During a conference, Ripple’s CEO touched upon the enormous amount of sway that Bitcoin’s Chinese mining pools have on the network.
Concerns about Bitcoin’s centralization have been raised ever since people found out that a significant percentage of its mining power is owned by just four large mining pools.
Ripple CEO Brad Garlinghouse, however, points out to a slightly more subtle problem in Bitcoin’s hashing power: It’s mostly controlled by Chinese pools. He first made note of this in a speaking engagement at the Stifel Financial 2018 Cross Sector Insight Conference.
“A number of prominent people, even Steve Wozniak, has said that he sees a world where Bitcoin is the primary currency. I think that’s absurd. I don’t think that any major economy will allow that to happen. By the way, it doesn’t make sense. I’ll tell you another story that is underreported, but worth paying attention to. Bitcoin is really controlled by China. There are four miners in China that control over 50% of Bitcoin. How do we know that China won’t intervene? How many countries want to use a Chinese-controlled currency? It’s just not going to happen,” he said.
This may sound like paranoia at first, but as we dive into the statistics, it’s clear that Garlinghouse isn’t just talking hot air. BTC.com, Antpool, F2Pool, and BTC.TOP all have two things in common: They’re all Chinese, and they account for an enormous share of Bitcoin’s total mining power.
Adding them all up, they account for 58.9% of BTC’s hashrate. That’s enough to mess with the consensus of the network. If we were to add up all major Chinese mining operations (above 2% of the hashrate), we’d end up with 75.3% control of hashing power.
What Garlinghouse is missing, however, is the fact that independent miners would probably join other pools if China’s government suddenly starts to step sideways with pools in the mainland.
Still, there’s no guarantee that Bitcoin could survive such an attack, making this an inherent flaw in proof-of-work coins. It’s a game of cat and mouse between China’s interests, the possibility of apathy from miners, and banking on the possibility that they would actually pay attention to the pools they are mining in.
In the latter scenario, if Bitcoin ever succumbs to pressure from a government whose territory hosts the majority of the world’s hashing power, we may very well see people migrate in large numbers to proof of stake coins.