Hello my fellow steemians and crypto investors,
I’ve been recently hearing a lot of talk about Bitcoin cash becoming more profitable to mine than Bitcoin. Indeed, some hashing power has moved to Bitcoin Cash temporarily and mining profitability is higher on the new chain.
Many are making their bets thinking this could become a trend that leads to the potential overtaking of Bitcoin’s rule in the crypto world.
Why is this a bad idea?
The problem with this short term thinking is that mining difficulty will eventually adjust on both chains. If more hashing power is devoted to Bitcoin cash, the difficulty will automatically adjust up and thus mining on this chain will become less profitable. Also, if less power is devoted to Bitcoin the difficulty will be lower and it will become easier to mine it.
Bitcoin's network effect is light years ahead of Bitcoin Cash's
This is what will likely happen with mining profitability on both chains:
We will see several adjustments in the difficulties on both chains until they reach an equilibrium.
Despite the current profitability advantage, most mining pools still mine on the Bitcoin chain. They understand this is a temporary phenomenon and switching would require lots of efforts re-configuring their current equipment so for them is not really worth it.
So, what do you recommend?
I’d recommend holding both coins. Most investors already own Bitcoin cash just by virtue of them holding Bitcoin before the hard fork. Also, Segwit implementation is around the corner and it will bring about a lot of potential second layer solutions to Bitcoin, such as the Lightning Network. Greater mainstream recognition and legislative initiatives are in the pipeline for Bitcoin as well and will soon be announced.
I would say selling Bitcoin proper to increase Bitcoin cash holdings is really a bad idea at this time.
Just HODL both and wait 2020!
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Tell me what you think about this post in the comments below. This is not professional investment advise. I'm not your financial advisor. Only invest money you can afford to lose!
Happy crypto investing!