At 3am ET this morning, 45% of all bitcoin mining was being conducted by members of a single mining pool—Ghash.io. This near-majority stake had bitcoin bugs concerned. Bitcoin works because there is a huge public log of every bitcoin transaction, and that log is written by miners, who keep it honest by checking each other. But if a single group is mostly responsible for writing and checking that log, that group could in theory cook the books to give its members bitcoins that aren’t theirs. That would completely undermine bitcoin.
Quartz’s Christopher Mims wrote about this, arguing that: “The existential threat to bitcoin its boosters said was impossible is now at hand.” But that is precisely the wrong takeaway. That threat is not at hand. In fact, bitcoin looks stronger than ever.
After Ghash.io’s large stake came to light on bitcoin discussion boards, members of the pool started flocking away, reducing the pool’s share of mining to 38% over the course of just seven hours. This is just more and stronger proof that the system is self-correcting—such mining pool exoduses have happened in the past, but the stakes are higher now, with the value of a bitcoin hovering around $800.
But the question is: Why would any individual member of the mining pool give up such a lucrative spot? To take one for team bitcoin?
No, not really. If bitcoin ever comes under majority control and is actually defrauded by malicious miners, it will lose all its value. So there would be no monetary gain to stealing or counterfeiting bitcoins. Miners aren’t stupid. Their wealth is tied to the health of bitcoin, and they aren’t going to compromise it.