Bitcoin stability threatened by mega mining pool
The future of Bitcoin could be in jeopardy after a single mining pool emerged as the source of over half the total computational power used to mine new coins.
According to Ittay Eyal and Emin Gün Sirer, two researchers from Cornell University, the anonymously-held GHash mining pool has managed to reach the 51% mark on 72 occasions and, crucially, hold onto it for 12 hours on Friday.
A single entity reaching this level of control is potentially very damaging to the crypto-currency, as its security rests on it being a distributed system.
Unlike physical currencies, which are controlled and minted by a single, central bank, Bitcoin and similar virtual monies can theoretically be minted by anyone willing to turn over some of their computing power to “mining” – which involves solving complex mathematical problems to release new coins into the system’s economy.
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If one entity has control over more than half of that mining power, it is able to launch what is termed a “51% attack”. Bitcoin security is based on decentralisation, but if one party has control of the network, that’s lost. One power a majority group would have is the ability to confirm transactions. That means they could in theory have the ability to spend the same coins twice, decline competing miners’ transactions, or charge higher fees from people with large holdings.
In the worst-case scenario, they can carry out a denial-of-service attack on the rest of the Bitcoin network.
While there’s no indication GHash has tried to do any of these things, the revelation has caused its own fallout.
According to told Coindesk it has removed 1.5 petahash of its hashing power out of GHash in order to try and rein the group in.
“The high level of combined hash power in the GHash pool is concerning to many participants in the system. As a leader and trusted partner in the Bitcoin system, BitFury has decided to transfer some of its hashing power away from GHash to help reduce these concerns,” chief strategy and communications officer Marc Aafjes told Coindesk.
Aafjes added that, should the GHash pool get close to 51% again, it will remove further capacity.
For their part, Gün Sirer and Eyal recommend changing the rules of Bitcoin to disincentivise mining pools, fix what they describe as “selfish mining”, and “incorporate changes to make what’s happening among the miners easier to detect”.
“These fixes do not make Bitcoin perfect, and there may still be other issues to fix, but they fix the most important issues in a way that respects the existing investment in Bitcoin infrastructure,” they conclude.