The Decentralization of Ethereum: Jihan Wu Says ASIC Mining Will Make ETH Less Centralized
According to co-founder and former co-CEO of crypto mining giant Bitmain, ASIC miners help make blockchain networks decentralized – but other developers disagree. They argue that specialized miners exclude participation in mining rewards by shrinking competition.
Wu was a keynote at a blockchain event in Chongqing, China this past Wednesday and there he was quoted on the subject:
“While we have seen various network upgrades that aim to become ASIC-resistant, such as Cuckoo cycle and ProgPow, but what we can foresee is that very likely, there will still be ASIC miners for these two algorithms.”
The coming ProgPow upgrade for Ethereum is aiming to block and stunt ASIC machines while improving the advantages of GPUs. He made the argument that ASIC miners, processors for crunching certain algorithms, are more GPUs (graphics processing units) than devices for centralization of power.
Although the timeline for activating ProgPow has yet to be determined, it was approved by a popular vote by the Ethereum community. The change will affect the more than $600 million a year worth of Ethereum’s mining but the auditing code is still being audited.
He not only disagrees with the characterization of ASIC, but he also claims (with no evidence) that there is involvement from the CEO of NVIDIA within ProgPow. He alleges several employees apart of the upgrade report directly to that CEO, a big concern because NVIDIA has a dominant market share in GPU hardware.
“To me, ProgPow is clearly an effort to achieve centralization, in an attempt to exclude other integrated circuit designers to participate in ethereum mining. And GPU hardware is strongly protected by patents, so having a tailor-made algorithm for this type of hardware is certainly a way to avoid a fully competitive market.”
Wu also deduced that the Ethereum network is already prey to centralization through two major mining pools, Sparkpool and Ethermine, which have been statistically proven to own more than half of the current computing power in its mining.
Furthermore, he asserts that “the entire network will be even more centralized – almost undoubtedly, by switching to a proof-of-stake model”. He alleges that 51 percent attacks have a higher cost for bad actors on ASIC and that ASIC miners are far more capable of securing blockchain networks:
“But GPU-based mining algorithms are not specialized, they are compatible with each other. If miners attack one cryptocurrency, there are still others that can be mined. That’s why there are more 51 percent attacks on GPU-based cryptos.”
ASIC currently owns about 70% of global crypto mining equipment market shares, making Wu’s comments in his speech, not at all surprising.
There has been increasing challenges for the company because of cryptocurrency market volatility triggering redundancies. They also had a case dismissed by a Chinese court when they sued for IP infringement resulting in the revoking of their patent. Then despite a lapsed IPO filing and threat of a lawsuit from disgruntled investors, executives remained optimistic, claiming it brought more transparency to their public profile:
“We will restart the listing application work at an appropriate time in the future.”
This month, ASIC released Z11- a miner dedicated to proof-of-stake cryptos.
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