Mining of Bitcoin is becoming dangerously decentralized with over 40% of all Bitcoin blocks now being mined by operations owned by one single organization, Bitmain.
The mining pools BTC.com and AntPool are both owned by Bitmain and together account for 42% of the Bitcoin hashrate, according to data from CoinDance.
Due to the increasing occurrence of 51 percent attacks on smaller networks, the possibility of one entity controlling 51 percent of Bitcoin is of understandable concern to the community. Both Bitcoin Gold and Litecoin Cash have recently been victims of such attacks, where a single hacker can steal huge amounts of assets by using a technique known as ‘double-spend’.
Considering the size of the Bitcoin network and mining difficulty involved, Bitcoin isn’t really an efficient network to target with a 51 percent attack. However, due to Bitmain CEO Jihan Wu’s support for Bitcoin Cash and the controversial SegWit2x hard fork, some involved in the industry worry an attack could be launched anyway for malicious reasons. While admittedly this is highly unlikely, it still goes against the principles of Bitcoin to have any single entity control more than 51 percent of the network.
A recent promotion by Antpool to attract more Bitcoin miners by offering zero fees has not helped to calm those concerns. In previous situations where a single pool reached the 51 percent threshold, the company involved encouraged users to move some hash power to other pools.
A possible solution to the problem of centralized mining has been proposed by Matt Corallo, a developer for Bitcoin Core. His proposal suggests replacing the current mining protocol with two new ones, allowing miners to make their own block template rather than having to use the pool operators. This would significantly reduce any single entity being able to control too much hashrate.
China-based Bitmain is the world’s largest producer of application-specific integrated circuit (ASIC) miners, the most popular cryptocurrency mining hardware. In addition to Bitcoin, it also controls 21.3 percent of the Bitcoin Cash hashrate.
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