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Author Topic: The effects of miners swinging from one coin to another  (Read 550 times)
Preclus
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November 12, 2017, 10:25:44 PM
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Bitcoin is designed to adjust difficulty based on mining hashrate.

Now there are multiple versions of bitcoin with varying mining difficulty.

A miner can choose to apply their mining hashrate to the version of bitcoin that gives them the most money for their hashing power.

This has manifested itself in the majority of hashing power switching over to Bitcoin Cash in the last couple days.

And the disappearance of hashrate from BTC has caused transaction confirmations on the BTC network to slow down to a crawl because there is a high difficulty but the miners have left for the (easier to make money) BCH chain.

Now, the BCH mining difficultly will adjust higher (because of the mining power on the chain) and at that point, miners can move back to BTC because it will become more profitable to mine BTC. At that point, BTC will be "easy" to mine because it possibly readjusted to a lower difficulty as there were fewer miners.

Because all the mining hashrate was on the BCH chain, when BCH changes difficulty the change will be based on all the hashing power it had. BCH will be more difficult to mine. After the BCH difficulty change and the miners move to the BTC chain, transactions confirmations on the BCH chain will slow to a crawl because the difficulty is high and the miners have left.

And then the whole cycle will repeat with one coin getting all the miners and then the other coin getting all the miners and the difficulty swinging wildly between low and high as the network tries to readjust.

Essentially, miners are taking advantage of the delay in the difficulty adjustment. Pumping it high, then moving to an other chain where it is low waiting for it to adjust and then switching back. This makes the miners more money.

Is that a correct analysis of what is going on or not?
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It is a common myth that Bitcoin is ruled by a majority of miners. This is not true. Bitcoin miners "vote" on the ordering of transactions, but that's all they do. They can't vote to change the network rules.
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haltingprobability
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November 13, 2017, 05:27:35 AM
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Looks pretty stable to me:

tertius993
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November 13, 2017, 07:20:37 AM
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Looks pretty stable to me:



I think that is a misleading image - it only goes to 5th November - remember we have ‘t seen a difficulty adjustment for BTC since the massive rise in BCH started. However, if you look on sites like bitcoinwisdom, you will see that a significant adjustment is coming (albeit very slowly!) and block times are well below the target of 10 minutes.

I think the OP raises a good question which I have been wondering about as well. The 2,016 block / “two week” gap on difficulty adjustment works fine with increasing hashrate or small reductions but it doesn’t cope well with a significant drop. Bitcoinwisdom currently forecasts the next adjustment is nearly 20 days away.
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November 13, 2017, 08:49:21 AM
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Is that a correct analysis of what is going on or not?


Yes. See https://bitcointalk.org/index.php?topic=2393552.0

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November 13, 2017, 10:21:19 AM
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Well miners are wise decision makers even if I would mine I will go to more profitable one just like what happened yesterday that they switch to BitcoinCash (BCH) and give more hashing power to it. But right now I think because of the dumped of Bitcoin Cash right now they would now mine to the most profitable and that would be Bitcoin. I hope Bitcoin will regain more and more this time around.
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November 13, 2017, 10:33:15 AM
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Well miners are wise decision makers even if I would mine I will go to more profitable one just like what happened yesterday that they switch to BitcoinCash (BCH) and give more hashing power to it. But right now I think because of the dumped of Bitcoin Cash right now they would now mine to the most profitable and that would be Bitcoin. I hope Bitcoin will regain more and more this time around.

Yes. There is no conspiracy. Of course the miners mine the most profitable coin. But the resulting problem are the large swings in mining power regarding each coin and resulting swings in block time.

https://bitinfocharts.com/comparison/bitcoin-confirmationtime.html#3m

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November 13, 2017, 10:40:28 AM
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Good analysis. So the difficulty should be adjusted more frequently? Roll Eyes
Matias
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November 13, 2017, 10:47:34 AM
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Good analysis. So the difficulty should be adjusted more frequently? Roll Eyes

To my understanding, the right thing to do would be to stop using Emergency Difficulty Adjustment (EDA) in bitcoin cash, since it causes these swings (again; to my understanding).
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November 13, 2017, 01:53:12 PM
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Certainly seems to be having quite an impact on transaction times and costs right now.
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November 13, 2017, 05:30:52 PM
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It would seem to make sense to make things like bcash merge minable with Bitcoin. Infact we could fork bcash to make a merge minable version of it. This way we can keep all the advantages of bcash without supporting the acrimonious environment that competition over hshpower brings.
For miners it's the same, as they don't need any opportunity cost to make the decision. Mine both.

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