The rise and fall of Bitcoin mining
The rise and fall of Bitcoin mining: Earlier this month, fans of Bitcoin—the world’s most popular digital currency—were caught in a whirl of panic as one group threatened to corner the market for new bitcoins.
GHash.io, a Ukraine-based collective of Bitcoin miners, recorded a massive spike in its computing power. Almost overnight, an organisation that didn’t exist as recently as last summer, suddenly controlled 42 percent of all the world’s ability to create bitcoins.
Reading influential forms like Bitcointalk.org and Reddit’s r/bitcoin page that day, one would be forgiven for coming to the conclusion that the development signaled the imminent collapse of the Bitcoin economy. Some went as far as advocating for commencing a distributed denial of service attack (DDoS) on GHash, aimed at temporarily crashing the group’s servers, as a form of protest against the organisation’s dominance.
The fear was over something called a “51 percent attack.” An entity that controls over half of the processing power on the entire Bitcoin network can use that power to engage in a whole mess of shenanigans, like getting away with spending a single Bitcoin an infinite number of times, or preventing other Bitcoin users’ transactions from going through. At 42 percent, GHash was short of the full amount it would need to cause serious trouble, and the group has since taken steps to drop its processing power down to an even less threatening level.