Nicehash owns about 70% of DASH mining network according to a Reddit user (Jan 10), and the news is already causing a wave of concerns within the community
It looks like someone currently controls over 51% of DASHs hashrate over Nicehash mining pools; a recent Reddit post accusing Nicehash of being a threat to Proof of Work (PoW) cryptocurrencies is raising concerns around the dreaded topic of 51% attacks.
Titled, ‘Someone controls >51% of DASHs hashrate currently’, the Reddit author known as Flenst has claimed that he was investigating the ETC 51% attack when he stumbled across a discussion about “Nicehash abilities”, and here is where he supposedly uncovered that Nicehash currently holds over 70% of the total nethash rate.
The post stated:
“I stumbled over it when researching the ETC 51% attack and the discussions about other PoW coins and its “Nicehash-ability”. Nicehash currently holds >70% of DASHs total hashrate, see: https://www.nicehash.com/algorithm/x11 (1390TH/s Nicehash vs. 1790TH/s total). This is the first problem, and it is uncommon. Usually, Nicehash holds around 10 – 20% of PoW coins nethash and it is only dangerous for smaller forks of the PoW coin.”
Inevitably, the post has stirred tension within the community. Since the market dip began, a lot of cryptocurrencies have been afflicted by the stigma of a 51% attack and as such, many of them are now facing extinction.
What is a 51% attack?
The term refers to an assault on a blockchain, it is done by a gathering of miners controlling over half of the system’s mining hashrate, or processing power. Whilst such an attack on the bitcoin network is speculatively possible, it has yet to be seen, whereas other blockchain networks have not been so fortunate.
The aggressors would have the capacity to keep new transactions from being confirmed, enabling them to prevent payments between a few or all stakeholders. They would likewise have the ability to revert transactions that were completed while they were in charge of the system, meaning they would be able to double spend coins and control the entire network.
Is Nicehash a Threat?
According to the Flenst, Nicehash normally poses a threat to smaller coins with low volumes and a small community, but in this case, DASH is one of the biggest communities in the ecosystem and it seems that the network is not too healthy at this point.
The enduring depreciation of a majority of the tokens in the market has had terrible consequences. Since mining is no longer particularly profitable, a large portion of the miners have stepped away, which in turn lowered the network defenses making it fall into dangerously high levels of mining concentration, which can end up in a 51% attack.
According to the post, Flenst found out that the majority of the hashrate was being directed to Nicehash which caused a big concentration level of mining hashrate in the same pool; hopefully, this hashrate is not controlled by a single actor.
This Nicehash website has a specific panel to show the addresses that are collecting the mining rewards, and the author was able to confirm that those DASH payouts were mainly going to four addresses.
Flenst was able to get to 3 of the four addresses via block explorer where he was able to isolate a specific transaction containing three of the four top addresses as inputs, revealing that it was one entity who had the control of all other three. What alarmed him was the fact that these three alone gathered over 53% of the total mining hashrate.
Flenst mentioned that even though he could not find the fourth he believes that this last address could also be controlled by the same entity. He also noted when the scheme began, writing:
“You can also see this started 6 months ago/around September last year, and I think the fourth unknown pool also belongs to this entity yet it is separated on the blockchain. It started to gather a lot of hash at the same time.”
While the Redditor ends up heavily criticizing Nicehash due it enabling the possibility of mining concentration, he also comes to the conclusion that ASICs are not keeping smaller blockchains safe, which is a piece of unsettling information. He finds that despite it can be very expensive to execute a 51% attack, someone could try to perform a 51% attack on the DASH network before the network has the chance to implement its chainlocks.
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