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[Serious] Risks of Hash-Rate Concentration

I’ve been following the Bitcoin project since 2012 and I truly believe that we could all benefit from a self-governed currency but lately something has been worrying me:

According to sources around 65% of the network hash is located in China.
What would be the consequences if those concentrated mining farms would suffer from an attack or if China decided to blacklist mining servers / would give up on their investment in them?

I’d assume that the transaction fees would skyrocket and virtually handicap the entire bitcoin network leading to people losing faith in the system as well as pretty much striking a fatal blow to it.

Don’t get me wrong, I truly belive in decentralization but doesn’t having so much of the network hash concentrated in one part of the world raise serious issues to the concept?

I’d just like to get a discussion going about the implications of such and maybe what could be done to avoid any issues that might arise.

Sources:

https://www.statista.com/statistics/1200477/bitcoin-mining-by-country/

https://news.bitcoin.com/65-of-global-bitcoin-hashrate-concentrated-in-china/

Edit for clarification:

I’m mostly concerned about the time it would take for the network to adjust for the hash rate loss.

If we assume that a block is mined approx. every 10 minute then a drop of 2/3 in the hash rate would increase the block mining duration about 3 times resulting in 30 minutes per block.
For 2016 block to be mined it would then take about 42 days (around 1.5 months) and in the meantime the transaction fees would skyrocket or is my calculation wrong?
That could have serious implications on the public sentiment in my opinion.



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12 Comments

  1. Your should read up on how bitcoin works. When mining farms get shut down, the network will adjust the difficulty to balance out the loss of hashrate. It has nothing to do with transaction fees.

  2. China itself doesnt like the miners, so the Label “China” is misleading, it shoule be “Chinese citzen thst go aganist government Regulations and use the cheapest electeicity on the Planet… ”

    If the Chinesen governmwnt itself starts mining that would be a problem.

    But if it really is a problem for you than you should probably also set up a miner then and do something against it yourself

  3. If 65% of hash rate would disappear the average time between blocks would be 65% slower for up to 2016 blocks. Then it would get back to normal when difficulty adjusts.

    There’s no discussion to be had here.

  4. That amount of hashrate is worth billions – nobody would rationally destroy it when they know it won’t even kill bitcoin.

    There are all sorts of last resorts that could be used if necessary, hard forking around the issue one way or another, eg to a new difficulty level. Undesirable but it would ensure bitcoin would survive – and if these attackers know bitcoin would survive why waste all that money on the attack?

  5. I’m pretty sure Chinese Bitcoiners want to stick it to the government as much as anyone else, if not more. But let’s say, hypothetically, that China had enough control over its own miners to attempt a coup on the network.

    Suddenly there would be a LOT of incentive from the rest of the world to increase their mining power. People with large positions in Bitcoin would be highly incentivized to protect their positions by subsidizing mining operations in their own countries, pushing the hashrate beyond what would normally be profitable. I wonder if China could keep its grip on the majority.

    But let’s say even that fails, what does China do with control over the network? If they write fake values into the ledger, there’s going to be a fork. If they try to push abusive changes into the protocol, there’s going to be a fork—it just wouldn’t be Bitcoin anymore. They might win in the short term, or they might even get away with it, if the abuse is small enough. But large abuses would just mean that the uncompromised ledger wins out in the long term.

  6. I hear you, there would be an adjustment period of up to a week, but this is no different to what he have now when there is a spike in price and suddenly it costs $5-10 to get a transaction through in a reasonable amount of time.

    Maybe the effects last a month, this may give FUDsters ammunition for some time, but trust me, this isn’t some new revelation, we just haven’t felt the need to address it.

    It’s better to focus on things like the Lightning Network as a way to overcome the scaling limitations of Bitcoin without compromising its security.

  7. Maybe OP is serious but this looks like your standard shitcoiner FUD post:

    1. “[Serious] Risk” title
    2. Starts with claiming to be an OG, then raises a basic question
    3. OP’s first post in 4 years is bitcoin FUD

  8. This would just create an amazing opportunity for others looking to get in the mining business. The “problem” if one even existed, would be very short lived.

    Nothing would break as the difficulty gets adjusted on the fly every 2k blocks or so.

    But this could be a once in a lifetime opportunity for a country with an abundance of cheap renewable energy.

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