Failed launch of Bitcoin Gold (BTG)
Bitcoin Gold (BTG): The hype was strong with this one.
Who wouldn’t be interested in a fork of the Bitcoin blockchain? The testnets were active with miners mining for nothing simply to test the network, establish benchmarks and fine tune rigs in the weeks leading up to launch. All in effort to maximize profits with the launch of a valuable coin in the first hours after launch before the large Chinese mining farms could redirect massive hash.
Announced July 2017, Bitcoin Gold (BTG) had an interesting backer in Jack Liao, CEO of lightning ASIC. Why would an ASIC company launch an ICO for a GPU minable coin? Where is the profit for an ASIC company with a GPU coin?
Bitcoin would now have 3 coins as a result of the second fork from the main blockchain with Bitcoin Cash (BCH) previously launching August 1, 2017. Bitcoin Gold promised to succeed where so far Bitcoin Cash had not.
It would be different this time. Rather than ASIC focused SHA256 this new coin promised a new algorithm using Equihash and would only be GPU minable. It would also adjust the difficulty with each block rather than fixed intervals.
Equihash is a known quantity to many miners. Nvidia cards work very well and many miners had been using ZEC profitably. A review on Whattomine at time of writing shows one Nvidia 1070 could produce $1.98 per day mining Zec.
Bitcoin Gold promised a low difficulty at launch with a known Proof of Work (POW) algorithm. Difficulty ever increasing is the bane of miners. Predicting what will mine well today and the future of difficulty is near impossible except to say it will be higher tomorrow than it is today.
Since the BCG launch The total hashrate on Monero has dropped from 273MH/s to today 225MH/S, nearly 50 MH/s decrease. This decrease is likely a result of the new BCG. The decrease in hashrate however has not resulted in an increase in profits as the difficulty has only increased.
Difficulty change with each block. BCG promised to change with each block. This could be up or down based on total hashrate compared to the mean of previous set number of blocks. Digishield V3 promised to prevent the wild swings in difficulty just after the launch of BTC. It would allow the difficulty to adjust much sooner to wild swings in hash rate like the 19% decrease Monero has seen since yesterday.
Where did it all go wrong?
The first indication something was wrong was prior to the release of the blockchain with several pushbacks of the launch. October 20, 2017 Coinbase, the largest cryptocurrency market by volume, went on record as not supporting the new coin due to lack of transparency and , “This is a major security risk.” posted on its blog. Bittrex, 3rd by volume followed saying the codebase is “not in a functional state and Bittrex will not commit to opening a Bitcoin Gold trading market.
The official launch was set for November 12 at 7pm UTC. Several pools made similar announcements including the official pool at bitcoingold.org or any pools listed on the ecosystem tab at bitcoingold.org.
It was not long before miners started reporting irregularities. Hours after the first blocks were found no balances had been reported. Then news of a fork of the new coin emerged. Pools like pool.gold posted apologies for sending miners down the wrong fork. Despite launch of the new coin many miners were still mining for free despite the official launch. Other pools including Minergate, one of the largest, have yet to launch BTG pools due to the confusion.
Posters at bitcoin talk seem convinced the testnets and the confusion at launch were caused by unscrupulous players redirecting has for personal gain. This is not confirmed and only speculation at this point with more details possibly to come in the days and weeks ahead.
Prior to BTG launch it was also discovered that the developers were pre-mining 8000 blocks (100,000 BTG) which caused Bittrex to warn traders , “Please be aware that if a market does open there is a possibility of the developers selling their premined BTG on the open market.”
What to do?
With BTG hard to value and limited trading options the only choice is to mine or not to mine. Given the premine, unknown true fork at time of writing, lost balances and disappearing hash it is safe to say unless your electricity is free it is likely better to mine elsewhere until BTG is on more solid footing.