35% of Ethereum Execution Nodes Run on AWS!? — The Case for DAO Owned Data Centers
What’s the most powerful asset at the blockchain world’s (BW) disposal that didn’t exist at the advent of Bitcoin 14 years ago? This question is obviously subjective and theoretically could vary a great deal among the community due to the differences in strategy among each blockchain. But for the business world and most of humanity for that matter, the one thing that typically remains after boiling down a debate to its simplest form is…money.
At the time the first block of BitCoin was mined 14 years ago- block zero — BitCoin was the only public blockchain and cryptocurrency in existence and its value was essentially zero. Since then, much has changed. Bitcoin has been declared ‘dead’ 474 times by various pundits and naysayers, there are now over 1,000 different blockchains in existence, and Central Banks around the world have conducted numerous research studies on the viability of Central Bank Digital Currencies. It’s become legal to incorporate decentralized autonomous organizations (DAOs) as Limited Liability Companies (LLCs) in the state of Wyoming USA (and a few others) and register Ethereum tokens and new coins with the state as ‘ Open Blockchain Tokens’. DAOs can open US business bank accounts, Stripe accounts, and even receive approval for US Government issued SAM numbers. There’s now a total of 9 blockchain specific Exchange Traded Funds (ETFs) trading in the US market alone. There’s been billions of dollars in blow ups, hacks, and scams that have reached as far as the main stream. The SEC has sued many companies from the smallest of startups to industry titans such as Ripple, Binance, and Coinbase. Through it all, the cryptocurrency market as of 10/15/2023 seems to be holding its 200 day moving average and the total market cap for global blockchain assets is currently $1.09tn.
If the BW was an individual company, it’s market cap would rank 7th in the world behind Apple, Microsoft, Saudi Aramco, Alphabet (Google), Amazon, and Nvidia. It’s an astonishing feat especially considering that the quantum computing and artificial intelligence sectors alone received approximately 6x and 14x the investment received by the BW during the last 14 years. This is not to say that the 3 sectors are competing directly against each other but rather to invite the reader to consider the figures against the pace of innovation within each sector (more on that in a moment).
Imagine for a moment if Satoshi Nakamoto had a $1tn in equity to leverage at the time he wrote Bitcoin’s white paper. What would he have done differently? It’s hard to say but the point is, it’s here and now, and the potential it holds could change the tech landscape as we know it. How so?
In the 14 years that AI and quantum computing raced ahead, the BW has yet to solve its most fundamental issue — scalability. Blockchains have yet to prove scalable with nodes operated on PC’s and laptops let alone mobile devices. Furthermore the RAM required to operate nodes for some of the more prevalent chains has continued to rise and is often 5x to 10x or more the RAM built into the average computer. In the case of Ethereum, node operators need more than 100x the average RAM capacity of the average computer to participate in the Ethereum network which has undoubtedly contributed to a staggering statistic — 35% of Ethereum execution nodes run on AWS! Let that sink in for a moment. This is one of the most telling statistics as to the size of the scalability issue facing the BW today.
Although the Internet Computer (ICP) blockchain claims it’s highly scalable, ICP nodes run on data centers using computing power that will not be in the average computer or mobile device any time soon. This ‘RAM’ issue is so significant that it’s resolution is one of the main goals of the Cardano community over the next 12 months. Cardano stake pools require 24GB of RAM, an increase of 50% in comparison to last year.
The scalability issues lead to node operators purchasing compute resources from cloud computing companies like AWS, Google, Microsoft, Hetzner, Digital Ocean and others. Think about this for a moment — 60% of BitCoin and Ethereum nodes (the no. 1 and no. 2 blockchains in terms of value respectively) run on assets owned by cloud computing companies.
In 2023, the blockchain industry is slated to spend $4bn on cloud computing while essentially perpetuating the loss of true sovereignty and while the quantum era races ahead catching the likes of Vitalik Buterin off guard to such a degree that Ethereum will have to hard fork in the event the quantum era suddenly arrives.
