Just a couple of weeks ago, Vitalik Buterin was talking about potential vulnerabilities of the Bitcoin network and promoted Ethereum in preparation for its big event — the merge with the Beacon network. While many BTC fans dismissed the idea that fees will not sustain Bitcoin’s infrastructure and will create a vulnerability where someone with a couple of billion dollars could bring the whole ledger down, skeptics received a new argument in their favor.
Centralization seems to be inevitable
One of the biggest dangers that the Bitcoin network sees in the future and does not have a clear answer to is the centralization of mining efforts. Currently, BTC mining is one of the most lucrative business endeavors a tech-savvy entrepreneur can find in the tech world. However, it has become very expensive too. With ASIC units surging in price and electricity demands skyrocketing, many miners found their forays in the world of crypto less attractive.
The recent drop in Bitcoin prices and the electricity price increase caused many miners to close their BTC positions to cover expenses related to mining. Many were forced to completely shut down their operations. Nevertheless, hash rates continued growing. The competition drives up prices across the whole industry and creates a situation where only mega-corporations can afford to mine BTC.
What happens when several huge players start controlling the network? At the moment, the combined hashing power of the US and China is enough to initiate a 51% attack. It seems that the situation when the same influence will be concentrated in a single country is impossible. However, with a long enough period of incremental centralization, the level of vulnerability will only increase. Mining pools are already very centralized.
Is it so bad?
The short answer is “no”. We are not even close to the situation where someone can attack the network. In the long run, fees will be enough to sustain mining operations and support continuously increasing hash rates. We will probably face some problems related to centralization, but the community has the necessary instruments to deal with them.