China will not attack the bitcoin network
China’s leadership in the mining market will last for several more years
Bitcoin Cash Network Has Already Been Attacked 51%
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For a long time, there has been a debate in the crypto community about whether China can provoke a 51% attack with a cryptocurrency hash rate benchmark. According to the latest statement from crypto developer Jameson Lopp, there is no such threat..
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China will hold the lead for several more years
Since 2015, when bitcoin mining began to acquire an industrial character, the topic has been constantly raised in the crypto community: can the Chinese government ultimately carry out a 51% attack on the bitcoin network. It’s no secret that China today has a benchmark hashpower in the world of over 70%. Today, the main manufacturers of chips for mining are concentrated in the Celestial Empire, as well as the main mining farms that are constantly mining cryptocurrencies. Cheap electricity and the proximity of equipment manufacturing companies to the location of the mining farms make the mining of cryptocurrency in China the most profitable.
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Most of the computing power used to mine cryptocurrencies is concentrated in Inner Mongolia and runs at 2.5-3 cents / kWh during the dry season from cheap coal and wind power, but during the flood season these mining companies move significant capacity to the province. Sichuan and Yunnan to take advantage of hydroelectricity 1 cent / kWh. Simply put, China generates more energy than current demand, resulting in very low prices.
In July 2020, a study commissioned by the Fidelity Applied Technology Center released a report according to which about 50% of the world’s mining capacity is likely located in China. However, they noted that cryptocurrency mining is a secret industry and believed they were able to identify only 15% of Chinese mining enterprises..
This means that China has truly colossal hash power capabilities and can use them against the bitcoin network, provoking a so-called 51% attack.
China is not going to attack bitcoin
Many have already spoken about the vulnerability of bitcoin before the 51% attack. The main problem is that the attackers themselves do not violate any rules..
“If an attacker with a 51% stake seeks to maximize his profits, then the most appropriate target for double spending would be an exchange. Mine a bunch of coins, send them to the exchange, convert them into another censorship-resistant cryptocurrency or stablecoin Stablecoins – literally translated from English “stable” coins – continue to gain popularity in the digital asset market. With … More, withdraw those funds, then release a bunch of blocks that have been mined in secret, which send your original UTXOs that were spent on deposit for exchange back to your wallet, ”writes Jameson Loppa.
However, such an attack is not easy to carry out. Loppa gives several conditions under which a 51% attack is simply impossible:
- Any exchange with high liquidity is likely to have withdrawal limits.
- Likewise, most of these exchanges will require AML / KYC and hence you will also need to hack a verified account of a high limit exchange..
- The value of the bitcoin that you are still holding after the attack is likely to drop significantly, so a successful large attack could actually result in yourself being shot in the foot..
- You better not be wrong as long as you access the target exchange. For example, one hacker recovered $ 25 million in stolen funds after leaking his IP address. .
It is certainly safer to just use your hash power to profit from protecting your network, rather than attacking it..
Loppa himself also believes that China’s leadership in cryptocurrency mining will not last long..
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“In the very long term, I expect we will see semiconductor foundries outside of Asia start producing more chips for mining, and countries with even cheaper energy sources continue to become more industrialized, thus providing more competition. China’s dominance in the mining industry is unlikely to last long. I expect this theoretical 51% attack to become less and less likely, ”says Loppa..
Earlier BeInCrypto reported that Bitcoin Gold development team reported successful 51% attack prevention.
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