On 17th September, Bitmain Founder Jihan Wu participated on a forum of the Subreddit r/BTC, wherein he responded to a comment made by a cryptocurrency researcher named Justin Bons. Bons wrote about centralization in mining, conveying that the rise in the block size is not the reason for an increased centralization. Here, Jihan opposed and commented:
“To reduce the mining pool centralization, reducing the block time can help a lot. Because mining pools have to provide PPS fee mode to its customers due to the popular behavior of hashers. Mining pools then have to bear the risk of block finding volatility, but paying out to customers at a stable rate. So mining pools needs to have very big capital to start, which is a kind of centralization pressure.”
Subsequently, Bons also implied that it is not the miners but the pools they are associated with that run full nodes. According to him, this scenario is analogous to a free market of pools or a representative democracy for miners, where a pool may switch its miners with another pool in seconds, resulting in a change of vote.
On being asked to explain how miners do not run full nodes but pools do, Bons explained that all miners, including the modern ASIC miners, can only function if they are directly connected to a pool. He further added that the issue of centralization does not revolve around mining, but mining pools. He wrote:
“There is no mining centralization. It is more a question of pool centralization. #Bitcoin #BitcoinCash”
Under the same thread, a game designer and blockchain enthusiast Reina Nakamoto also returned an opinion on Bons’ stance. Reina stated that there is no centralization even in mining pools. According to the user, if there are more than 3 pools without one of them having a 51% hashing power, then the mining space is not centralized. Reina also wrote that the issue of decentralization/centralization is seen by others on the basis of their ideologies, making the term unquantifiable.
Jihan Wu’s mining giant Bitmain, which is based out of China, is seen as a threat to the Bitcoin [BTC] mining environment as the company is reportedly approaching 50% of the hashing power. This poses a destructive threat to the Bitcoin ecosystem wherein Bitmain may have enough hashing power to launch a 51% attack on the network in the future.
Bitmain has also been accused to act as a central reserve for Bitcoin Cash [BCH]. Earlier this year, the company released all its Bitcoin funds to buy Bitcoin Cash in return. It was also reported that Bitmain holds over half a billion dollar worth of funds in BCH.