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.

Bitcoin Ransomware Attack: Google Disables Baltimore Officials’ Gmail Accounts

The Baltimore City government has been under siege since May 7, as it was hit with a ransomware attack that saw hackers demand $100,000 in bitcoin and officials refuse to pay the ransom. In a new development, Google disabled officials’ Gmail accounts being used as a turnaround.

According to The Baltimore Sun, the Baltimore City government created Gmail accounts to work during the ransomware attack, as the city’s servers have been disrupted to the point their baltimorecity.gov emails aren’t working.

Recently, however, emails sent to several of the newly created Gmail addresses returned messages claiming the “email account that you tried to reach is disabled.” It was found that Google has considered these business accounts that need to be paid, instead of free individual Gmail accounts.

James Bentley, a spokesperson for Mayor Bernard C. “Jack” Young, noted Baltimore planned to purchase a business plan from Google so the accounts could be restored. The news outlet quoted him as saying:

They disabled them because they deemed them to be business accounts. Their position is these accounts are circumventing their paid service

City Council President Brandon Scott added that meanwhile his staff was appealing the suspension with Google, although he hadn’t been briefed on the problem. A spokeswoman for Baltimore’s health department claimed she was able to see received old emails, but not send or receive new ones.

Per her words, there as no notice on why the account was disabled. On its website, Google claims it’ll suspend accounts used for sending spam, distribute malware, abuse children, violate copyright, or for other illicit purposes.

As CryptoGlobe covered, Baltimore was hit with a ransomware attack earlier this month that brought its real estate industry to a halt and crippled some of its essential systems. So much so the city’s collection and transfer of property taxes and water bills have been affected.

The hackers attacked the city’s servers with a new type of ransomware known as “Robbinhood,” and are demand a 13 BTC ($102,900) ransom to stop the whole attack. They also gave the city the option to pay 3 BTC ($23,700) to decrypt a specific system.