Ethereum Risks Being Booted from Major Host

Ethereum might be booted from German cloud-networking provider Hetzner, who powers 16% of the Ethereum Mainnet, CoinDesk wrote, citing a Reddit post published earlier in the week.

Terms of service ban staking

Hetzner posted that its terms of service ban staking and mining, and Ethereum plans to move to proof-of-stake (PoS) soon.

The provider wrote:

Using our products for any application related to mining, even remotely related, is not permitted. This includes Ethereum. It includes proof-of-stake and proof-of-work and related applications. It includes trading.

The consequences for Ethereum

If Ethereum is forced off Hetzner, it would raise questions as to the true degree of decentralization of the blockchain. Cloud service providers host almost two-thirds of Ethereum nodes, which process network transactions, according to data of ethernodes.org.

Hetzner is second only to Amazon Web Services, who power around 53% of Ethereum nodes. It’s not known whether Hetzner has ever taken measures to enforce its ban or since when it’s been effective.

The post by Hetzner came in response to a tweet from Web3 infrastructure platform W3bCloud founder Maggie Love, who asked:

Ethereum and Tornado Cash issues

Hetzner’s statement follows US Treasury Department measures against crypto addresses associated with privacy mixer Tornado Cash. The mixer, which is based on Ethereum, lets people send and receive funds anonymously and, to some extent, untraceably.

Sparking debate

The issues with Tornado Cash generated debate in the Ethereum community around whether an entity could force network nodes or the infrastructure powering them to curb activity to ensure compliance. This could include transaction censorship.

Ethereum will move to PoS next month, which is expected to exacerbate the debate. While being a more environmentally friendly solution for transaction processing, PoS comes with its own centralization issues.