First, there were many. Then, there were few. Miners that is. At the beginning there was only one, it is true, probably just Nakamoto himself, but then plenty downloaded the software and with just one click on a GUI interface it would just start mining.
A new world of people’s money, as brief as it was new, for the game was on, and in bitcoin that game has led to village sized farms of endless hardware consuming more energy than some countries.
Now, there’s only around ten miners left, miners that small blockers accuse of delaying segwit, while big blockers accuse of intentionally keeping the blocksize small to profit from fees.
Both of those theories probably have less truth to it than it appears, but no myth without fire. And the mining myth is one in development.
Bitmain, their leader. A powerful figure, with chess skills, running an empire. A people, from Sia to Monero, in revolt.
If such myths we are to make and history judge us right our bias at the door to leave we must, for easily we can turn the above picture into a pioneering entrepreneur breaking new ground at faster speed than others can sow discord.
Bitmain is seemingly planning to launch an Ethereum Application Specific Integrated Circuit (ASICs), which is in effect just a CPU but so optimized it does nothing else than calculate whatever ethereum’s Proof of Work (PoW) mining function requires to be calculated.
Some accuse them of already having such Asics turned on, mining ethereum at this very moment. The theory further suggests they are selling these mined eth for bitcoin, not dollars.
It has a ring of truth to it, with the ratio of eth/btc halved from 0.12 to 0.06 standing as circumstantial evidence.
When ten miners were shown on stage in 2015, gathered to decide the fate of bitcoin, there was suddenly some reflection.
Bitcoin mining is just a multisig with private keys held by ten individuals, Vitalik Buterin, Ethereum’s founder, then commented.
How ironic that the fate of a libertarian currency is to be decided by enterprises based in communist China, some others quiped.
Democracy is two wolves and a sheep voting what to have for dinner, Adam Back, Blockstream’s CEO, said in a presentation quite adapted to his audience.
You lost, big blockers were told when miners unanimously signed a document in February 2016 binding them to just one client and its rules without any qualification save for the “foreseeable future.”
They don’t care about decentralization, the chorus among both big and small blockers. We don’t want to decide, miners said. They wanted to be told what to do.
With that background, ethereum rose. First slowly, then very quickly. Big blockers on revolt. Hope was on question, with some deciding for bitcoin it had been lost.
Fear and tribulation in mining lands. Their holdings on trial, their equipment might become naught. Miners backtrack. There might be big blocks after all.
The dance that followed, two years long, should have a poem at least, if not a song, for great talent would be required to capture that swing from all hope lost to victory certain, a swing greatly felt to a similar degree by big and small blockers alike, until the finale of August 1st 2017, followed by the sudden cancellation of 2x in November of that year.
Were miners playing both sides? Did the division really have any ground? Most importantly, did they really have any power at all? If they don’t, then who does? Does anyone?
To say yes is not true. To say no is not true. Nor to say maybe. In that nuanced view Vlad Zamfir, an ethereum developer working on Proof of Stake Casper, says it isn’t necessarily the hash-power itself, but the disbalance in resources, in money, which may give miners a significant say over decisions that might affect their interests.
No such decision would do so more than ethereum’s planned move to Proof of Stake. Miners therefore, Zamfir suggests, might hire troll armies, sock-puppets, and to be timely with the news even perhaps Cambridge Analytica, to shape the debate or opinion if there was a choice to be made.
With miners estimated to have made billions in profits mainly from bitcoin, but also ethereum, such resources might be vast indeed. And if such resources are concentrated, they might even have decisive say.
He says miner’s interests are not necessarily aligned with those of users, with that being the case for miners as a whole and even more so if they become more concentrated.
The other coin is to say that miners are the biggest holders since they produce the coins, but for ethereum it could be more complicated.
If one is a bitcoin Asics manufacturer, and has mined bitcoin for so long, and holds the vast majority in bitcoin, then they might, instead of holding eth, instantly convert it into btc.
The second leg would then be to say even if they don’t hold the coins, they hold vast amounts of equipment, but this argument is weak even for bitcoin as hashrate deprecates very quickly and thus becomes useless. While for ethereum it is non-existent as it will move to PoS.
One, therefore, can easily make the case that miners are actually very short term focused, rather than long term, especially for ethereum, but also for bitcoin. In that context one could even say they did not really care about the terrible experience newcomers received in bitcoin last year for they already made their money.
Ethereum, however, has one unique advantage or disadvantage depending on your view. It shares with other coins the fact that there is only one way ethereum can be spelled, but unlike bitcoin specifically, there is someone that holds and can enforce the ethereum trademark, that being the Ethereum Foundation.
Major exchanges, therefore, have no choice in what they call ethereum. So in ethereum there would not be a situation where one exchange calls one chain eth, while another calls the same chain zeth. While in bitcoin that same situation appeared to be a very real prospect prior to the matter being settled.
That brings us to developers and the significant influence they hold. Just as one might say miners’ interests are not necessarily aligned with those of users, the same may well apply to developers as a class.
Because the bitcoin split was initially a split in developers’ views, rather than miners or users. Such split in developers’ views was probably genuine as the debate has a long history and begun on the bitcoin whitepaper mailing list announcement itself.
But that doesn’t mean developers’ other more self interested factors might have not affected the outcome of the debate, or indeed the miners’ decision.
For if concentrated miners might at least have something invested in the long term health of the network, some developers might have nothing invested save for their own work on it. Work they can easily transport to something else. Worse, some developers might even benefit from damaging the project.
As such, ulterior motives speculations can lead to a very slippery slope where everyone is a suspect, which in effect translates to no one is a suspect.
But the question in the title is a difficult one and, perhaps somewhat surprisingly, we don’t really have a view. From a self-interest perspective, concentrating mining is very much undesirable especially if that miner is primarily a bitcoin miner.
That’s because they may or may not be selling all their eth for btc, and they may or may not really care about eth, especially when they may or may not prefer an eth like functionality in bitcoin through sidechains or other means.
But a distraction is also very much undesirable. How much a PoW hardfork would push back scalability solutions and hybrid PoS is unclear at this stage.
Some developers say it can be done fairly quickly, and probably it can, but quickly runs the risk of bugs, at least conceptually. Such quickly therefore might turn into months or more.
Then, how quickly hybrid PoS and full Casper can be implemented is also a factor. If somewhat timely, then a more skewed PoS/PoW reward might perhaps be a preferred alternative.
We’re not really worried miners would stop PoS because as long as developers remain united we don’t think they can.
But we would like stakers to be somewhat distributed and since many of them would probably be previous miners, a PoW hardfork might be a solution if hybrid is no where in time or if skewing hybrid is found undesirable.
Ultimately, since most probably don’t have a strong view on the matter, except for current miners – who by the way could not even handle some kitties despite being paid billions – the ethereum developers should perhaps discuss the matter between themselves, taking into account all factors, and then lay out their conclusions with reasons, perhaps with recommendations – on balance – and then put it up to a holders vote.
That mechanism might not be perfect since current miners would be most incentivized to vote, but until people invent a better system than democracy then perhaps there isn’t a better solution.
So we’ll start the vote here. Needless to say, please don’t bother sybil voting or faking it because we’ll probably know, thus making the result worthless.