Bitmain Can Attack the Bitcoin Network as Hash Rate Nears 51%
Bitmain can theoretically take over the Bitcoin network should it control 51% of the hashing power.
Bitmain has come dangerously close to reaching a hash rate that could make it possible for a 51% attack on Bitcoin.
According to data provided by Coin.Dance, two mining pools under the control of the giant Chinese company were able to mine over 42% of blocks this past week.
The two mining firms are BTC.com and Antpool that had hash rate percentages of 25.3 and 16.9 respectively. According to the latest data, the dominance index is just slightly below 42%. Here is the distribution.
Bitmain is the largest producer of ASIC miners, powerful mining equipment that has made CPU and GPU mining practically useless.
The reason for continued Bitmain dominance can be linked to its aggressive pursuit of powerful ASICs.
The company manufactures and utilizes its own equipment. It, therefore, has put in efforts that see it release mining rigs with dizzying hash rates. It has been noted that some reach over 1 million hashes per second.
With 42% under its control, Bitmain would only need another 9% to take control of Bitcoin and if it pleases it, stage an attack.
Antpool has been reported to have embarked on a mission to increase its dominance. It’s said to be wooing more miners to join its pool, promising zero commissions.
What will stop Bitmain from entertaining such thoughts if it controls the requisite percentages?
The development is worrying for Bitcoin, a cryptocurrency that wants to advance the ethos of decentralization. We recently witnessed such attacks on Verge (XVG) and Bitcoin Gold (BTG).
The result has been that the two coins have spiraled downwards as investors lost confidence in their security.
Can Bitmain stage the 51% attack?
With the increasing dominance, Bitmain could and can indeed entertain the thought of taking over Bitcoin’s network.
However, that may not make sense, economically and business-wise. At the current prices, anyone who controls the network could make some hard cash, but it would only be for a fleeting moment.
The reasoning is that, if it did happen, the immediate reaction in the market would lead to a sudden sharp decline in prices.
It would set in panic-selling, further exacerbating the situation. The entire cryptocurrency would face uncertainty and many will seek to exit as quickly as possible.
Carrying out such an attack would also be akin to Bitmain attacking its own business. What happens once it comes out that it has undertaken such an attack?
It would simply mean that its entire business would be at risk of collapse.
What next for Bitcoin?
There isn’t much the Bitcoin community can do, other than wait and see where Bitmain heads in coming days.
The individual miners have a role to play, but if Bitmain does acquire such power, it’ll be upon it to review its intention.
The Bitcoin team could think of implementing changes to its mining algorithm, but that too has its own challenges. One thing though is that this has long been coming.
It isn’t the first time Bitcoin finds itself in such possibilities. It happened before in 2014 with Ghash that surpassed the crucial 51% mark.
However, the firm decided to ask some of its miners to join other pools and thus dealt with the situation. The same could happen if Bitmain hit that number.
The only thing that may come in between is that Bitmain is a company under control of a major shareholder.
It’s unlike Ghash that was simply a collection of miners. But wisdom suggests that the Chinese-based company won’t take that route.
It doesn’t make sense at all- especially economically.