 January 12, 2021
Dear Blockchain Bites reader,
The copy of the newsletter sent around 5 p.m. EST was sent in error. We apologize for the mistake.
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Tuesday, January 12, 2021
Our Apologies
Sci-Hub Becomes 'Uncensorable' on Handshake
| January 12, 2021  The top stories in bitcoin, crypto and more – all in one place, delivered daily. Sponsored By:  By Daniel Kuhn If you were forwarded this newsletter and would like to receive it, sign up here.
Bitcoin's price is bouncing back, having found a floor of around $30,000 to stand on. Meanwhile, the number of active bitcoin addresses and transaction volumes has climbed above peaks set in 2017.
Also, content moderation decisions from Amazon, Shopify and Twitter following the Capitol riots in Washington, D.C., on Jan. 6 have put efforts to "decentralize" the web in sharp relief.
Few, if any, crypto-based protocols or platforms have matured to that level, though there are encouraging signs. Yesterday, Sci-Hub moved to the "uncensorable" Handshake network, preserving its rich database of pirated academic research.  Top shelf writing sailthru or
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 Big year Bitcoin. DeFi. Ethereum 2.0. The biggest trends in crypto this year began to move the needle in the rest of the world. Multi-billion dollar funds bought bitcoin as an inflation hedge. Institutions began discussing the merits of decentralization. And the banking sector warmed to crypto.
CoinDesk's 2020 Year in Review covers the major events, ideas and themes in crypto, and why they matter. The series is a comprehensive collection of op-eds, essays and interviews from some of the biggest names in crypto, published throughout the month.
Quick bites
 The list Who moved the needle on crypto this year? What were the projects that mattered? Who shattered the glass ceiling and broke the mold?
From DeFi to bitcoin's late year surge, 2020 was full of big stories, trends and personalities. We've unveiled CoinDesk's 2020 Most Influential list, a selection of 12 people who helped push the industry forward this year. See who made the list.
Market intel Retracing and beyond?  Q4 If the 2020 Q1 was the quarter of market turmoil, Q2 the bitcoin halving and Q3 the explosion of stablecoins and decentralized finance applications, Q4 was the quarter of institutional FOMO for bitcoin and of Ethereum launching the first phase of its ambitious migration to a proof-of-stake (PoS) blockchain. The latest CoinDesk Quarterly Review looks at the performance of bitcoin and ether compared to macro assets and other crypto assets, and at their progress, milestones and value drivers over the past three months. Download the free report.
At stake Hashrate distribution A frequent criticism of the Bitcoin ecosystem is the centralization of hash power contributed to secure the network. For years, the mining market has coalesced in China due to an abundance of cheap electricity, the proximately of mining machine giants and low production costs.
According to the Cambridge Bitcoin Electricity Consumption Index, China dominates the mining sector, accounting for nearly two-thirds of contributed hash power. The U.S. comes second with approximately 7% of the global hashrate, followed closely by Russia and Kazakhstan. It's worth noting these metrics are based on a limited sample size.
Further, only 10 mining pools are responsible for 70% of bitcoin's hash power, Casa CTO Jameson Lopp noted in a blog post this summer. Detractors point to this concentration – at the national and corporate level – as a fault line for Bitcoin security. If malicious actors gained control of the network, they could perpetrate a 51% attack, which is a way to double-spend bitcoin or otherwise tamper with the blockchain's record of transactions.
"In 2020, Bitcoin has […] become a highly centralized system that places an increasing amount of trust in a small number of large entities. Any centralization of Bitcoin network hash power should be of concern as it erodes the trustless model of the network," TokenAnalyst, a cryptocurrency research firm, claimed last year. While Lopp is seemingly in support of distributing power away from mining pools, he doesn't see this concentration as a three-alarm fire. Hasu, a pseudonymous crypto researcher, also thinks concentration is harmless. "[B]itcoin's design doesn't assume mining power is widely distributed. It's simply not a requirement. Instead, it only assumes miners are rational, which is something completely different. Rationality means agents do what is best for them, even if that means colluding with other miners to attack the system," he wrote in a CoinDesk op-ed. Research has shown the costs of attacking a well-secured blockchain network would likely surpass the gains made. Further, in practice, a double-spend is not a death sentence. Ethereum Classic, a less-active fork of Ethereum, suffered three double-spend attacks in 2020 and is still chugging along in the new year, after a number of security updates. Even if not a pressing threat, there is still a cause to decentralize bitcoin's computing power. Nangeng "NG" Zhang, CEO of mining giant Canaan, noted there's a growing trend chipping into China's dominance.
"[B]itcoin miners have traditionally relied on the cheap electricity powered by hydroelectric plants in the Sichuan province as their source of renewable energy. But when you consider that hydropower is only available during the wet season in China, six months of the year, it's no surprise that bitcoin miners have cast their eyes to more innovative and sustainable sources of energy across novel jurisdictions," he wrote in a CoinDesk op-ed.
Several firms, including Layer1 and Northern Data, have set up shop in Texas, attempting to leverage the state's abundant supply of cheap electricity and business-friendly environment. Layer1 even announced the audacious goal of usurping some 25% of the bitcoin hashrate in the coming years, though the company has had some notable blowbacks.
Now, Kentucky looks set to become the next center of U.S. crypto mining. A pair of lawmakers introduced legislation offering tax breaks to cryptocurrency miners. As Zhang concludes: "In reimagining a mining ecosystem that is both sustainable and viable, we will do well to plan strategically for the long term and not only consider short-term wins – whether it's in tech or profitability – focusing instead on the complete integration of commercial, sustainability and environmental goals."
Who won #CryptoTwitter? 
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