The headline is incorrect, the graph shows the RELATIVE hashrate of Bitcoin and Bitcoin Cash.
The absolute hashrate of the Bitcoin network is still increasing [0].
All this chart demonstrates is that the hashrate of Bitcoin Cash is increasing faster than the hashrate of Bitcoin.
This also means that NEW hashing power is coming online, not that hashing power is necessarily switching from Bitcoin to Bitcoin Cash (even if it's currently more profitable to mine Bitcoin Cash than Bitcoin [1]).
Transaction fees, even when they're really expensive like they currently are on the Bitcoin chain, are still minimal in comparison to the block reward of 12.5 Bitcoins (or about $51,250 at current prices) per block found.
Here's a link to a recent full block found on the Bitcoin chain, total transaction fees were 0.43 BTC (or about $1,750).
My ignorant TL;DR: BCH may temporarily more profitable in part because hardware goes a lot further against the reduced difficulty. As more miners are attracted to BCH, the difficulty should theoretically balance in correlation with the "in-practice"/exchangeable value of BCH.
Clicking on the 'difficulty' tab seems to confirm this:
I barely remember some mention of (at least the potential for) miners cooperating to reduce the difficulty for BCH after the fork. If I'm understanding this right (unlikely!), the relative hashpower is a pretty bad metric for comparison unless difficulty is also factored in?
I personally use the open source NiceHash client to earn what currently works out to $.06/day with a single older desktop GPU (thanks "free" internet + electricity!) because I don't want to be bothered with micro-managing to point the infinitesimally small fraction of mining power I experiment with in the optimal direction.
The difficulty re-targets once every 2016 blocks. Bitcoin Cash (BCH) has a added feature that re-targets the difficulty downward if blocks are being found too slowly. Bitcoin's Legacy chain doesn't do this so if enough hash power leaves the legacy chain in a short period of time it causes slow block times and people hope that if it gets bad enough there will be an inflection point where people abandon the legacy chain for Cash. The likely hood of that happening is anyone's guess.
That downward adjustment is total bs, and can enable (like is happening currently) a scenario where miners lower their hashpower for ~12 hours, the difficulty drops, and they all pile back on and get ~2 minute blocks for 2016 blocks and earn a shit ton of money.
So the delay between BCH's new rapid/emergency 'difficulty downward' and its re-targeting back upward using the standard method is the window of opportunity/market inefficiency/whatever you want to call it?
Can anyone comment on what is driving this? I read an article about it being more profitable to mine Bitcoin Cash a few days ago, but as with most of these cryptocurrency releases I find it tough to separate the marketing from the truth.
It is currently 116% more profitable to mine Bitcoin Cash than Bitcoin [0] -- this figure will fluctuate as the price of Bitcoin and Bitcoin Cash fluctuate, and the difficulty to mine each cryptocurrency adjusts every 2016 blocks.
In this case it is the truth. The price of Bitcoin Cash is going up and the difficulty to mine had been going down. So for now, it is more profitable. It will likely go back in forth for a while before there's a dominate winner.
Yep. As it becomes more profitable more people mine, the difficulty goes up, profitability goes down, people stop mining, difficulty goes down, and so on.
That's correct -- the difficulty to mine BCH will reset at block 479,808 (the last adjustment) + 2016 blocks (the number of blocks in between each difficulty adjustment).
The difficulty of mining BCH is currently expected to increase at the next difficulty adjustment, and thus profitability will go down.
I was under the impression, it was miners that by and large were in favour if segwit and everything that goes along with it. Part of point of Cash was to try to reduce the influence of miners on the currency. So my guess is it's just bet-hedging for now.
That's incorrect - in general the miners are opposed to SegWit, but they accepted a compromise of agreeing to SegWit if they could increase the block size to 2 MB (from 1 MB currently). SegWit will be activated within 24 hours, but Bitcoin Core (the main developers of current Bitcoin code) have already said they are not going to support an increase to 2 MB blocks. They also claim they never agreed to it in the first place.
As a result, it's very likely to see another hard fork to 2 MB in November, so there will be 3 chains with a shared transaction history, and most like all will claim to be the real Bitcoin -- personally I don't think debating which one is the "real" one is worthwhile, just use the one you want, but eventually it's likely that one chain will get the majority of hashing power and have a much higher price per token than all the others.
