Ethereum developer Evan Van Ness voiced concern over bitcoin’s (BTC) mining centralization, mentioning that the highest two mining swimming pools management greater than half of the whole hashrate.
In a Dec. 27 Twitter thread, Van Ness stated that out of the final 1,000 bitcoin blocks, 501 have been mined by the Antpool and Foundry USA mining swimming pools — suggesting a majority management of the hashrate. A chart of the bitcoin hashrate distribution by BTC.com based mostly on three days of information signifies that Foundry USA presently controls 31.1% of the hashrate, whereas Antpool 21.1%, for a complete of 52.2%.
Van Ness cited a “hysterical piece” by crypto-focused information publication Coindesk. The article criticized ethereum concerning the community’s centralization following The Merge and transition to proof-of-stake (PoS). Within the late September article, Coindesk cites the co-founder of a cryptocurrency agency elevating the problem that “out of the final 1,000 blocks, 420 have been constructed simply by Lido and Coinbase.” Van Ness commented:
Van Ness additionally famous that on the time of the article’s publication, bitcoin’s block manufacturing was extra centralized than Ethereum’s. As an illustration, two separate mining swimming pools mined 430 of the most recent 1,000 blocks. He defined that he was complaining about “the double customary” and claimed that “Ethereum and Bitcoin are by far probably the most decentralized chains.” He concluded:
“I’d argue that Ethereum is considerably extra decentralized, nevertheless it’s not less than debatable.”
What are mining swimming pools and why is it an issue?
A bitcoin mining pool is a gaggle of miners who mix their computing sources to extend their probabilities of discovering a block and incomes rewards. When a block is discovered, the rewards are distributed among the many pool members in keeping with their contribution to the computing energy.
Mining swimming pools are needed as a result of the chance of discovering a block within the bitcoin community alone could be very low. By becoming a member of a mining pool, miners can improve their probabilities of discovering a block and incomes rewards. Moreover, mining swimming pools enable individuals to obtain a gradual revenue stream relatively than ready for a uncommon block discovery.
On the similar time, Bitcoin mining swimming pools have change into a major ache level for the community’s decentralization since these entities choose the transactions and the content material of the blocks mined by many miners. Mining pool GHash.io is an notorious instance because it reached management of over 51% of the community’s hashrate in 2014. The pool later dedicated to avoiding controlling greater than 40% of hashrate sooner or later.
Mining swimming pools want to regulate solely small fractions of the whole hashrate of a cryptocurrency community. It helps to make sure decentralization and safety. When a single mining pool accommodates a good portion of the community’s hashrate, it turns into extra susceptible to a 51% assault, during which a single entity may probably disrupt the community by controlling most of its computing energy.
In a 51% assault, an entity which controls a lot of the hashrate can compromise the integrity of the community and have interaction in malicious conduct, equivalent to reversing transactions or double-spending. It has by no means occurred to bitcoin, nevertheless it occurred on blockchains the place a decrease hashrate made such assaults sensible.
In 2019, ethereum traditional (ETC) suffered a 51% assault, with crypto change Gate.io figuring out not less than seven double spends. In 2018 vertcoin suffered 4 separate assaults that resulted within the theft of about $100,000. Double spending carried out on the bitcoin gold (BTG) community in the identical 12 months resulted in over $18 million stolen. Lastly, in 2013, the litecoin fork, feathercoin (FTC), additionally suffered a 51% assault.