The co-founder of Ethereum, Vitalik Buterin recently released open-ended questions to the crypto community. He postulated seven crucial issues in the blockchain ecosystem. Vitalik’s questions deal with some of the major obstacles that stand between the blockchain and mass adoption. This article will attempt to answer one of the seven questions by Buterin.
Question 1: The Hashing Power Issue
“Bitmain and affiliated pools now have ~53% of all Bitcoin hashpower. Isn’t this a really big problem?”
Vitalik’s first question raises concern over a huge percentage of the Bitcoin hashing powered being powered by Bitmain. Bitmain is the largest producer of ASIC miners in the world. The hash power committed by Bitmain is spread across BTC.com and AntPool. These are both owned by the Chinese crypto mining giant and other Bitmain affiliates. In recent months, this percentage has exceeded 50%.
Cobra, the anonymous co-owner of BitcoinTalk and Bitcoin.org took a swipe at Bitmain in March. He argued that it was impossible for crypto users to have faith in an asset that could be shut down by a central third party at any time.
If one entity could control the hashing power of a digital asset, it was not possible for it to be resistant to censorship over time. He argued that in order to prevent Bitmain from shutting down Bitcoin, there would need to be an immediate and massive response amongst everyone, which was impossible.
This is not the first time that Cobra has gone after Bitmain. In January, Bitmain co-founder Jihan Wu was engaged in a discussion with Cobra. Cobra called Wu an enemy of freedom and Bitcoin. He even suggested that the PoW algorithm needed to be changed to prevent pool monopolization.
It Is Rasing Jitters In The Crypto World
The idea that one entity controls over 51% of the Bitcoin hashrate is quite concerning to crypto-libertarians. It could potentially destabilize the Bitcoin network and allow Bitmain to conduct a 51% attack at will.
Since Cobra raised the concerns, the Bitcoin hash power distribution has been adjusted. Bitmain currently controls just 46% of all the Bitcoin hashing power. Wu has always staunchly opposed accusations of centralized controlled leveled against his company. He has highlighted the fact that bitmain does not control any of the hashing power that users of its ASIC miners use. In a tweet, he stated that anyone could move the hashrate from Antpool at will. He was clear in the tweet that the company does not control the hashing power.
What This Means
In essence, although Bitmain operates a huge and popular pool to mine the Bitcoin, it does not mean that Bitmain owns the hash rate. Besides that, the chance of Bitmain carrying out a 51% attack is quite small. Right now, they are making quite a bit of money in the genuine business. In 2017, they made a profit of $4 billion from crypto mining. If they did anything to jeopardize that, they would essentially be shooting themselves in the foot.