Ethereum Could Get Kicked Off Cloud Host That Powers 10% of Crypto Network

Hetzner, which hosts roughly 10% of Ethereum nodes, says it does not allow mining or anything “even remotely related,” including staking.

AccessTimeIconAug 26, 2022 at 6:52 p.m. UTC
Updated Aug 26, 2022 at 7:24 p.m. UTC

Sam is a reporter at CoinDesk focused on decentralized technology, DeFi and DAOs. He owns ETH, BTC and MATIC.

Ethereum appears at risk of getting kicked off the cloud-networking provider that powers roughly 10% of the second-biggest blockchain.

Hetzner, a German-based cloud services firm, said in a Reddit post this week that its terms of service specifically bar crypto mining and also staking, the approach Ethereum is moving to soon to run the blockchain.

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

If Ethereum is forced off Hetzner, it would further whittle down where it resides, raising the question of just how decentralized the purportedly decentralized blockchain really is. According to ethernodes.org, over 60% of Ethereum nodes – the computers that process transactions on the network – are hosted by cloud service providers. Of these cloud-hosted Ethereum nodes, Hetzner powers roughly 16%, second only to Amazon Web Services at around 53%.

Hetzner didn’t respond to a request for comment from CoinDesk by press time.

It is unclear how long the ban has been in place or whether the firm has ever taken action to enforce it. “We are aware that there are many Ethereum users currently at Hetzner, and we have been internally discussing how we can best address this issue,” Hetzner said in its post.

Hetzner referenced its Reddit post in response to a tweet from Maggie Love, founder of Web3 infrastructure platform W3bCloud. “Ethereum cannot be decentralized if the stack is not decentralized…” Love tweeted. “Where is the dialogue on this?”

The statement from Hetzner comes on the heels of recent U.S. Treasury Department sanctions on cryptocurrency addresses related to Tornado Cash, an Ethereum-based utility that allows users to send and receive funds without leaving a clear trail.

The Tornado Cash situation sparked debate in the Ethereum community around whether nodes operating the network – or the infrastructure powering them – might be forced to censor transactions or otherwise curtail activity in accordance with the sanctions.

This debate will only amplify next month when Ethereum transitions to proof-of-stake, a more energy-efficient system for processing transactions that has sparked its own centralization concerns.

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Sam is a reporter at CoinDesk focused on decentralized technology, DeFi and DAOs. He owns ETH, BTC and MATIC.

CoinDesk - Unknown

Sam is a reporter at CoinDesk focused on decentralized technology, DeFi and DAOs. He owns ETH, BTC and MATIC.