The recent decision to keep the Ethereum (ETH) mining protocol without a change has sparked some anger in the community, as the potential for ASIC mining is threatening the network. Ethereum may be threatened by aggressive centralization of its network, contrary to its initial principle.
While ASIC mining in theory increases security, it also leads to centralization based on the ability to secure the powerful, expensive machines. Due to logistics and slow supply, large entities end up with mining facilities, choking out ordinary users and supporters.
This is a chart of ethereum hashrate divided by 100-day EMA of dollar value of block rewards paid.
(100-day EMA because price changes take time to propagate to hashrate due to hardware sunk costs)
We’re still well within historical norms. pic.twitter.com/LURYuloLKz
— Vitalik “Not giving away ETH” Buterin (@VitalikButerin) April 9, 2018
After it became clear that Monero has seen extraordinary ASIC activity, the Ethereum community started to ask for an update, to stop any ASIC miners from being created. Engineering and producing a mining rig takes months and is quite expensive, but a blockchain project can make the machine obsolete with a network update.
In theory, Ethereum should move to a proof of stake, with partial mining being scaled out. But since the project was supported by voluntary miners for years, the decision not to perform a fork for ASIC-resistance was met with discontent.
The ETH market price, which recovered to $422.90, has seen significant weakness in the past days. Some believe that more centralized mining would lead to immediate selling of ETH, further depressing the price. Earlier GPU miners usually held their ETH tokens, as they did not need to cover larger costs.
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— BITMAIN (@BITMAINtech) April 3, 2018
But what is even more worrying, Bitmain has announced an EtHash mining machine. The timing is strange, recalling the earlier release of the X3 right after the Monero community started talking of an ASIC-resistant hard fork. There are indications, such as the suddenly and rapidly rising Ethereum hashrate, that some ASICs may already have mined the network. This adds to the accusations that Bitmain sells mining rigs after using them for a few months.
Only a hard fork making ASIC miners obsolete would show the exact hash rate, as with Monero. Latest reports show Monero’s hashrate falling up to 80%, the share of the now-defunct machines.
In the case of Ethereum, the digital asset was initially engineered to be ASIC-resistant. But back in 2014, the only ASICs were for Bitcoin, and were still in their early days. Since then, the industry had enough time to expand its reach and design new rigs, including those for Ethereum’s minign algorithm.