Controversy Unfolds in Bitcoin Cash with Unknown Miner Controlling 40% of Hash Rate

A mysterious miner by the pseudonym Satoshi Nakamoto acquires a significant share of the Bitcoin Cash network hash rate increasing the risk of a 51% attack being carried out.

Key takeaways;

  • An unknown miner has acquired up to 44% of the hash rate on the Bitcoin Cash network
  • A number of theories are circulating as to the identity of the miner with many believing Craig Wright and/or Calvin Ayre to be involved
  • With the Bitcoin network currently 3% more profitable to mine than the Bitcoin Cash network, the unknown miner may have ulterior motives to acquiring such a large share of hash power

A pseudonymous miner going by the name “Satoshi Nakamoto” acquired as much as 44% of the hash rate on the Bitcoin Cash network this week. Last week, a miner going by the pseudonym “BoomBoomBoom” acquired up to 35% of the hash rate.

The miners are assumed to be the same entity given the high unlikelihood that one miner could acquire 35% of the Bitcoin Cash hash rate last week while a separate miner acquires 40% of the hash rate in the following week. The high amounts of hash rate acquired by this miner pose a significant risk to the network as it becomes increasingly centralized.

51% Attack on Bitcoin Cash?

While the hash rate is after dropping off since, a significant number of blocks are still being mined by the unknown miner. If the unknown miner managed to acquire 51% of hash power, it would not only provide the power to carry out 51% attacks but may damage user confidence in the network.

One of the key concerns raised against the Bitcoin Cash network has always been its propensity to exhibit high levels of centralization (in terms of the distribution of hash power). This acquisition of an extreme share of hash power by one entity is the latest demonstration of this.

During the hard fork in November and the ensuing battle for hash rate between the Bitcoin Cash ABC and Bitcoin Cash SV protocols, the mining pool acquired over 64% of the hash rate in the Bitcoin Cash ABC network. The mining pool is led by Roger Ver, the CEO of the company, who is one of the most vested individuals in the success of Bitcoin Cash.

Who is the unknown Bitcoin Cash miner?

There are a number of theories circulating that speculate where the hash rate is being sourced from. The prominent theory is that Craig Wright and Calvin Ayre, the leading advocates for Bitcoin Cash SV, are behind the hash rate.

The theory is that the bitcoin cash acquired through mining will be exchanged for bitcoin cash sv with the purpose of driving down price and confidence in bitcoin cash. This would simultaneously serve to attract speculators to bitcoin cash sv with prices likely to rise as bitcoin cash is exchanged for bitcoin cash sv.

A second theory is that Bitcoin miners transitioned their hash rate to the Bitcoin Cash network to raise fees on the Bitcoin network. With the majority of bitcoin miners income being generated from block rewards, this theory seems unlikely.

A countless number of other theories could be thought up about who the miner is. The fact is that the identity of the miner remains a mystery for the moment. What is known is that the Bitcoin Cash network is currently far more centralized and is at a greater risk of an attack from the unknown miner.

Whoever is acquiring such a large share of hash power is doing so at a significant opportunity cost. It is currently estimated that it is 3.4% more profitable to mine on the Bitcoin network than the Bitcoin Cash network.

This demonstrates that regardless of who the miner is, the miner has significant interests in the Bitcoin Cash network. Whether the interests are positive or negative remains unknown.