Ever since Bitcoin Cash was launched, conflicting reports have surfaced regarding its adjustable mining difficulty. A new chat log involving Greg Maxwell seemingly indicates how BCH miners can willingly take advantage of the algorithm to generate a greater amount of coins on demand than they would otherwise. That is quite a serious accusation, and the information provided by Maxwell appears to confirm this is indeed possible. It seems the way that mining difficulty is calculated leaves much to be desired.

Bitcoin Cash Mining Difficulty Causes Concern

There are plenty of reasons to be concerned over how the Bitcoin Cash mining difficulty is determined. We have seen a major influx of hashpower over the past few days, yet the network difficulty is still only 7% of that of the Bitcoin blockchain. That seems quite strange, as this lower difficulty combined with a higher hashrate allows mining pools to successfully reap block rewards in quick succession. In fact, the average block time has fallen to around three minutes at the time of writing, which means around 280 BCH is created on the network every hour.

Figuring out why this is even possible has proven quite challenging. Everyone knows the Bitcoin Cash ecosystem utilizes a unique mining difficulty algorithm which can introduce sharp drops or increases whenever needed. Right now, it seems more hashpower results in a lower mining difficulty and more coins being generated. This is a very unusual turn of events, and it causes a ton of speculation as well.  One of the people weighing in on these discussions is none other than Gregory Maxwell, the Bitcoin Core developer.

In Maxwell’s opinion, there are several flaws in the BCH mining difficulty readjustment. First of all, it is possible for miners to ramp up the difficulty and mine away for 12 hours, after which time the level will attempt to readjust. It is this 12-hour window that has Maxwell somewhat concerned, since it appears the difficult calculation process is flawed at best. In the chat log, he claims that the network blocks leave an old timestamp on previous blocks for some time before jumping up to the normal time to trigger the difficulty adjustment. After that trigger occurs, miners will repeat the process over and over in order to keep the difficulty low and coins flowing in.

If that is not enough to cause concern, it appears any BCH miner can successfully trigger these difficult adjustments with little effort on their part. Even if other entities were to try to prevent this from happening, they would be unsuccessful in doing so. The result is more network blocks being created and more BCH brought into circulation. That would certainly explain why the Bitcoin Cash price has been coming down hard over the past 48 hours. Indeed, it appears there are a lot of coins being sold at an accelerated pace.

Stated Maxwell, “…of course, inflating the mining income is in the collective short term interests for all bch miners… (maybe you can argue that in the long term they’re better off not doing things that might show weaknesses and lower its value).”

Assuming there is some truth to these statements, one has to ask themselves who stands to benefit from this inflated coin production. ViaBTC is the only BCH mining pool generating a lot of blocks, although Antpool and BTC.com may have something to say about this. Both of those pools are now mining the altcoin as well, although it is possible the hashrate will not go up by much over the next few days. Additionally, the BCH price was also heavily inflated due to trading on

All things considered, there are a lot of important discussions being had pertaining to Bitcoin Cash right now. There is also a lot of speculation and misinformation being spread, which is only made worse by the lack of a proper Bitcoin Cash development team right now. For a cryptocurrency with a market cap of around US$10 billion, there is no doubt a lot of work to be done. It will be interesting to see how things play out in the coming weeks and months, and a lot of people will be keeping a close eye on the mining situation.