Bitmain Now Controls 42 Percent of Bitcoin’s Hashrate
Jun 24, 2018
Bitmain, the world’s largest manufacturer of cryptocurrency mining hardware, now controls approximately 42 percent of the Bitcoin network hashrate. The company owns BTC.com and AntPool, the two largest BTC mining pools in the world.
Can Bitmain Reach 51 Percent Control?
According to BTC.com, AntPool and BTC.com are respectively responsible for hashing 15.1 percent and 27.3 percent of all Bitcoin blocks. With such a high hashrate, questions are beginning to arise as to whether Bitmain can go all the way to 51 percent.
In the blockchain world, 51 percent is a significant figure. An entity with 51 percent control of a blockchain’s hashrate can, in theory, challenge the immutability of the network by double-spending coins.
Indeed, there is a real possibility that Bitmain could (if they wanted to) attain 51 percent control of the Bitcoin hashrate. Adding credence to this claim is the fact that the company doesn’t even employ all of its existing hashpower to mine BTC. Some of its mining hardware is tasked to mine Bitcoin Cash (BCH), resulting in 29 percent of the BCH hashrate.
If Bitmain were to focus only on BTC mining, its hashpower potential would increase by about three percent, putting it slightly closer to that 51 percent number. (The relatively small percentage increase is because Bitcoin mining difficulty is higher than that of Bitcoin Cash by more than 70 percent)
Hashrate Increases Despite Price Decline
In a related development, the Bitcoin hashrate continues to increase. This growth is despite the steady decline of the cryptocurrency since the start of 2018. The network hashrate has more than tripled since December 2017 while Bitcoin prices have plunged by a factor of three within the same period.
Increase in hashrate means an increase in the mining difficulty. Thus, more computing power is needed to solve the complex mathematical algorithms involved in the mining process. As prices continue to decline, the ability of miners to make profits reduces as well.
If BTC prices fail to cross a certain level and hashrate continues in its upward trajectory, some of the smaller miners might be forced to shut down their operations. Such a situation might be to Bitmain’s advantage, as it could enable the company to gain even greater control of the Bitcoin network.
Due to its size and the fact that it manufactures mining hardware, Bitmain might be able to outlast its competition in the face of increasing mining costs.
I bumped into Bitcoin in 2010 while I was still engaged in the fierce battle of obtaining my Engineering degree. I found the content of Nakamoto’s white paper fascinating since it reminded me of the works of legends like Haber and Stornetta. When I am not writing about cryptocurrencies, I am either attempting to beat my scrabble high score or engaged in some internal existential debate.