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BCH Miners tax causes uproar in the commun

BCH Miners tax causes uproar in the commun
By We Play Coins
Added on Jan 24, 2020

BCH miners tax causes uproar in the community according to a report by ccn. The news has received a lot of negative attention after the announcement. Bitcoin Cash is a fork of the Bitcoin Blockchain. The creators forked it due to the concentrated centralisation over time of Bitcoin.

The network is asking miners for a 12.5% tax on all network earnings to put back into the development of the network. Zhuoer believes that instead of relying on rich investors to push innovation, a tax would give the network greater freedom to fulfill their own vision. Miners who fail to pay the tax will be orphaned.

From the Blog post of CEO Jiang Zhuoer

Infrastructure Funding Plan for Bitcoin Cash

1. Introduction

We, a group of miners representing a majority of identified Bitcoin Cash hash rate, have an interest in ensuring that Bitcoin Cash remains a strong and vibrant cryptocurrency. As such, we recognize that investment in software and commons is crucial to secure a bright future for Bitcoin Cash.

Funding of infrastructure may often go overlooked or be underprioritized. The long-term effects of neglect to infrastructure have the potential to be damaging. Or, even worse: the project can be captured by well-funded saboteurs. However, we can avoid these problems by providing an adequate level of stable funding, allowing Bitcoin Cash to thrive and succeed.

To provide this funding, we intend to direct 12.5% of BCH coinbase rewards to a fund that will support Bitcoin Cash infrastructure.This funding will last for 6 months, and it will provide significant and much needed support to the Bitcoin Cash ecosystem.

2. The SHA-256 Ecosystem

Because of the hash ratio between BTC and BCH, and the difficulty adjustments that maintain an equilibrium, it is the entire set of SHA-256 mining (including BTC mining) that bears the cost under this plan.

This is counterintuitive: With 12.5% of the coinbase being donated, then on first glance, it would appear that BCH miners simply give up 12.5% of their rewards and would then lose 12.5% of their hash as well.However, after difficulty adjusts on BTC, it is a different story.

Assume round numbers for illustration: BTC is 97% hash and BCH 3%.If BCH gives up 12.5% of its reward, that 3% goes to about 2.6%, and BTC would go to 97.4%.

0.375% of the total SHA-256 rewards are being pulled out of the entire system, but this cost will be split between BTC and BCH in the same ratio as the hash (97:3).The BCH hashrate will be diminished by 12.5%, but BTC mining will bear 97% of the cost of the diminished profitability, because there will be more hash competing for the same BTC rewards.

3. Amount and Duration

If we assume a current price of $300 per BCH, then donating 12.5% of the coinbase for a period of 180 days would total $6,075,000 (144 x 6.25 x 300 x 180 x 0.125).This plan provides a substantial sum that would have a positive impact on Bitcoin Cash and the cryptocurrency ecosystem.

4. How the Funds Will Be Dispersed

A Hong Kong corporation has been set up to legally accept and disperse funds.The funds would be used to pay for development contributions to full node implementations as well as other critical infrastructure.

5. On Orphaning

To ensure participation and include subsidization from the whole pool of SHA-256 mining, miners will orphan BCH blocks that do not follow the plan. This is needed to avoid a tragedy of the commons.

Although the main beneficiaries of this plan is the Bitcoin Cash ecosystem, some in the community may have reservations or objections to this plan because it is somewhat unprecedented and represents a departure from tradition. But the conditions are ripe and the plan makes sense at this time.

Built-in developer funding apparatus (such as on DASH) have both benefits as well as drawbacks. Some key differences here include:

a) There is no “masternode” voting or any other voting. This is a decision by miners to fund development directly.

b) The initiative shall last 6 months (May 15th 2020 — November 15th 2020)

c) The initiative is under the direction and control of the miners, who can at any time choose not to continue.

d) This is not a protocol change. Instead this is a decision by miners on how to spend their coinbase rewards and which blocks should be built on.


It makes the most sense to activate this feature at the same time (and in conjunction with) the May 15th protocol upgrade. This facilitates a consistent rollout among ecosystem participants. This means the code will need to be ready soon for testing and deployment.

We will work with the various Bitcoin Cash node implementations to include code to implement verification of this miner funding as part of the May 2020 protocol upgrade.

BCH miners tax causes uproar in the community as expected. Do you think it is the right thing to do? Tell us more in the comments.