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Major Chinese Miners Will Support Segwit if it Comes With 2 MB Block Size Increase

Major Chinese Miners Will Support Segwit if it Comes With 2 MB Block Size Increase

Major Chinese Miners Will Support Segwit if it Comes With 2 MB Block Size Increase

Jiang Zhuo’er, a major Chinese miner who has invested millions of dollars in mining infrastructure and currently operates the Litecoin mining pool LTC1BTC, stated that big blockers and the Chinese mining community are not against Segwit but are in opposition to Segwit without a clear on-chain block size increase solution.

The Bitcoin Core development team’s Segregated Witness is a Swiss army knife of a solution, as Ryan Shea, the co-founder of Blockstack, explained in an analysis paper entitled “Bitcoin’s Segregated Witness: More Than Just Malleability Fixes and Scaling.” It provides up to 3.7x of on-chain scaling, provides infrastructure for two-layer solutions such as Lightning and fixes many existing problems in bitcoin such as transaction malleability.

Also, hardware manufacturers including Trezor reaffirmed the importance of Segwit for the security of bitcoin, as the solution eliminates long processes of transaction verification and settlement.

"SegWit transactions are designed in such a way that allows hardware wallets to get rid of the verification process altogether, because SegWit transactions will include the value of previous outputs in the signature of the transaction. The wallet thus does not need to request the previous transactions nor hash them anymore, saving precious time for users,"said Bach Nguyen of Trezor.

Yet, with the exception of F2Pool, the world’s third largest mining pool, the majority of miners in the Chinese mining industry are still against the activation of Segwit.

In the past few weeks, experts and analysts attempted to unravel the actual intentions and motives of Bitcoin Unlimited supporting mining pools. Some accused mining pools such as Antpool for preventing the activation of Segwit to protect AsicBoost from being exploited, a method utilized by miners to increase profitability of mining operations. Others stated that some Chinese miners are against Segwit because it does not provide immediate on-chain scaling.

The fact is, it is difficult to speculate the on-chain capacity of the bitcoin blockchain with Segwit integrated. The bitcoin block size could be increased up to 3.7 MB but it could also expand only up to 1.7 MB, as mentioned by various research papers including Bitfury’s research initiative on Lightning.

Jiang noted:

“The big-block camp has never been opposed to Segwit, but rather they are opposed to Segwit without also increasing the block size. Ever since Core jumped on the complexity and lack of public understanding of AsicBoost as a way to muddy the waters of debate, the new talking point of “miners oppose Segwit for their own personal profits” has become more commonplace. But if miners oppose Segwit because it harms their profits, why would these miners sign the Hong Kong agreement?.”

The Hong Kong agreement is an agreed upon consensus amongst Bitcoin Core developers and miners that the bitcoin block size would be increased to 2 MB. The Bitcoin Core development team did not follow this roadmap established at the Hong Kong roundtable discussion and presented Segwit as an alternative solution.

At this point, Chinese miners are seeking for Segwit and a 2 MB increase in bitcoin’s on-chain capacity. The Chinese mining community is looking for a compromise: follow the Hong Kong agreement and they intend to activate Segwit.

Author : Joseph Young

Joseph Young is a finance and tech journalist based in Hong Kong. He has worked with leading media and news agencies in the technology and finance industries, offering exclusive content, interviews, insights and analysis of cryptocurrencies, innovative and futuristic technologies.

Bitcoin Block size China Hong Kong Segregated Witness