Chinese crypto mining giant, Bitmain, has mined over 42% of all Bitcoin blocks recently giving rise to fears that the company could soon have control over the 51% threshold necessary for a network attack.
Bitmain, the world’s largest producer of ASIC chips and mining rigs, is raising a few hairs right now in the crypto community following the company’s rising dominance in Bitcoin mining. Combining the total market share of two major BTC mining pools that Bitmain currently owns, Antpool and BTC.com, we can see that the company is not far off achieving 51% control of the entire network.
For now the company remains 9% short of this target, but there are concerns that Bitmain could tap into its Bitcoin Cash hashing power that operates on the same PoW consensus algorithm, to bridge this gap if it wanted to.
What Does This Mean?
The worry here is that if any single company controls a 51% majority of the overall mining pool, it leaves the whole blockchain network open to a number of manipulative issues including double spending and malicious governance over transactions.
While on the surface this would appear unlikely for Bitmain to do, given the $3-4 billion profits the company reported last year, it does mean that if Bitmain suffered a breach in security the attackers would have controlling access over the Bitcoin network.
An attack like this would grant the hackers control over all future block creation, however new Bitcoins could not be artificially generated due to the nature of DLT. It would be increasingly difficult for attackers to manipulate any blocks that have already been committed to the ledger, particularly those that were created later in time. Because of this, a 51% attack would not necessarily be enough to bring down the network by itself, however excessive double spending could lead to a total collapse in market confidence and bring down the cryptocurrency.
This is not the first time that this threat has been posed to the Bitcoin network. In July 2014, Ghash.io surpassed the 50% control mark over BTC, but miners unanimously chose to reduce their market share to prevent the chances of this kind of attack from happening. However not all mining pools have this same level of foresight, with two ethereum based blockchain networks, Krypton and Shift, both suffering 51% attacks back in August 2016.