittance payments. Maybe we are going to see some other cryptocurrency being adopted in that situation. But regardless of which cryptocurrency is used, we can see that there is a clear need for disruption as government policies again seeks to impede or overly exploit the free float of money.

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Bitcoin Crashes Downwards: Is BTC Going to Fall Back to $4000?

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Bitcoin fell down to test the $5000 support level. If the current support around $5000 is broken, BTC might really crash to $4500 and $4200 support levels.

Bitcoin fell down to test the $5000 support level which is the most crucial level for BTC currently. The downward correction started after bitcoin tested the $5500 resistance level yesterday at around 18:00 UTC.

 

The resistance around $5500 proved very strong and pushed the price downwards sharply. The sharp declining pattern attracted a lot of sellers which even pushed the price below $5200 support level and BTC tested the $5000 support reaching up to $5018.

BTCUSD Price Chart- Coinbase

BTCUSD Price Chart- Coinbase

Bitcoin is currently trading around $5070 (at the time of publication) showcasing a bearish pattern.

 

Bitcoin Price Drop:

The sudden price drop has led to people speculating that BTC might soon crash back to the $4000 range. Earlier, analysts were also predicting the sudden rise of bitcoin to be a conspiracy. Also, Bloomberg had also called the sudden rise a Blip. If BTC had successfully crossed over the $5500 range, the next major resistance was around $5800, however, BTC fell sharply losing more than $400 in value over the last 24 hours.

 

The bearish move does not clearly indicate a crash towards $4500 and $4000 range, however, if the current major support around $5000 is broken, BTC might really crash to $4500 and $4200 support levels. With the price of bitcoin falling, other major altcoins are also in the red zone today with Ethereum falling more than 8% in the last 24 hours, XRP falling more than 6% and Litecoin falling around 12% in the last 24 hours.

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China to completely ban crypto mining: Bitcoin about to Crash Hard?

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As reported by Bloomberg, China is moving towards putting a complete ban on mining bitcoin and other crypto as it causes serious wasatage of resources.

As reported by Bloomberg, China is moving towards putting a complete ban on mining cryptocurrencies such as bitcoin. In accordance to a document posted by the National Department and Reform Commission of China, the mining of cryptocurrencies should be completely banned as it causes serious wasatage of resources.

 

China is known to be the largest hub of cryptocurrency mining with huge mining rigs been set up in the country. Earlier, China has also banned small investors to invest in security token offerings or STOs and only large investors with more than $1 million funds are allowed to invest in such projects. Now, the country is planning to take strict action against cryptocurrency miners in the country.

 

Cryptocurrency miners were earlier attracted to China due to their cheap electricity rates and subsidies in the country, however, due to the strict actions being taken by the government with the guidelines of the NDRC which has disincentivized cryptocurrency mining, a lot of miners have shut down their operations or moved to other nations.

 

Largest Mining Pools in China:

China has been a hub for some of the largest cryptocurrency mining polls. Even though the mining pools have been shifting to other countries, there has been some effect of the ban on the market for bitcoin and other cryptocurrencies as the mining is a major part of the overall working of cryptocurrencies.

 

How do you think the complete ban on cryptocurrency mining in China will effect the bitcoin price? Tell us in the comments section below.

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