Miner Weekly: New Blockchain to Increase Bitcoin Mining Rewards?
This article first appeared in Miner Weekly, BlocksBridge Consulting’s weekly newsletter curating the latest news in bitcoin mining and data analysis from TheEnergyMag. Subscribe to receive in your inbox once a week.
Recently, there has been buzz surrounding the impending launch of Fractal Bitcoin—a bitcoin sidechain developed by the UniSat wallet team. Its launch is slated for September 9.
What does it have to do with bitcoin mining? Well, the sidechain uses merged mining with Bitcoin — a mechanism where one bitcoin mining machine can simultaneously produce both Bitcoin and Fractal Bitcoin, earning rewards in both BTC and FB. It’s similar to how Litecoin and Dogecoin are merged mined – except there is a catch in the case of Fractal Bitcoin.
Fractal Bitcoin introduces a novel merged mining mechanism called “Cadence Mining.” It allows bitcoin miners to merge-mine only every one of the three blocks in Fractal Bitcoin block rewards. The remaining two blocks are reserved for those solely mining Fractal Bitcoin. 50% of the total supply of 210 million FB is allocated to proof-of-work mining, while the other half is pre-mined.
The sidechain is designed to natively support BRC-20 tokens and Ordinals, with direct transactions on Fractal Bitcoin’s blockchain without being reflected on Bitcoin. Hence for bitcoin miners, there might be additional block subsidies via merge-mining but there could also be potential loss of transaction fees on Bitcoin from degen-oriented activities.
As with all bitcoin sidechains, it remains uncertain whether Fractal Bitcoin can secure sufficient hashrate for robust network security and how the market will evolve. So far, Spiderpool stands out as the first top-ten bitcoin mining pool supporting merge-mining FB. Its lack of widespread adoption could be attributed to its centralized nature and potential connections to the people behind BSV (Bitcoin Satoshi Vision).
By the time FB becomes available to the public for mining, 50% out of the total supply of 210 million FB has been pre-mined by UniSat, the developer of the project, as well as its project advisors, contributors and pre-sale investors.
UniSat is reported to have ties to the BSV ecosystem. According to a May 2023 post by TechFlow—a Chinese crypto news and research site—UniSat was developed by the same BSV-focused Chinese team responsible for Sensible Contract, a smart contract solution for BSV. The article also highlighted connections between BRC-20 applications and former BSV community participants, teasing that “Behind BRC20 is the ‘vengeance’ of the BSV community.”
For those new to the space, BSV emerged as a hard fork of Bitcoin Cash (you might want to explore Bitcoin Cash’s “hash wars” for an interesting read), which itself was a hard fork of Bitcoin. BSV’s most prominent supporters include Craig Wright, a notorious figure who faced a UK court ruling that he had forged evidence in his claim to be Satoshi Nakamoto, and his supporter Calvin Ayre, who was indicted in 2012 by a US attorney on charges relating to illegal gambling and money laundering (but reached a plea bargain with US authorities in 2017).
In an interview with Blockspace Media’s Bitcoin Season 2 podcast, UniSat’s CEO and founder Lorenzo said one of the most asked questions he gets is whether Fractal Bitcoin is a fork of Bitcoin. “Yes and no, because physically, it is. But logically, it is not,” he clarified, adding: “We want to build around bitcoin. We don’t want to have our own users. We want them to be Bitcoin users.”
Regulation News
- Paraguayan Bitcoin Mining Industry Provides Fewer Than 400 Jobs – Bitcoin.com
Hardware and Infrastructure News
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- HIVE Acquires 1,000 S21 Pro Bitcoin Miners to Enhance Fleet Efficiency – TheEnergyMag
Corporate News
- Bitcoin Miner CleanSpark Seeks to Double Authorized Shares – TheEnergyMag
- Bitfarms Calls Out Riot’s ‘Misleading’ Letter Ahead of Special Meeting – The Block
- Blockstream Mining Starts Third Investment Round for Hashrate-Backed Tokenized Note – CoinDesk
Financial News
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- Canaan Pledged 530 Bitcoin for $22.3M Loans at 4.2% Interest Rate – TheEnergyMag
- Needham sees high potential in Core Scientific (NASDAQ: CORZ), TeraWulf as bitcoin miners expand into AI and HPC – The Block
Feature
- The Bullish Case for Bitdeer with Brandon Bailey – The Mining Pod
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