Declining Bitmain Hash Rate Means BTC Is Safe And Decentralized
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Bitmain’s position as the dominant Bitcoin (BTC) mining company eroded over the past month, with the Bitmain hash rate share falling by nearly 10%.
Data collected over the last seven days by Coin Dance shows Bitmain’s two mining pools, Antpool and BTC.com, experienced a collective 9% drop. In late June, they made up 42% of the network’s hashing power, but at the time of writing, Antpool makes up 13.4% with BTC.com at 19.6%. This gives Bitmain a combined hash rate of 33%.
There was concern that Bitmain’s dominance might jeopardize Bitcoin, earlier this year. As Crypto Briefing reported back in late June, the Chinese mining company was 9% away from the controlling share needed to stage a 51% attack. Although there has never been a consensus attack on Bitcoin, other Proof-of-Work (PoW) networks have been affected: Verge (XVG) has had two confirmed attacks this year.
The now-defunct mining pool GHash touched above 50% of the BTC network back in 2016, but the pool’s administrators quickly requested miners switch to other mining pools. When Bitmain controlled 42% of the network, the company launched a promotional ‘zero-fees’ offer for new miners joining Antpool.
One step forward, two steps back: the Bitmain hash rate?
Bitmain’s declining hash power coincides with its efforts to expand overseas. The company announced on Monday it was building a $500m blockchain data center and mining facility in the town of Rockdale, just north of Austin, Texas.
The company’s co-CEO, Jihan Wu, is reportedly planning to host an IPO at the end of September; mooting the possibility of Hong Kong as a venue. Bitmain is valued at $12bn after a pre-IPO funding round in early July. High profile investors included the Chinese tech company and WeChat operator, Tencent, as well as Japan’s Softbank, which holds a 15% stake in the taxi-app, Uber.
ViaBTC, a rival mining pool principally made up of former employees from Tencent, has also surpassed Antpool to become the second largest mining pool in the BTC network, today. Data collected from the past 24 hours shows Antpool makes up 13.89% of the hash power; ViaBTC is at 15.97%, a 2% lead.
The chances of the Bitmain hash rate increasing by an additional 9% seemed a very real possibility, a month and a half ago. Over the same time period, Bitcoin network’s total hash rate increased by a further 4,000 TH/s, suggesting competitors stepped up efforts and taken a large share of the BTC network.
Today’s news will come as a relief to many. Decentralization rhetoric sounds hollow when the BTC network is dominated by a few for-profit companies; had Bitmain become the king of Bitcoin this would have only made matters worse.
The Bitmain hashrate now needs 18% more of the hash rate to dominate Bitcoin, double what it needed earlier this summer.
The author is invested in BTC, which is mentioned in this article.