Bitcoin Cash just about avoided a full-blown hash war after the largest mining pool on Bitcoin Cash announced plans to impose a 12.5% mining tax.
Normalcy appears to be returning to the Bitcoin Cash market after Bitcoin.com withdrew its support for the proposed 12.5% BCH mining tax plan in its current form. Many believe this to mean that the tax levy on miners could now be dead in the water.
In response to the threat of a chain split, Bitcoin.com published a post announcing its re-thinking of the BCH tax proposal, pointing out that a lack of clarity regarding where the over $6 million in tax collections would go was a major reason for their decision.
“We think the lack of clarity in this is one of the main drivers of confusion and contention around the various funding proposals. In venture capital, investors do not find talented technical individuals and hand them money to do something.”
They also argued that it would be better for developers to make it clear why they need the funds and provide specific budgets and timelines for their work.
Hash War Potentially Thwarted
The anonymous mining group threatening to split the chain took notice of Bitcoin.com’s withdrawal and announced that they would be standing down and will continue to support the BCH network for now.
“We have taken notice of Bitcoin.com post here. We trust Bitcoin.com is going to be able to convince the rest of the signatories to severely amend the IFP. We are therefore standing down and will not start our competing pool for the time being and will continue to support the BCH pools instead. We would also like to thank the community to be able to have such a civilized discussion over this issue.”
the statement read.
What was Behind all the Ruckus?
On January 22, Jiang Zhuoer, CEO of BTC.TOP, the largest bitcoin cash mining pool company, proposed a new way to fund bitcoin cash development internally in a Medium article titled Infrastructure Funding Plan for Bitcoin Cash. The proposal also stated that miners who refuse to pay the tax will have their blocks orphaned, which essentially excludes them from obtaining block rewards.
As expected, Bitcoin Cash miners didn’t take too kindly to the threat of being booted from the BCH network, resulting in an anonymous group of miners representing 1.6 exahash/s threatening to launch a hash war that could lead to a chain split.
The tax proposal triggered vigorous debate among developers, miners and investors, and may have even been responsible for a drop in the price of BCH during that period.
The tax proposal continued to attract criticism on a number of fronts, but the turning point seems to have arrived at the prospect of another chain split. You may recall the bitter hash war in 2018 when the BCH network experienced a hard fork split, resulting in two separate cryptocurrencies, Bitcoin Cash (BCH) and Bitcoin SV (BSV).
This war had a disastrous effect on the crypto market, including Bitcoin Cash itself which lost 87% of its value in five weeks after the split. No one wants a repeat of that messy affair.