Controversial cryptocurrency company Bitmain has become one of the 21 entities processing transactions on the nascent EOS network.
The China-based firm, best known for producing cryptocurrency mining hardware and supporting a big-block approach to Bitcoin scaling, on Tuesday received a sufficient number of votes to become an active EOS block producer, which allows it to receive compensation for processing transactions and enforcing the network’s constitution.
Bitmain’s block producer candidate, EOS AntPool, is — as the name suggests — run by AntPool, one of Bitmain’s two large mining pool subsidiaries (the other being BTC.com). Bitmain also led a $3 million funding round for ViaBTC, which operates a moderately-sized mining pool, in 2017.
Collectively, these three pools account for more than 50 percent of BTC blocks mined over the past seven days, and this level of centralization is one reason that Bitmain has become a flashpoint in many cryptocurrency circles.
There’s significant debate about the degree to which pooled hashpower translates into actual “control” of the bitcoin mining landscape, though the fact that pool users must construct block headers using templates provided by pool operators has led one core developer to propose replacing Stratum with an upgraded mining protocol and others to call for a radical change to Bitcoin’s Proof-of-Work (PoW) consensus algorithm.
In any case, Bitmain is far from having this degree of influence in the EOS ecosystem. However, EOS itself has been criticized for its current level of centralization.
Aside from the fact that the network is structured to divide transaction processing between just 21 entities, voting itself could become heavily centralized once EOS creator Block.one begins participating in block producer elections in the near future. The firm, in addition to raising more than $4 billion during the project’s token sale, received 100 million of the 1 billion tokens created in the cryptocurrency’s Genesis block.
Consequently, the elevation of Bitmain to active block producer status is sure to raise some eyebrows. By the time of writing, EOS AntPool had risen to 11th in the voting, where it will earn 845 EOS (~$7,300 at the current exchange rate) per day or about $2.7 million per year.
That’s not an insignificant sum, but it should be placed in context. According to self-reported data, Bitmain raked in $2.5 billion in revenue in 2017. A funding round concluded in June valued the company at $12 billion, and the firm plans to go public later this year with a valuation as high as $40 billion.
Notably, Bitmain isn’t the only controversial cryptocurrency company that EOS users have voted to serve as one of the network’s 21 block producers. Cryptocurrency exchange Bitfinex, which is closely-linked to contentious cryptocurrency issuer Tether, presently ranks first in the block producer rankings. The company is currently earning 1020 EOS (~$9,000) per day, which amounts to nearly $3.3 million over the course of a calendar year.
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Last modified: May 20, 2020 6:55 PM UTC