Thanks to the rising price of BTC, the mining operation has become more attractive. Investments are rushing in and large mining pools involving thousands of rigs or more have joined the network in order to gain an advantage in the race to solve the puzzle first and get the reward. For players without large capital from investments, they have a choice to participate in a mining pool. When the pool wins a race, the award will be allocated to each participant based on the computational power contributed.
This ever-growing computational power of a pool poses a real threat due to the so-called 51% problem. This problem occurs when a miner manages to build up computational power to total at least 51% of the total computing power of the network. When this occurs, the miner will have a chance to outrun other miners. The miner can continue to grow the ledger with blocks containing bad transactions since this miner has more than a 50% chance of solving the puzzle first. Soon, the malicious miner's ledger will grow to be the longest path and all other nodes have to save this path based on Bitcoin's consensus protocol.
For a large and well-established network such as Bitcoin, the 51% problem is not as critical an issue, mainly due to the following reasons:
- A well-established network will attract a much larger number of participating parties and connect a very significant number of nodes. It will take an exorbitantly high initial investment for a hacker to purchase the necessary mining rigs. When such a network is attacked, the price of cryptography will drop quickly when the news becomes public and the hacker will have a low chance of recovering the investment.
- In the history of Bitcoin, there have been cases when a mining pool that accumulated dangerously high computing power approached this line. When the participating miners in the pool realized the problem, many of them chose to leave the pool. Soon, the computational power of the pool fell to a safe level.
- In the case of a small and immature network, it is not difficult for a miner to muster computing power of more than 51%. However, the cryptocurrency value of these networks is minimal and it gives hackers very little financial incentive to take advantage of the 51% problem.