This week’s headlines inspire fear and uncertainty. Bitmain owns the two largest Bitcoin mining pools: AntPool and BTC.com. Combined, they have produced 42.3% of new blocks over the past seven days.
The reason for concern is that once a majority of miners confirm a transaction, it becomes irreversible. If a single entity gains control over 51% of the hashrate, they could double-spend coins, and devalue the entire currency. The decentralized nature of mining is what guards against false transactions, and protects the network.
Who is Bitmain?
Founded in 2013, Bitmain is the largest manufacturer of ASIC miners. Their hardware is said to be used for 70% of all bitcoin mining, that alone is cause for concern. In April 2017 these miners were shown to possess a vulnerability that would allow Bitmain to remotely shut down the miners it produced, at any time. Although they claimed it a bug, and unintentional, it was a significant warning sign that Bitmain’s dominance places the security of the Bitcoin network in jeopardy.
At around the same time, developers were working on the SegWit protocol, aimed at making Bitcoin scaleable. Meanwhile, Bitmain was developing AsicBoost, which would allow their miners to operate 30% more efficiently. However, SegWit and AsicBoost were incompatible with each other. Whenever the protocol of Bitcoin is updated, a majority of miners must signal approval for it to be accepted. In this case, Bitmain was vocally opposed to SegWit and set their miners to reject the protocol upgrade. The community complained that Bitmain’s opposition to SegWit was so they could make more money with AsicBoost.
The fact that they possess so much power in the Bitcoin network is cause for concern on its own. Especially after the events of April 2017, Bitmain is eyed with suspicion by most of the crypto community. Even if most of the community despises Bitmain, they got to the position they’re in now by producing the most reliable hardware. As long as they deliver the most efficient and reliable equipment, miners will continue to purchase it. Now that they have become so large and successful, economies of scale make it very difficult for any competitor to surpass them.
Will Bitmain be the End of Bitcoin?
It’s healthy to be suspicious of any entity gaining so much influence in a network that relies on the distribution of power. However, although they are far from benevolent, the concern of a 51% attack is most likely unwarranted. Bitmain makes a lot of money mining cryptocurrencies, manufacturing ASIC miners, and hosting mining pools. They are said to have earned $4 Billion last year from those efforts. Bitmain has a lot to lose from an attack on the Bitcoin network. Anyone who succeeded in a double-spend would devalue the entire network. Attacking bitcoin would amount to attacking their own source of income.
For those reasons, I think Bitcoin is most likely safe from a 51% attack. That would require a desire to eliminate bitcoin from the world, and enough money and power that you could afford to lose a whole bunch of it for the sole purpose of taking down Bitcoin.
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