Bitcoin decentralization is a matter of national security — Auradine CEO

Maximizing Bitcoin ( BTC ) decentralization throughout the entirety of the stack is a matter of national security, Rajiv Khemani, co-founder and CEO of mining chip manufacturer Auradine, told Cointelegraph.

The CEO explained that third-party firmware — which updates and changes over time — could theoretically be used to compromise the energy grid or launch a 51% attack on the Bitcoin network.

Auradine’s CEO outlined a potential situation where malicious code embedded within this firmware could shut down mining operations within a certain geography. This could cause a drop in hashrate and network difficulty, making a 51% attack easier to execute.

Bitcoin network hashrate. Source: CryptoQuant

Khemani stressed the need for caution when evaluating hardware and software from foreign entities:  

"Anytime you have hardware, software, and firmware from a foreign entity connected to your energy infrastructure — which is what Bitcoin has essentially become — you have to make sure that you are doing the proper due diligence and risk mitigation."

Another attack vector is supply-chain risk, the CEO said during the interview. If highly specialized mining hardware like application-specific integrated circuits (ASICs) are overwhelmingly manufactured in a single jurisdiction then that country can restrict the export of those products at any time — leaving miners without access to the crucial technology.

“There’s not many ways to spy or steal coins” though mining hardware, the Auradine executive said, dispelling an earlier claim made by US Senator Elizabeth Warren that foreign crypto miners could spy on US military bases. The reason for this is that mining hardware does not feature robust memory or surveillance capabilities, the CEO told Cointelegraph.

Khemani concluded by arguing that the United States should enforce policies that encourage the domestic manufacturing of ASIC hardware and that no one country should control a majority of the total hash power or hardware supply.

Related: BTC miners are ideal energy consumers, but regulators need to catch up — Hive

Geographic hashrate distribution raises concerns

The Auradine CEO isn’t the only one who has sounded the alarm about hashrate concentration and mining pool centralization.

In May 2024, it was reported that just two mining pools — AntPool and Foundry — controlled more than 50% of the network hashrate.

Hashrate distribution by mining pool. Source: HashRateIndex.com

Later, in September, CryptoQuant founder Ki Young Ju noted that Chinese mining pools accounted for 55% of the hashrate — an assertion that was met with debate.

According to TheMinerMag, it is inaccurate to say that China has hashrate dominance because Bitcoin miners participating in China-based mining pools are geographically distributed . This makes it incredibly difficult to say that any one country controls a majority of network hash power.

Magazine: Bitcoin miners steamrolled after electricity thefts, exchange ‘closure’ scam: Asia Express