So what does this mean? In short, it becomes obvious that although the BW has had an incredible run to a $1tn market cap, the pace of the innovation required to simply enable nodes for the average machine has lagged while AI and quantum computing have far greater resources at their disposal to bring each technology forward and to the masses more rapidly. Instead of focusing more on figuring out the blockchain’s place in a post quantum world, the BW is focused predominantly on an issue that is specific to their sector and an issue that big money is not too concerned with.
I find it helpful to think back to 2017 when Cardano was founded. And then consider where AI and quantum computing were at that time. Since, AI has exploded onto the mainstream with ChatGPT reaching 1.8 billion monthly site visitors in May 2023. In January 2022 researchers at the University of New South Whales published a paper detailing how quantum silicon processors can be produced using existing manufacturing techniques. In August 2023, Oged Regev of NYU published a paper proving the math behind his algorithm that reduces the number of logic gates required by Schor’s Algorithm by nearly 50%. Within the last month, IonQ released their data center plugin quantum computer that are designed to be literally plugged in to data center machines. Along with the release, IonQ claimed quantum advantage is nearing. On 10/12/2023, Rensselaer Polytechnic Institute became the 1st university to receive IBM’s Quantum System One. And where is Cardano?
Don’t get us wrong, we have the deepest respect and admiration for Cardano and believe it to be the most intelligently designed blockchain in existence. But there’s only so much passion, research, and intelligence can do when it’s competing with the capital and computing power behind Microsoft, AWS, Alphabet (Google) and governments worldwide.
Decentralized storage providers like FileCoin, Storj, and others integrate with and enable users to store data on AWS S3 storage. Mina Protocol has touted their ‘snapshot breakthrough’ that involves node operators saving the chains block and transaction history to Google Drive. At least 25% of Ethereum workloads run on AWS. Blockchain is the fastest growing cloud computing segment yet accounts for only 1% of the $570bn total spend.
Microsoft, AWS, and Google control 65%, 63%, and 51% of the data center, cloud computing, and AI markets respectively. The margins within these markets are 58%, 40%, and 18% respectively. AI margins are significantly lower due massive upfront development costs but will increase substantially going forward.
What do these companies have in common that has enabled each to gain a stranglehold on such profitable tech sectors? Much like debates in the physical realm boiling down to money, the digital realm boils down to the resources required to secure, store, distribute, and analyze its most valuable component — data. And what are these resources? Data centers and computing power. Does it surprise you that the blockchain is fastest growing cloud computing segment yet accounts for only 1% of the $570bn total spend?
According to McKinsey, data center power demand in the US alone will more than double by 2030. Schneider Electric’s recent white paper outlines the reasons why they believe demand will rise even faster. Nvidia CEO was recently quoted as saying that $1tn will be spent on data centers in the next 4 years.
We have always admired the BW’s selfless ‘community 1st, individual 2nd’ mentality and unequivocal commitment to distributing the blockchains’ many inherent socioeconomic benefits to all of humanity. And it is this ‘united we stand, divided we fall’ mantra that can enable the BW to solve scalability issues, compete with MAG, and step forward with conviction toward the quantum era.
We believe the BW should come together, leverage the power of our $1tn market cap and build a DAO owned data center that allows any chain to have fractional ownership and oversight there of — enabling true data sovereignty all the way down to the rack and scalability across all chains. We also build the most advanced, capable hybrid compute platform in the world. We continue refining ZK proofs and use them to properly source and secure AI models and decentralized storage protocols. We use the DAO as a mechanism to facilitate the collaboration the BW as a whole which in DAO form, could be the 7th largest company in the world. The moment big capital realizes that the BW has a plan to address its scalability issues, investment will pour in and pave the road toward mass adoption. We then build the next data center — perhaps powered by photonic computing and a small nuclear reactor. And then we plan to build more — 100’s of them — over the next 100 years while accumulating as many real assets as we can.
Originally published at https://robert-mourey-jr.medium.com on October 16, 2023.
