On October 11, 2017, the cryptocurrency world was grappling with more than one Bitcoin fork. While the community debated the upcoming SegWit2x hard fork scheduled for November, a third fork was quietly gaining traction — one that targeted a fundamentally different problem. Bitcoin Gold, initiated by Jack Liao, CEO of Hong Kong-based LightningASIC, was preparing to implement the Equihash proof-of-work algorithm in a bid to dismantle what its creators saw as a mining monopoly controlled by a handful of ASIC manufacturers.
TL;DR
- Bitcoin Gold plans to switch from SHA-256 to Equihash proof-of-work to break ASIC mining dominance
- 65% of Bitcoin hash power comes from China, raising centralization concerns
- Anyone holding BTC on October 25 will receive equivalent BTG at the fork
- Project plans replay protection and per-block difficulty retargeting
- Lead developer “h4x3rotab” and contributors argue ASIC manufacturing is inherently anti-competitive
The Centralization Problem
Bitcoin Gold contributors J. Alejandro Regojo and Robert Kuhne laid out the case in stark terms. “What was born as decentralized is now centralized,” Regojo told Bitcoin Magazine, pointing to the concentration of mining power in professional data centers operated by a small number of entities. The numbers supported the claim: approximately 65 percent of Bitcoin hash power originated from China, a country that had been increasingly hostile to cryptocurrency activities.
But mining centralization was only half the problem. ASIC production — the manufacturing of the specialized chips that mine Bitcoin — was even more concentrated. Only a handful of companies, led by Chinese giant Bitmain, produced SHA-256 ASIC hardware. This created what Kuhne described as an inherently uneven playing field.
“The way the monopoly manufacturer currently operates is abusive to its customers — individual miners — and the industry at large,” Kuhne argued. “Manufacturers can produce ASICs at a tiny cost, but miners have to buy at a high price. This violates the one-CPU-one-vote ethos as described in the Bitcoin white paper.”
The argument was straightforward: while anyone can buy a CPU at market price, the same is not true for ASIC hardware. Entry barriers to the ASIC manufacturing market are enormous — building fabrication plants requires government approval and banking relationships that effectively limit competition to a tiny number of approved entities.
The Equihash Solution
Bitcoin Gold’s answer was to adopt Equihash, the proof-of-work algorithm already used by Zcash and several other cryptocurrencies. Equihash is designed to be memory-intensive rather than compute-intensive, making it significantly harder to build specialized ASIC chips for. The result, in theory, is that standard GPUs can compete effectively, returning mining to individual users rather than industrial operations.
The team acknowledged that full ASIC resistance is likely impossible — any algorithm can theoretically be implemented in silicon. Their solution: commit to hard-forking to a new algorithm if ASIC chips for Equihash ever emerge. This threat alone, they argued, would serve as a deterrent to potential ASIC manufacturers unwilling to invest in chips that could be rendered obsolete overnight.
Beyond the algorithm change, Bitcoin Gold planned to implement strong replay protection — ensuring that transactions on the BTG chain could not be replayed on the BTC chain and vice versa — and a new difficulty retargeting scheme that adjusts at every block rather than every two weeks, preventing the chain from stalling if hash power drops suddenly.
The Distribution Model and Controversy
Bitcoin Gold adopted the same distribution model as Bitcoin Cash: anyone holding BTC at the time of the fork (scheduled for October 25) would receive an equivalent amount of BTG. The approach had proven effective for Bitcoin Cash, with users eagerly claiming their new coins and exchanges proving willing to integrate the new asset.
However, the project was not without controversy. Early announcements suggested a closed launch with a presale of newly mined coins — essentially an ICO-style funding mechanism where a batch of BTG would be mined in the first week and distributed to designated investors. The proposal drew criticism, particularly because Bitcoin Cash had not included any similar founders reward.
Kuhne acknowledged the pushback: “We have heard a lot of feedback from the community, so this proposal will be replaced with an updated and improved plan. But we will not completely rule out the possibility of a modest pre-mine to provide a basic level of funding for the project.”
The controversy highlighted a tension that would recur throughout Bitcoin Gold’s history — the gap between its stated decentralization ideals and the practical realities of funding development for a new cryptocurrency.
Market Context
Bitcoin was trading at approximately $4,826 on October 11, having posted a 14.37% gain over the past seven days. Ethereum sat at $303, up 3.78% on the week. The total cryptocurrency market was surging, with enthusiasm driven by a combination of institutional interest, the ICO boom on Ethereum, and anticipation of the multiple Bitcoin forks. Bitcoin Gold’s promise of “free money” for BTC holders added fuel to an already overheated market.
Why This Matters
Bitcoin Gold’s October 2017 launch was one of the earliest and most prominent attempts to address mining centralization — a problem that would only grow more acute in subsequent years. While the project itself would face significant challenges, including a major double-spend attack on its network later, the questions it raised about ASIC dominance and the concentration of mining power remain central to Bitcoin’s ongoing evolution. The debate between ASIC-resistant algorithms and purpose-built hardware continues to shape the cryptocurrency landscape, with projects like Monero and Ravencoin regularly hard-forking to maintain mining decentralization. For investors and miners alike, Bitcoin Gold served as an early lesson: not all forks are created equal, and the technical merits of a project do not always translate into long-term viability.
Disclaimer: This article was written for informational purposes and reflects events as reported on October 11, 2017. Cryptocurrency investments carry significant risk. Always do your own research before making investment decisions.
65% of hash power from China in 2017 and Bitmain controlling most ASIC production. Bitcoin Gold identified a real problem
h4x3rotab and the team had solid technical arguments. Equihash was proven via Zcash. the problem was no one trusted the premine
replay protection and per-block difficulty retargeting were smart choices. too bad the project got buried under governance chaos