Victor Ugochukwu · Oct 27, 2020 . 6min read
Cypherpunk, Jameson Lopp Dismisses China’s Hashing Power Concentration as a Threat to Bitcoin
Jameson Lopp explains why hashing power appears to be more concentrated from a single territory - China but dismisses it as a threat to Bitcoin Network
By Victor Ugochukwu · Aug 10, 2020 . 8min read
In a detailed blog post, renowned Cypherpunk and Bitcoin Maximalist Jameson Lopp shed light on one of the most discussed topics, dismissing China’s Hashing Power concentration as a threat to the Bitcoin Network.
Lopp gives a detailed prognosis of the issues surrounding. He explains why hashing power appears to be more concentrated from a single territory – China.
China is a highly industrialized nation with energy abundance. It can supply miners with cheap electricity at the rate of 1c/kWh. The Sichuan and Yunnan provinces are particularly notable for these affordable options to miners.
Apparently, because of this cheap energy to miners, China controls more than half of the entire Bitcoin network mining power. While December 2019, CoinShares report estimates China’s hash rate at 65%, another gives a conservative estimate. A more recent Fidelity Center for Applied Technology released a report showing China controls 50% of global mining power capacity.
The fact about China’s abilities with its hashing power concentration of the Bitcoin network
Surely, with more than half of the Bitcoin network’s mining power concentrated in China, it could easily stage a 51% attack. However, Lopp goes further to explain how that could impact the system. He explains that despite its scary-sounding name, a 51% attacker is limited in what they can do:
- Can’t steal people’s bitcoin arbitrarily
- Can only actually double-spend their own bitcoin
- They can’t change the consensus rules
- They can’t make invalid transactions valid
In furtherance of his point, Lopp also painted the worst-case scenario. It’s either a 51% attacker uses his powers to make a profit or crashes the system. While an individual or group of person may pursue the former, nation-states like China may pursue the latter. Apparently, perhaps Bitcoin threatens their monetary control.
However, that would still prove difficult to do because of how dispersed the mining farms are in China. Even if China starts seizing mining facilities, without delay, the news will leak to the rest of the world. And he says:
If we heard of such activity taking place, you can be sure that Bitcoin stakeholders would start planning emergency actions.Jameson Lopp
The next and easier target would then be the mining pools. Emphatically, China still controls the Bitcoin network’s hash power when you take a deep dive at the mining pools.
Data from Coin.dance shows fewer than ten mining pools from China control more than 70% of hashing power for mining on the Bitcoin network.
However, even if the Chinese State decides to stage an attack, it would still be practically impossible to bring down the network. Jameson Lopp further explains that this kind of attack cannot happen covertly. This is because of the many independent entities are observing activity on the Bitcoin network. Should this even happen, within a matter of minutes, an alert would be sounded, and miners would start looking into taking action against malicious actors. Moreover, also if China can pull this off (even though it’s practically impossible), then they still wouldn’t win should other miners decide to play the waiting game.
There are available solutions that help to further decentralize miners aways from pools.
Summarily, he thinks solutions like Betterhash should help to decentralize miners further away from the control of mining pools. This idea is already present in Stratum V2.
As a final note, Lopp anticipates a future where semiconductor foundries are located outside of Asia. This should help in bringing the competition needed for producing more mining chips for countries with even cheaper power sources.
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Victor Ugochukwu · Oct 26, 2020 . 5min read