Hetzner Anti-Crypto Policy Sounds Alarm for Ethereum’s Future

As the Ethereum ecosystem enters the final phase of a much-anticipated merger upgrade, German cloud service provider Hetzner has suddenly reiterated its opposition to allowing proof-of-stake (PoS) and proof-of-work mining operations position.


Hetzner is a centralized private cloud provider. Recently, the company’s official social account stated in response to the encryption node licensing question that its terms of service do not allow the use of Hetzner products for any mining-related applications, even remote-related applications. Including Ethereum. Hetzner said he knew there were a lot of Ethereum users and had been discussing internally how to best solve this problem. However, the ethereum community sees the remarks as a threat to the ecosystem, as Hetzner’s cloud service hosts nearly 16% of ethereum nodes, as follows:


Above: Ethereum mainnet data, source: ethernodes.org

Reliance on centralized service providers has long been seen as a bad practice in the cryptocurrency space — and for good reason. The response from the crypto community was also overwhelming after Hetzner clarified the issues and legal implications of using its services for crypto activities, as Hetzner stated that its products will not be allowed to be used for any mining-related applications, even remotely related applications, including Ethereum. The company also said the restrictions will also extend to areas such as node operation, mining and yield farming, and blockchain data storage and trading.

Hetzner acknowledged that its service is already widely used to support the ethereum blockchain, but revealed that there have been internal discussions on how to best address the issue. In fact, Hetzner clarified on social media that if a user is storing a program or code without using it and without any external communication, then for now, this is not covered by their terms of service, while they also It said that if users or any other potential customers are unsure whether their use case would violate Hetzner’s terms of service, they need to get in touch as soon as possible.

Frankly, the latest stance from cloud provider Hetzner does make the crypto community discover that centralized entities still have a huge impact on the burgeoning crypto ecosystem. Most of the 4,653 active Ethereum (ETH) nodes are occupied by centralized network providers such as Amazon Web Services (AWS), according to cryptocurrency analytics platform Messari, with more than 50% from AWS and more than 15% from Hetzner , 4.1% from OVH. In a December 2020 report, Messari said the high cost of running node infrastructure could make ethereum more vulnerable to attacks. In addition, according to Ethernode data, nodes are most geographically concentrated in the United States (46.4%) and Germany (13.4%), so government intervention in these two countries may seriously affect decentralization at the node level of Ethereum change.

In fact, Ethereum has begun to try to solve the problem of reliance on centralized cloud hosting, and Danny Ryan, a researcher at the Ethereum Foundation, recently said that when it comes to accessing capital, all types of players have the same advantages. Whereas in proof-of-work, the capital required is highly specialized machine components such as ASICs or GPUs, but one can find ways of building that avoid centralization issues, not letting a single operator grasp certain critical thresholds, and the upcoming A proof-of-stake upgrade is certainly a solution, as decentralization may be improved compared to proof-of-work.

Part of this article was compiled from cointelegraph

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/hetzner-anti-crypto-policy-sounds-alarm-for-ethereums-future/
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