Hetzner anti-crypto policies: A wake-up call for Ethereum’s future

Published at: Aug. 27, 2022

Just when the Ethereum ecosystem reached its final stages in preparing for the much-anticipated upgrade, The Merge, german cloud provider Hetzner, reiterated its stance against allowing mining operations for both proof-of-stake (PoS) and proof-of-work (PoW) applications.

Hetzner, a private, centralized cloud provider, stepped in on a discussion around running blockchain nodes, highlighting its terms of services that prohibit customers from using the services for crypto activities. However, the Ethereum community perceived the revelation as a threat to the ecosystem as Hetzner’s cloud services host nearly 16% of the Ethereum nodes, as shown below.

In crypto, the reliance on centralized service providers has been historically perceived as a negative trait when it comes to long-term sustenance — and for a good reason. Redditor u/Supermann- questioned the anti-crypto policies laid down by the second biggest Ethereum Mainnet host, Hetzner. Clarifying the doubts and legal implications associated with using its services for crypto activities, Hetzner stated:

“Using our products for any application related to mining, even remotely related, is not permitted. This includes Ethereum.”

The company also stated that the non-allowance extends to running nodes, mining and farming, plotting, storage of blockchain data and trading. While acknowledging the extensive use of its services for powering Ethereum, Hetzner revealed that “we have been internally discussing how we can best address this issue.” As a fair warning to the community, Hetzner added:

“If you, or any other potential customers are unsure about whether your use case will violate our ToS, please reach out to us.”

The latest revelation from german cloud provider Hetzner showcases the impact of the decision made by centralized entities on thriving crypto ecosystems.

The majority of the Ethereum ecosystem currently runs on Amazon.com, which hosts 54% of the total Ethereum nodes. Some of the mainstream cloud providers that currently host Ethereum nodes include Oracle Cloud (4.1%), Alibaba (2.8%) and Google Cloud (2.7%).

Discussions around the Ethereum upgrade have unknowingly spurred numerous misconceptions about what it means for the future of the blockchain. Cointelegraph’s report highlighted the top five misconceptions about the anticipated Ethereum upgrade.

Reduced gas fees and faster transactions are the biggest rumors spreading across the ecosystem, which have been confirmed to be untrue. However, a subsequent upgrade, named the Shanghai upgrade, will deliver faster and cheaper transactions.