Bitcoin Mining Is Consolidating, Reducing Network Security: Bloomberg

Amid the careening bitcoin price action of the last couple of weeks, a mining bottleneck is squeezing out the weakest bitcoin miners and consolidating the industry into fewer mining operations, Bloomberg reports.

A falling bitcoin price coupled with wear-and-tear on their machines will eventually force miners to mine at or below the cost of electricity. According to Bloomberg, miners' current breakeven point is $4,500, with the exception being miners who manage to cut significantly reduce their costs.

The news outlet asserts that “Only a select few can afford to stay in the game: miners with scale, very specific business models and extremely low electricity costs,” based on their reportage and interviews with miners and industry experts. They quoted one Washington (US) state-based miner, Malachi Salcido, as saying “We are entering in the phase when there’s a flushing out of the market.”

Data shows that miners are indeed leaving the network, indicated by falling hashrate and, subsequently, falling difficulty, as a result of unprofitable mining. CryptoGlobe has reported at length on the phenomena over the past months.

hashrate.png(source: bitinfocharts.com)

It also appears correct that mining is consolidating to fewer and fewer firms or pools of mining power. Charts clearly show a decreasing variety of pools present in Bitcoin mining operations. BTC.com's all-time mining hashrate charts show that unknown miners controled nearly 40% of the flagship cryptocurrency's hashrate, a trend that has been disappearing. Last year, the charts reveal unknown miners have been crushed as they're at 3.8%, while BTC.com, AntPool, SluhPool, ViaBTC, and BTC.top have over 10% of the hashrate.

 

poolyear.png(bitcoin mining pools, last year; source: btc.com)

 

51% Attack To Come?

The upshot of Bloomberg’s article is that, with Bitcoin mining in overall fewer hands, a 51% attack on the network becomes easier. Falling prices do, for the reasons discussed above, make these attacks easier, and there has been a rash of attacks on altcoins this year as a result of falling prices. Just today, the 2014-vintage Vertcoin altcoin was reported by TheBlockCrypto to be under attack.

While more mining consolidation may make it technically easier to launch an attack, this would also mean that remaining miners have an even larger interest in high bitcoin prices - which would almost certainly plummet if the network suffered a successful attack. Several other counterarguments on the matter can be found scattered across the web.

Long story short, most analysts believe attacking the Bitcoin network, even as the hashrate falls, isn't economy viable. The hashrate is notably still up over 150% when compared to last year.

Overstock Committed to Crypto Even After CEO Patrick Byrne’s Exit

Michael LaVere
  • Overstock said it is "absolutely" committed to crypto in the wake of CEO Patrick Byrne's resignation.
  • Company continues to support its high profile tZERO blockchain project. 

Popularo nline retailer Overstock remains committed to cryptocurrency even after the sudden resignation of its long-time CEO and crypto supporter Patrick Byrne. 

Crypto Supporter Patrick Byrne Resigns

On Aug. 22, Byrne announced he would be resigning his position as CEO following a series of comments made the week before about his involvement in FBI investigations and a romantic relationship with a Russian spy. Shares for Overstock plummeted more than 35% following Byrne’s bizarre comments, but rallied in the aftermath of his resignation. 

Despite making a sudden exit, Byrne had established Overstock as one of the most high-profile companies to support bitcoin and cryptocurrency, a legacy that plans to continue even in his absence. 

Newly appointed interim CEO Jonathan Johnson was asked by Yahoo Finance if the company will retain its focus on crypto and blockchain. 

He said, 

Absolutely, yes. The fledgling blockchain business is doing well.

He continued, 

Our team at Medici Ventures, which is the blockchain-focused business, is still working hard, and those different companies in the Medici family are growing at a nice rate.

Earlier in the month, Overstock reported suffering a 23% decrease in revenue for Q2 2019, despite claiming that the blockchain division was performing well. Overstock operates the notable tZERO platform, which was recently opened to retail investors for trading. In addition, the company announced in July that they would be issuing a digital-equivalent of a dividend for shareholders.