Bitcoin first passed the leadership of the market to XRP and now it is Bitcoin Cash’s (BCH) turn. So what’s behind the spurt in value of BCH?
Actually it is not too difficult to work out. Minutes after the Chinese mining giant filed its IPO papers in Hong Kong the price spikes. If you want to take a look at the prospectus, head over here for the PDF.
Bitmain is one of the largest holders of BCH, estimated at 6% of the total supply or about 1 million BCH. The company has been “hodling” that holding, which has in effect put a floor in for the BCH price.
Investors expect that Bitmain will invest substantial amounts of however much it manages to raise in its IPO into developing the BCH ecosystem.
And delving a bit deeper into the finances now that we have some official figures to work from, it appears that Bitmain is not as profitable as some may have us believe.
Bitmain does not breakout the figures for the Q1 and Q2 but Techcrunch did some analysis and it points to the company burying the bad news inside its first half figure.
Turns out Bitmain probably made in the second quarter of 2018 of $400 million, as transactions on the bitcoin network plummeted this year.
That has led to doubts about the success or otherwise of the IPO, given the volatility of crypto assets and the continuing bearish conditions.
Bitcoin Cash is a fork from bitcoin. Its unique selling point is the expansion in bloc size from bitcoin’s 1 MB (effectively 2MB with SegWit) to 32MB. Supporters hope this means it will be much better-suited to the world of payments because more transactions can be stuffed into a block, thereby speeding up verification confirmation times.
Roger Ver, also known as Bitcoin Jesus because of his early-stage advocacy for bitcoin, is a major backer of BCH.
Bitmain also owns a large stash of Bitcoin, Ether Litecoin and Dash in addition to BCH. The company is the largest producer of the specialised processors known as ASICs – with its Antminer the market leader by a mile. The advent of ASICs has driven the GPU miners out of bitcoin mining.
Bitcoin maximalists see BCH as an impostor.
Bitcoin is currently trading at $6,505 and BCH is 10% higher at $562.
Gary has been writing about cryptocurrencies since 2013 and currently works as the cryptocurrency analyst at interactive investor, the UK’s second-largest online investment platform. Gary contributes for Coin Intelligence News in a personal capacity and none of his commentary should be considered investment advice. Gary is the winner of the ADVFN International Financial Awards 2018 Cryptocurrency Writer of the Year. Contact Gary on twitter at: @gary_mcfarlane