Bitcoin Cash Proposal Suggests “Miner Tax”

A heavily controversial funding proposal from Jiang Zhuoer (CEO of BTC.TOP, the largest BCH mining pool based in China) has raised concerns of centralization among the community.

Zhuoer has suggested that 12.5% of Bitcoin Cash coinbase block rewards should be redirected into a “development fund.”

The fund is a Hong Kong corporation that has been set up to legally accept and disperse funds which would be used to pay for development contributions to full node implementations as well as other critical infrastructure according to the blog post.

The proposal is to implement this plan into Bitcoin Cash’s protocol upgrade in mid-May. It would receive roughly 112.5 BCH per day which is about 20,588 BCH over six months.

At today’s prices, the BCH fund would receive slightly less than $7 million in total though the post estimated it at $300 per BCH which is roughly $6 million or so.

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Until this proposal, BCH block rewards were owned by the miner who discovered them, but this plan would send 12.5% of the rewards to a Hong Kong based corporation that would disperse the funds.

A failure to pay will lead to block orphaning — which would mean they’re off the main chain. In other words, miners that refuse to pay this tax will have their miner blocks

In a new twist, an anonymous group of BCH miners released a statement in which they threatened to create their own chain if BTC.TOP did not reconsider its tax proposal by May 15, 2020. stepped in stating that it would not support any new plans until a broader consensus was reached, which helped calm the situation a bit. The anonymous group agreed to refrain from starting its own competing pool for now.

What should happen?

The current situation of forcing a tax upon miners is definitely not an ideal one. I’ve heard people refer to this funding proposal as a “donation” to a development fund. However, the word donation implies voluntary action. This is not a voluntary donation or tax.

One possible solution is to follow the recent suggestion Charlie Lee has made to Litecoin. The idea Lee has suggested is a 1% voluntary donation.

The 1% voluntary donation removes the act of force and allows those that support the proposal to donate. It also allows those that are not in favor of such tax to opt-out. A win-win for both sides.

Another solution I’ve had in mind is to use a funding proposal system similar to the Steem Proposal System (SPS). In the Steem system, ideas are written out and voted on. If an idea passes the voting threshold, it is then funded using the accumulated funds saved.

The problem with this is acquiring the funds to fund these proposal. But, if there are a large group in favor of taxing, then they must be willing to donate to something like this as well right? Plus, any users of the BCH ecosystem that are interested in funding the development of the project could donate too.

The SPS could be implemented with a smart-contract. It would operate very similarly to a DAO so no single party is responsible for handling and distributing the funds.


Though the proposal has been highly controversial, there are some merits to it.

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Funding development of BCH is essential. However, forcefully taxing miners is not the ideal solution in my opinion.

I’ve laid out my two possible solutions. I’d be interested in hearing what others have to say and how they think this should be handled. It will be interesting to see how this all unfolds in the future. Hopefully the right decision gets made that can compromise with both groups.

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Nolan M
I am a 29 year old developer, trader, and crypto enthusiast from Indiana, USA. I am the owner and sole blogger on TTM right now. I have been developing websites for over 10 years and have been writing for over 5. I have a big interest in cryptocurrencies, politics, and trading. I'm a lover of all things technology. I also love technical analysis and charting. Numbers and patterns have always drawn my attention. Be sure to follow me on Steem, Twitter, and YouTube! Also, don't forget to subscribe to receive TTM notifications! Link is up top, on bottom, and in the sidebar on the home page.