Recent research has revealed that miners for Bitcoin SV (BSV), a fairly-new cryptocurrency hard-forked from Bitcoin Cash (BCH), are hemorrhaging money at an alarming rate.
Blockchain and cryptocurrencies are almost all completely dependent on mining — the creation and confirmation of new blocks of data on the blockchain. With Bitcoin and most other cryptocurrencies, mining is incentivized through transaction fees and block rewards.
According to BitMEX Research, Bitcoin SV (BSV) miners are losing money.
A hardfork is the process where a developer and miners begin mining blocks on a new blockchain with a different validation protocol. This freedom is fundamental to the Bitcoin value proposition. Decentralization mandates that a free market is allowed to function.
Nevertheless, recent Bitcoin hardforks have been met with some controversy. For example, the Bitcoin Cash (BCH) hardfork — promoted by Roger Ver, Craig Wright, Calvin Ayre, Jihan Wu, and others — divided the Bitcoin community. Many have called the altcoin spinoff is scam, though others claimed it was the true Bitcoin.
When it comes to Bitcoin SV, BitMEX research indicates that miners willing to work on this blockchain are losing massive sums of money. In fact, since the hardfork, the cryptocurrency has cost miners in excess of $22 million.
What’s the Motivation to Mine Bitcoin SV?
When looking at the numbers, one can’t help but wonder: Why in the world would miners be willing to lose this kind of cash?
The answer may be related to early investment. Miners could be willing to work on the chain in the hope that the market will continue to increase — allowing for future returns. This sort of up-front investment is not uncommon.
Another option could be a sort of techno-nepotism. A group of miners could be receiving off-chain returns or payments by one or more third parties. This would keep them mining, even while showing a loss because those losses would be covered.
Regardless of what is motivating the continued mining of the Bitcoin SV blockchain, the reality is that nothing can bleed forever. If the coin doesn’t begin to create profits for miners, it will eventually collapse.
The Market Decides
Bitcoin and other cryptocurrencies eventually create a world where scam coins will fail. While it is certainly true that those scams can wreak havoc on investors, eventually they will die — and those who create and support them will be exposed.
If BSV is indeed a “pure dumpster fire,” as Ethereum (ETH) creator Vitalik Buterin once said, the coin will eventually die.
Think Bitcoin SV (BSV) is the path towards extinction? Let us know your thoughts in the comments below!