AntPool is now burning parts of its block rewards – more precisely 12 percent of the transaction fees of an excavated block. The reason given by the Mining Pool was to upgrade the entire Bitcoin cash system and thus provide an economic incentive to Hodl. What noble motives – but is there more to it?
Disclaimer: I, Alexander Roos, am not an advocate of Bitcoin Cash’s on-chain scaling. I sold 90% of my BCH shortly after the hard fork and have held only a small stake ever since. The front men of the big blocks – Roger Ver, Jihan Wu, Craig Wright et. al. – seem suspect to me; which should mean extreme caution especially in crypto space. So when you read it, note that I am personally critical of BCH.
Bitmain’s role in the news spy
Bitmain is the largest mining hardware manufacturer in the world. The ASICs – computers that can only be used to calculate blocks – are right at the news spy. ASICs are more efficient than conventional hardware: https://www.geldplus.net/en/the-news-spy-review/ Over time, so the theory, the hobby miners are pushed out of the market. Above all, the fact that Bitmain is the largest manufacturer spreads general concern.
Let’s recall last year: The scaling debate was completely inflamed and rumors about the so-called “ASIC boost” made the rounds. The ASIC boost was a trick to make Bitmain’s ASICs more efficient than others. SegWit would eliminate this unfair advantage as a by-product of Transaction Malleability. Suddenly, Bitmain’s opposition no longer seemed like an objection concerned about Bitcoin’s security and future, but like sheer greed. The plan: hold the network hostage and milk the cow for as long as possible. Then there was the popular uprising, the User Activated Soft Fork, and Bitcoin Cash forkte away from Bitcoin. The ASICs could continue to be used in this way.
AntPool, the selfless rescuer of the Bitcoin secret
Since the fork, Bitcoin Cash has not been as priced as Bitcoin secret. Even though Roger Ver keeps stressing that BCH is the real Bitcoin. The propaganda is not enough, economic incentives must come. AntPool, a mining pool under the control of Bitcoin secret, has announced 12 percent of the transaction fees of all geminter blocks to burn. This will lower the money supply in Bitcoin Cash. The price of money, i.e. the purchasing power, results from the total money supply and the absolute demand. The burning of tokens lowers the money supply. If demand remains the same or rises, the price rises. Everyone benefits! Or?
No, AntPool does not profit. Effectively the pool makes losses through its action. This lost profit benefits the system. With this the company also advertises – for the sake of the Hodlers and the ecosystem.
A second look
Behind AntPool is Bitmain. For me, the “fundraiser” works like a PR coup to save a dying crypto currency. The 12 percent of the transaction costs are not much for Bitmain. However, the press release could have a much stronger psychological effect on the market – à la “OH WOW! Less supply at BCash than at Bitcoin! All-in”. Of course this is exaggerated, but the point is made: If more people jump on BCH through the news and hodle it in the long run, Bitmain, pardon, AntPool can get out of business with a plus.
Let’s calculate how much money AntPool has burned on April 23rd:
17 blocks were mined. The average transaction fee per block is 0.01046389 BCH. The price per Bitcoin Cash was about 1.400 Euro. 17 * 0.01036389 BCH = 0.17618613 BCH through transaction costs. This corresponds to 0.17618613 BCH * 1,400 Euro/BCH = 246.66 Euro. If we take 12 percent, AntPool burned almost 30 Euro on 23.4.2018 (246,66 € * 0,12 = 29,60 €).
They didn’t pick me up. I still have 101 reasons against Bitcoin Cash. If there’s one thing I’ve learned from last year, it’s that crypto space is a battlefield. It’s a battlefield of intrigue and deception. I think the supposed hint of altruism is a cheap marketing move. The money supply, Rothbard taught me, plays no role for the economy.
The strategy seems to work well. Bitcoin Cash has risen by 100 percent in recent days. The 30 Euros per day are no longer a factor.