Mining Hash and Xchanges

[OnceBraveLittleToaster]

Allow me to present a scenario for consideration:

What would be the potential consequences if major institutional exchanges, either currently or in the near future, decided to allocate their proceeds toward Bitcoin mining operations? Specifically, what if these exchanges were able to amass enough computational power to secure control of a 51% hash rate within the network? Is it possible that such a situation is already unfolding?

Given the substantial wealth being generated from block rewards at present, this is a question that has been on my mind lately. It seems like a deep rabbit hole worth exploring, and I’d love to engage in a thoughtful discussion with anyone interested in sharing their perspective or insights on this matter.

[FP91G]

Allow me to present a scenario for consideration:

What would be the potential consequences if major institutional exchanges, either currently or in the near future, decided to allocate their proceeds toward Bitcoin mining operations? Specifically, what if these exchanges were able to amass enough computational power to secure control of a 51% hash rate within the network? Is it possible that such a situation is already unfolding?

Given the substantial wealth being generated from block rewards at present, this is a question that has been on my mind lately. It seems like a deep rabbit hole worth exploring, and I’d love to engage in a thoughtful discussion with anyone interested in sharing their perspective or insights on this matter.

Bro, this is not a trip to the store for oranges

First, ASICs need to be produced, Manufacturers have a huge backlog of orders.. You won't be able to buy a lot of equipment right now, you'll need to wait for the equipment to be produced.
Next, you need to install this equipment somewhere, and this requires huge mining capacities.
Mining companies won't shoot themselves in the foot, this is their business.

In theory, this is possible if you have your own ASIC production and huge factories for generating electricity, but you won't be able to produce the chips yourself.
Don't worry, it's unlikely to happen anytime soon, and a 51% attack won't steal coins from your wallet.

[ABCbits]

What would be the potential consequences if major institutional exchanges, either currently or in the near future, decided to allocate their proceeds toward Bitcoin mining operations? Specifically, what if these exchanges were able to amass enough computational power to secure control of a 51% hash rate within the network?

It would make people question Bitcoin's security and decentralization, where it would affect Bitcoin (and many altcoin) price negatively. I doubt they're willing to kill their own business that way. In case they split the hashrate into several pool and never perform any easily detectable attack (e.g. selfish mining), AFAIK they could do is intentionally exclude certain address/TX where it only delay how fast such TX getting confirmed.

Is it possible that such a situation is already unfolding?

No, although some people have concern about possibility of multiple mining pool work together.

[BattleDog]

Buying 51% is not a Costco run. Hashrate is hardware + cheap power + logistics. Exchanges have cash, but wafers and PSUs have lead times and siting takes months. Pooling other people's hashrate is easier, but then you are herding independent miners who can leave in a day.

What 51% can and cannot do:
Cannot change the rules or steal coins. Invalid blocks get orphaned by nodes.

- Can censor (leave out some tx), and with a true majority they can do it indefinitely while they keep that majority.
- Can double-spend targets by privately mining and reorging, mainly to defraud counterparties like exchanges. Mitigation is more confs and risk controls.
- Economics bite hard: visible censorship or reorgs nuke revenue and reputation; miners and users route around the attacker.

The real risk today -- Power over block templates lives at pools. A few large pools under the same policy pressure could soft-censor. That does not require 51%; it just slows some transactions and annoys everyone.


What helps in practice is:
Miners: prefer pools that commit to neutral templates and adopt Stratum v2 with job negotiation so miners, not pools, pick transactions. Be ready to switch pools.
Users/merchants: self-custody, run your own node, and choose sensible confirmation policies for incoming funds. Big payments get more confs.
Devs/operators: diversify funding, monitor pool shares, and keep pushing open standards that reduce single chokepoints.

Is this already unfolding? Exchanges dabble in mining and some run pools. That is a long way from coordinating a profitable majority attack. The more realistic failure mode is policy-driven filtering by a handful of pools, which market pressure has reversed before.

[FP91G]

Buying 51% is not a Costco run. Hashrate is hardware + cheap power + logistics. Exchanges have cash, but wafers and PSUs have lead times and siting takes months. Pooling other people's hashrate is easier, but then you are herding independent miners who can leave in a day.

What 51% can and cannot do:
Cannot change the rules or steal coins. Invalid blocks get orphaned by nodes.

- Can censor (leave out some tx), and with a true majority they can do it indefinitely while they keep that majority.
- Can double-spend targets by privately mining and reorging, mainly to defraud counterparties like exchanges. Mitigation is more confs and risk controls.
- Economics bite hard: visible censorship or reorgs nuke revenue and reputation; miners and users route around the attacker.

The real risk today -- Power over block templates lives at pools. A few large pools under the same policy pressure could soft-censor. That does not require 51%; it just slows some transactions and annoys everyone.


What helps in practice is:
Miners: prefer pools that commit to neutral templates and adopt Stratum v2 with job negotiation so miners, not pools, pick transactions. Be ready to switch pools.
Users/merchants: self-custody, run your own node, and choose sensible confirmation policies for incoming funds. Big payments get more confs.
Devs/operators: diversify funding, monitor pool shares, and keep pushing open standards that reduce single chokepoints.

Is this already unfolding? Exchanges dabble in mining and some run pools. That is a long way from coordinating a profitable majority attack. The more realistic failure mode is policy-driven filtering by a handful of pools, which market pressure has reversed before.

To put it briefly, any miner wants to make a profit, which depends on the price of bitcoin and the stability of the bitcoin blockchain.
And it is technically impossible to produce a lot of equipment to make a 51% attack.