Bitmain reaching 51% to dominate in Bitcoin Mining

Bitmain`s mining pools have now control 45% of the computing power on the Bitcoin blockchain, alarmingly close to the dreaded 51% threshold
25 June 2018   1975

That`s a problem because if a firm controls an total majority of the hash rate, it could execute a ‘51 percent attack‘, theoretically jeopardising the whole system. In a blockchain, each block have to be validated by a mining computer, which compete to do so. The only method for a miner to validate a block is to try combinations until one fits, that is, as it unveils the correct code, or ‘hash’. That hash is semi-random; partly randomly formed but also containing within it a reference to the previous hash in the chain. Thus all blocks are joined, and this is how we know that the blockchain is valid.

In a case when a new block is supplemented to the chain, all mining nodes are to validate the next block referencing that block. If there is more than one chain, the nodes will aim for the one with the longest history. But if one group regulates more than half of all the computational power on the system, it can choose an older block in the middle of the chain and begin re-mining everything from there. That chain will overtake the original chain and all original chain-transactions that had took place since the fork will become invalid. It can also deny to accept blocks created by others. 

In July 2014 (when 1 bitcoin was estimated for about $550) a mining pool was named GHash.IO, really exceeded 51 percent. Actually, miners ceased mining with the pool. Responding to community concern, the firm voluntarily limited itself to 39.9 percent of the hashrate, and supposed that other groups follow suit. 

The limit has already been surpassed by Bitmain, and it isn’t even devoting all of its computing power to Bitcoin mining, because it also mines Bitcoin Cash. Also, as the severeness of mining Bitcoin increase and the price falls (as it has recently), smaller firms are likely to be forced out of business. 

The firm, originally from Beijing, has its offices in Amsterdam, Tel Aviv and Zug and has envolved funding from some big names, and by January of this year it already accounted for 41 percent of the computing power on the Bitcoin blockchain. It was strongly criticised in March for releasing a new mining machine that it would soon become obsolete.

Israeli BTC Investors to Face Catch 22

They need to pay taxes from Bitcoin investing in order to avoid their property arrest, but banks don't take their money due to AML issues
06 August 2019   168

Bitcoin investors in Israel are faced with the impossibility of paying taxes, as local banks refuse to accept funds received from the sale of cryptocurrencies because of the risks of money laundering and terrorist financing. About this writes the local edition of Haaretz on August 6.

Bitcoin is not recognized as a currency in Israel, therefore, individuals must pay 25% of the income from cryptocurrency trading to the treasury, and legal entities - 47%.

Investor Ron Gross told the publication that he acquired bitcoins in 2011 and reported his income to the tax office. In 2017, the bank that served Gross began to refuse to accept funds received from the sale of bitcoins. The investor met with representatives of the bank to demonstrate to them a 70-page history of bitcoin transactions as confirmation of the origin of the funds, but failed to convince them.

The tax authority is aware of the problem, but they say the ball isn’t in their courts. I’ve tried working with almost all the banks, but the minute they hear the word ‘Bitcoin’ they freeze up.
 

Ron Gross

Bitcoin investor from Israel

 

Since Gross was unable to pay taxes on time, his bank account, home, and even scooters were arrested. According to the investor, the tax authorities know about the problem, but can do nothing.

According to Haaretz, the tax office is aware of $ 86 million in unpaid taxes on income from cryptocurrency trading. It is possible that the real amount may be significantly higher.

Roy Arav, another Bitcoin investor, kept the proceeds from trading Bitcoin in an account with Israeli bank Discount under the control of the Bit2C exchange. The bank refuses to transfer money to Arava’s personal account under the pretext that its politicians forbid it to transfer funds related to virtual assets to client accounts due to the risks of money laundering and terrorist financing.

Arav also could not pay taxes and was forced to sue the bank. According to the investor, the authorities entered his position and granted him a deferral of time for the consideration of the claim.