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Dec 18
2019
Binance Research: BSV and BCH Miners Might Have Earned Millions More If They Also Mined BTC


Binance Research has released a groundbreaking report on the economics of Bitcoin mining, which compares and analyzes mining mechanics and profitabilities between Bitcoin, Bitcoin Cash, and Bitcoin SV.

Binance Research, the market research and analysis arm of Binance, has published a new report on cryptocurrency mining, which has evolved into a billion-dollar industry thanks to the rise in the price of Bitcoin and other cryptocurrencies. The report, titled “Bitcoin Mining Allocation,” focuses on Bitcoin (BTC) and two of its forks: Bitcoin Cash (BCH) and Bitcoin SV (BSV). 

In its new report, Binance Research estimated BSV miners missed out on $12.5 million in potential collections if they were mining BTC instead, during the 13 months that have elapsed since BSV’s launch. Meanwhile, the cumulative opportunity cost for BCH miners over the same period is estimated at $7.7 million.

The report noted that the crypto mining industry has increasingly become more specialized, as shown by the prominence of Application-Specific Integrated Circuit miners or ASICs. The report outlines the change in BTC’s mining paradigms, from CPUs and GPUS to Field Programmable Gate Array (FGPA) setups and the current dominance of ASICs, as well as the main players in the mining industry.

The report also compared mining mechanics and profitabilities between BTC, BCH, and BSV. Binance Research noted that cryptocurrency mining for BCH was often more economically rational, while BSV mining involved a significant opportunity cost for most of 2019, which is estimated at more than 15% of its total mining revenue for its entire history, since the November 2018’s fork. 

Nevertheless, underlying mechanics for mining BTC, BCH, and BSV are largely the same, as they use the same hashing function. According to Binance Research, the respective mining profitabilities, expressed by the mining reward-to-difficulty ratio, of the three coins were expected to converge in the long run, despite their different price points. 

The report noted that BCH’s mining profitability became nearly equal to BTC’s in March 2018, nine months after their chain-split. Meanwhile, the mining profitability of BSV started to converge with those of BTC and BCH in August 2019, also nine months after its hard fork from the BCH blockchain.

“Potential reasons for seemingly suboptimal mining allocations include varying liquidity conditions, a partial lack of mature derivatives products, additional rewards from merged mining, and differences in the structure of mining pools,” according to the report.

However, Binance Research concluded that the aforementioned reasons do not necessarily explain BSV’s lower mining profitability compared to its namesakes and that additional factors may be involved, which are either political or otherwise non-economically driven.

Read the full report here.