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It looks as if bitcoin is getting Segregated Witness.

Bitcoin Improvement Proposal 91 (BIP 91) just locked in. Up to 90 percent of all hash power signaled support for this soft fork, which implies miners intend, in turn, to trigger Segregated Witness (SegWit) activation. By extension, this should make BIP 148 obsolete and August 1 a non-event.

But SegWit is not certain. In fact, on a technical level, SegWit is not any closer to activation at all.

BIP 91

Segregated Witness, defined by BIP 141, locks in if at least 95 percent of miners (by hash power) signal support for the upgrade within a two-week difficulty period. To do so, miners need to embed a piece of data called “bit 1” in the blocks they mine.

Importantly, this is technically the only way for SegWit to activate right now. And this threshold has not yet been met.

But there are alternative strategies to try and reach this threshold “indirectly” — like BIP 91.

BIP 91 is a bitcoin Improvement Proposal proposed by Bitmain Warranty engineer James Hilliard. It is compatible with the New York Agreement and backed by a number of bitcoin companies and mining pools. It is also compatible with BIP 148, another strategy to meet the BIP 141 threshold indirectly.

Miners have been signaling support for BIP 91 over the past couple of days through another piece of data, “bit 4.” Once 269 blocks within a 336-block window include bit 4, this BIP 91 soft fork gets locked in. This threshold was just met.

This means that after another 336 blocks, a little over two days from now, all BIP 91–compatible nodes will reject any block that doesn’t include bit 1.

As long as a majority of hash power enforces BIP 91, this majority should eventually control the longest valid chain according to all bitcoin nodes. And as this chain consists of bit 1 SegWit-signaling blocks only, it would in turn activate SegWit on all SegWit-ready nodes.

In that case, BIP 141 should lock in by mid-August, and SegWit should be live on the bitcoin network after a two-week “grace period” by the end of that month.

If all goes well …

What Could Go Wrong?

Although well over 80 percent of hash power has signaled bit 4 for BIP 91 activation, this doesn’t actually guarantee anything. Most importantly, it doesn’t in itself mean that these miners will signal bit 1 for SegWit.

Indeed, so far, most miners don’t. Currently, the proportion of miners signaling bit 1 is still far lower than BIP 91 activation would suggest. It is even lower than 50 percent.

Moreover, BIP 91 is probably being enforced by hardly any economically relevant nodes; that is, nodes operated by users that accept bitcoins as payment. Almost no bitcoin users on the network recognize BIP 91 or its bit 4 signaling at all, and will therefore continue to accept blocks with or without bit 1.

BIP 91 is, instead, enforced by hash power alone. This in turn means that a majority of miners (by hash power) could back out of BIP 91 with little more than reputational damage. They could continue to mine blocks that do not signal bit 1, even after BIP 91 activates in a few days. As long as these miners are in a majority, they will still control the longest valid chain: valid according to most miners, and valid to most users.

Furthermore, any minority of miners and the few nodes that do enforce the BIP 91 soft fork would then be forked off the bitcoin network. In a few days from now, these miners would mine (on top of) blocks that almost only they themselves would consider valid, while most of the rest of the entire bitcoin network would completely ignore them. These miners would be wasting their own resources.

With this week’s bit 4 signaling, a majority of miners have effectively made a statement that they intend to start to activate the SegWit soft fork within a couple of days. But for now, that’s really all it is: a very public, blockchain-based statement of intent.

Actual SegWit activation should start next week, if miners stick to their stated intent.

In late July, the U.S. Securities and Exchange Commission (SEC) announced that virtual tokens, such as those sold by the decentralized autonomous organization (DAO), are securities and therefore now subject to federal securities laws. While the SEC announcement recognized that not all blockchain-based tokens are necessarily securities — Ether is not a security, while the DAO tokens are — the announcement should be taken seriously by companies seeking to launch an initial coin offering (ICO) under U.S. jurisdiction.

Other countries have taken different regulatory approaches, on Medium, Andrew Keys, head of global business development with ConsenSys, reported that the Chinese Mint is “experimenting with the ERC 20 token standard and Ethereum smart contracts to digitize the RMB.” Keys noted that China’s  Mint “also actively promotes blockchain technology in finance and related fields.”

As of September 4, China has taken a relatively firm stance against ICOs. However, this stance might be more characteristic of the Chinese government than catastrophic. According to Chinese financial magazine, Caixin, the Chinese regulators, the People’s Bank of China and China Securities Regulatory Commission, are currently deciding on how to handle ICOs. While permanent suspension is possible, until regulations are implemented, it’s assumed that the ban is temporary.

Geopolitics of Crypto Mining

Like the ICO world, crypto mining is dominated by China. Chinese mining pools are said to control more than 70 percent of bitcoin’s total hashrate, if not more. There are two indisputable reasons for China’s dominance in the crypto mining industry. First, geopolitics: electricity in China is extremely cheap compared to other countries; and electricity costs are the most important factor in achieving a profitable mining operation. In industrial regions, electricity is either supplied by hydroelectric dams or subsidized by the government. Second, China maintains control of the majority of mining pools. The largest crypto mining pools ― collaborations where individuals or companies combine their hashrate to improve their chances of mining a block ― are all located in China.

The issue with China’s dominance in crypto mining is that combining pools in the same location could lead to centralization. If the bitcoin network becomes centralized its value as a decentralized ledger would essentially plummet. Russia and the United States do not have significant hashing power yet, but there is evidence their mining activity is growing.

The world’s first full-service mining solution provider

Nestled in Wenatchee, Washington, located close to a number of hydroelectric dams on the Columbia River, the Giga Watt Project is becoming a significant player in North American crypto mining.

Giga Watt is fueled by five megawatts of power dedicated to mining resources, with an additional 50 in development. The token-launch platform Cryptonomos supports their ambitious quest to revolutionize mining. Cryptonomos’ objective is to deliver turnkey services to Giga Watt, including token-launch structuring, book building, platform hosting, smart contract development, cybersecurity, financial management, and administration of investor and public relations. While Giga Watt’s initial token sale has ended, there is still time to join the endeavor.

To fulfill their ambitions, Giga Watt is building an enormous network. “With massive power at our disposal, we can begin issuing blockchain solutions that perform useful computing functionality. Imagining a global supercomputer that consumes a gigawatt of energy where each of our customers can participate is indeed exciting,” admitted Giga Watt CEO Dave Carlson. With such a massive power network at their disposal, Giga Watt’s mining operation could be unmatched by any other in the world.

At this time, the Giga Watt project has three units already in operation, which means that 2.25 mega watts are currently ready for tokenization, while the construction of new units continues. At the time of writing, 1.25 million WTT tokens have potential clients to whom capacities could be rented out. By September, three of Giga Watt’s state-of-the-art pods will be completed. Capacities are allocated to token holders on a first come, first served basis.