The Bitcoin Core developers were never part of the agreement to hard-fork and increase the block size - they've said it was a terrible idea all along at least on the time scale proposed. I don't think they even knew about it until it was publicly announced. Also, SegWit increases the block size to 2-ishMB by itself (it's complicated, because older nodes need to think blocks are still under 1MB, which is done by stripping out parts of SegWit transactions when sending to them). This means that in practice the hard fork gives a block size of 4-8MB.
The "compromise" framing of "we gave you SegWit, now you have to give us a hard fork" is pretty terrible too, because the two aren't symmetrical - SegWit makes hard forking less urgent, but hard forking to increase the block size makes the SegWit improvements more important because they're designed to make larger blocks work better. Even Bitcoin Cash copied one of the key SegWit improvements, the transaction hashing change, in very slightly modified form for this reason.
I don't think 'symmetrical' means what you think it means. Just because A makes B 'less urgent' or 'more efficient' doesn't mean we have to choose between A or B. Why not both? Bitcoin Core's dev did not give a good technical reason for not adopting 2MB beyond crowding out smaller miners blah blah blah. I mean, come on. Have they seen the last 1000 blocks list these days?
There is a good explanation on reddit of the history of this. [0] The Core developers did agree to a block size increase though in what is commonly referred to as the Hong Kong Agreement. They didn't follow though on that agreement and made up some truly weaselly excuses for why.
More recently a large group of players in the space came together and agreed to what has come to be called the New York Agreement (NYA) This said that they would support Segwit and a 2MB hard fork for bigger blocks. Core and Blockstream who largely controls Core have ignored the NYA and worked against it. They are pretending like segwit has support w/o the 2MB block increase when it doesn't and they are going around doing some truly cringe worthy stuff to tray and scuttle the 2MB part of it.
At least 5 by my count and the CEO of your own company which employs still more. If what you say is true then the HK agreement wasn't made in good faith.
Miners are in favor of profit; the price of Cash went up 2.5X over the past three days, so until the mining effort does the same, mining Cash is especially lucrative.
I'll caveat my statements by acknowledging I'm an outsider to all of this. That said, it was my understanding that BTC's decisions regarding segwit were driven by the proprietary interests of Blockstream. Is this correct?
Not sure what you mean by "BTC's decisions" -- it's a decentralized network that has A LOT of different stakehodlers -- some more important than others, some louder than others.
All humans are driven by self-interest, as far as I understand Blockstream employees are humans.
Edit: After re-reading my response, I wasn't trying to be a jerk to you, poking fun at Blockstream.
No offense taken! To clarify on what I mean by "BTC's decisions," the tale I've heard is that a small group of people control a lot of the messaging around Bitcoin, e.g. the sub-reddit and a site and a Twitter account. These people also had an economic interest in Blockstream. So they used the fork to promote a solution that benefits Blockstream.
Yep, that's pretty much spot on. R/Bitcoin is extremely censored (and the mod logs are not public). R/BTC is another discussion forum that seems to be more open (people from R/Bitcoin will say otherwise). You'd think they'd spend more time talking about all the amazing things blockchain technologies are going to facilitate, but they mostly just spend their time hating on the other group. Sad, but what do you expect, both groups are comprised of "humans on the internet"!!
that doesn't agree at all with what i've seen of this situation unfolding.
i think:
bch was created by people who want to use adjustable block size caps to scale transaction volume, and this favours established miners and consolidates their influence.
segwit was created by people who want to try a second layer for transactions (specifically the lightning network), and some miners are opposed to this direction because they would not collect fees on layer-2 transactions.
The absolute hashrate of the Bitcoin network is still increasing [0].
All this chart demonstrates is that the hashrate of Bitcoin Cash is increasing faster than the hashrate of Bitcoin.
This also means that NEW hashing power is coming online, not that hashing power is necessarily switching from Bitcoin to Bitcoin Cash (even if it's currently more profitable to mine Bitcoin Cash than Bitcoin [1]).
[0] https://bitcoinwisdom.com/bitcoin/difficulty
[1] https://cash.coin.dance/blocks