Top payment cryptocurrencies, including Bitcoin Cash, Bitcoin SV, and Litecoin, face future mining profitability issues and have seen hashrate drops, in contrast with Dash.
Miner fee state. When will BCH/LTC/BSV miners turn off their equipment? pic.twitter.com/nrG09Qt5kb
— WhiteRabbit (@WhiteRabbitBTC) October 17, 2019
According to mining data pulled recently, several major cryptocurrencies pull very minor revenue from network transaction fees, calling into question the future viability and profitability of securing those networks. Last week, total fees generated by the entire Litecoin network over the course of a day equaled $453.77. Bitcoin Cash and Bitcoin SV generated, respectively, $103.91 and $79.94 respectively. This contrasts significantly with Bitcoin, which receives a much more significant portion of its mining revenue from fees at $132,790 over the same day.
Miners in proof-of-work cryptocurrencies are compensated in part by fees and in part by supply emission of new coins created. Over a long period, the emission by various networks tends to reduce, with an eventual finite coin supply or negligible emission. In this scenario, the hope is that the network will generate enough usage so that the resulting fees are enough to compensate miners to sustain a robust enough hashrate to secure the network from attacks. The emission of new coins to miners should theoretically provide enough revenue to support a robust enough hashrate for a secure network for a long enough period while a network is still new and acquiring new users.
BCH, BSV, and LTC recording one-year hashrate drops, in contrast with Dash’s growth
For the top cryptocurrencies mentioned above, however, transaction counts and respective revenue have not been sufficient to add significant miner interest. As a result, network hashrates for these networks has stagnated or even declined over the past year. According to data from BitInfoCharts, Litecoin’s hashrate has decreased significantly from its all-time high of 523.81 terahashes in July to 231.45 terahashes at time of writing, a decline of over 50%. This is also lower than the network’s hashrate one year ago of 253.08 terahashes, representing both short-term and long-term shrinkage in network security. Bitcoin Cash’s hashrate is up marginally from about 2.1 exahashes at the time of the split with Bitcoin SV last November to a current rate of 2.41 exahashes, down significantly from 3.84 exahashes a year ago and last year’s high of 7.88 exahashes. Bitcoin SV for its part follows a similar pattern, claiming a current hashrate of about 1.21 exahashes, down from roughly 1.44 exahashes at the time of the split.
Dash, however, has experienced a far brighter picture in network hashrate growth. The hashrate is up to around 3.93 petahashes, up from 2.14 petahashes one year ago, a recent low of 1.30 petahashes last December, and marginally down from an all-time high of 4.42 petahashes earlier this month. This represents continuing investment in the network despite hash market-wide price movements, and an increasing network security.
Additionally, Dash’s network security received a significant overhaul recently with the activation of ChainLocks, leveraging the masternode network as well as miners to prevent against 51% attacks. The masternode count has remained consistent above the 4,900 number over the past year, with a current active count of 4,936, down slightly from the recent all-time high of 4,969 in September.
Dash’s strong growth metrics and high remaining total supply promise long-term sustainability
In addition to consistently growing network hashrate, Dash has exhibited strong growth in another key long-term indicator: active addresses. In addition to long-term growth in transactions, Dash has shown consistently growing active addresses over a 24-hour period, outpacing its slower-growing or stagnating competitors, consistently passing Litecoin and posing one of the clearer threats to Bitcoin, the frontrunner in this category. Active address numbers tend to correlate with more users on the network, rather than simply more usage by a limited number of usage, and tends to indicate a growth in user base over a longer period. This may suggest that the Dash network will see enough growth in usage to be able to generate enough transactions, and fees, to support the network’s infrastructure after new coins created have either diminished or disappeared entirely.
Finally, has a significantly higher percentage of its coin supply which has yet to be created compared with its common competitors. According to data pulled from Messari Crypto, 51.77% of Dash’s year-2050 total supply has been created. This contrasts with Litecoin at 75.79%, and Bitcoin Cash and Bitcoin SV at 86.14% and 86.12%, respectively. This is due to Dash’s blockchain being relatively new at a little over five years, contrasting with eight years for Litecoin, and over 10 years for the Bitcoin forks as they were split from the original Bitcoin chain. This indicates that, in addition to showing strong growth metrics of being able to support a robust infrastructure in the long-term, Dash also has more time before the network must exclusively rely on usage fees in order to function.