Bitcoin mining giant Bitmain mined 42% of all Bitcoin blocks last week, gradually closing in on controlling a 51% majority of the network’s hash rate.
Bitmain is closing in on 51%
ASIC maker and cryptocurrency mining giant Bitmain – claimed 42% of total blocks found on the bitcoin network of the past week. BTC.com and AntPool, both owned by Bitmain, currently account for 26.6% and 15.3% of the network’s hash rate, respectively.
Bitmain Technologies Ltd. – the Beijing-based bitcoin mining company recorded astonishing profits in 2017, raking in between $3 billion and $4 billion.
Bitmain is ahead of its competition by manufacturing and using its own products in the mining process. It manufactures application-specific integrated circuit (ASIC) miners that are capable of mining Bitcoin at a faster rate than high-end graphics processing units (GPUs).
It also operates mining pools, where miners can join efforts and ultimately reduce their mining costs, as well as cloud mining services that allow miners to remotely rent mining power from its mining farms. .
Bitmain also mines Bitcoin Cash (BCH) with its ASIC miners – because BTC and BCH run on the same algorithm. If Bitmain stopped mining BCH and instead used 100% of its resources for mining BTC, it could theoretically reach around 45% of Bitcoin’s total hash rate.
This is quite close to the majority number of 51%. This would theoretically put Bitmain in a position to perform a 51% attack on the Bitcoin network to censor transactions or double-spend.
The sky is falling – but probably not
The 51% number is making many people in the cryptocurrency space quite nervous. It is a number often associated with the loss of decentralization and immutability. What would happen if Bitmain reached 51%, and what are possible ways to keep Bitmain out of a singular majority position?
It wouldn’t be the first time in Bitcoin’s history, however, that 51% was achieved by a single company. In 2014, the mining company Ghash crossed the threshold of 51% of the mining pool, causing great controversy in the community.
One solution proposed by Ghash was to have miners move their resources into different mining pools, taking away the majority advantage. He also urged any company in the same situation in the future to do the same. It would be a slightly different situation with Bitmain though, as it is a large mining company and Ghash was a collective of many small miners.
Another unlikely solution would be to change the Bitcoin Proof-of-Work (PoW) algorithm. This is quite unlikely due to the security issues that might arise. A similar situation occurred after the Monero cryptocurrency was forced into a proof-of-work algorithm that left the community divided when it came to the true goals and vision of the project.
Ultimately, there doesn’t seem to be much fear of Bitmain executing a 51% attack even if it crosses the threshold, as the incentive not to attack the network exists for the mining giant. The biggest fear would be vulnerability to an outside hack or a dishonest team member creating trouble.
What do you think of Bitmain being so close to 51% of the Bitcoin network’s total hashrate? Let us know your thoughts in the comments below!
Images courtesy of Shutterstock