Many of the community members have raised concerns about the centralization of the Bitcoin network that would further result in major attacks.
Bitmain, the China-based cryptocurrency industry giant which dominates the world’s majority of the Bitcoin mining pools is now emerging as the leader in Bitcoin mining operations. According to the latest pool statistics updated by BTC.com, AntPool and BTC.com, which are both owned by Bitmain, occupy 42% of the Bitcoin network hashrate.
Bitmain is currently the world’s largest producer of application-specific integrated circuit (ASIC) miners, and it current dominance in the Bitcoin mining operations has raised severe concerns regarding the centralization in the mining process. Many people have been raising this question that if Bitmain manages to grab a 51 percent stake in the Bitcoin hashrate, it could possibly have a 51 percent attack on the Bitcoin network.
Bitmain is also said to having a dominating role in the mining of Bitcoin (BTC) derivative Bitcoin Cash (BCH) which has an identical PoW and consensus mechanism similar to Bitcoin and can be mined using the Bitcoin ASIC chips. Some crypto community members have pointed out that Bitmain CEO Jihan Wu has a bigger support and proximity towards Bitcoin Cash (BCH) and the controversial scaling proposal SegWit2x. This could possibly result into Bitmain attacking the Bitcoin (BTC) network if it manages to get a majority control on the Bitcoin network hashrate.
Bitmain is said to have minted a whopping $3-4 billion in profits mining Bitcoins in 2017 and thhus it is highly unlikely that it might have dubious intentions towards the BTC network. However, another concerning possibility which arises is that any sort of security breach could let the BTC hashrate fall into malicious hands.
Such a scenario has not occurred for the first time in the cryptocurrency market. Back in 2014, mining pool Ghash, which is now defunct had briefly crossed the 51% threshold. However, in response to the community concerns, many users considered moving their hash power to other mining pools.
In order to combat the centralization of Bitcoin mining and make it absolutely decentralized, Bitcoin Core developer Matt Corallo has proposed something called “BetterHash”. This proposal aims at replacing the existing Bitcoin mining protocol Stratum with two new protocols. This will let miners construct their own block templates instead of being forced to chose the one provided by the operator of the mining pool wherein they direct their hashrate. This will help to reduce the dominance of the operators on the network and will instead more autonomy to the miners.
Earlier this month there were reports that having registered an unprecedented growth last year, Bitmain is now mulling options to launch its own Initial Public Offering (IPO) this year. Bitmain is also considering options to expand its business beyond cryptocurrency mining and focus on artificial intelligence (AI) market.
Venture Capital giant Sequoia Capital is already said to have pumped a whopping $400 million in the pre-IPO round of Bitmain. After the latest investment by Sequoia, Bitmain’s valuations have soared to $12 billion. Wu said that the company’s plan to go public is a “landmark” decision and one-of-its-kind in the cryptocurrency space which would mark a significant step to appease global regulators. It would help to bring more transparency and security in the cryptocurrency space.