10% of Ethereum Nodes Use a Web Hosting Service They’re Banned From

Around 10% of Ethereum nodes use Hetzner’s service today.  

Don’t Use Us for Crypto, Hetzner Warns 

Ethereum’s reliance on centralized web hosting services has once again come under scrutiny in the crypto community. 

This time, the discussions center on Hetzner, a web hosting service that currently looks after around 16% of remote Ethereum nodes (as 61% of nodes are hosted remotely, that equates to about 9.76% of all Ethereum nodes). An August 23 Reddit post from Hetzner that resurfaced on Twitter today has warned Ethereum users against using its service for crypto-related activities. 

I know this is off topic, but if there are Hetzner customers who are using Ethereum, they should please read this: –Katie

— Hetzner (@Hetzner_Online) August 26, 2022

“If there are Hetzner customers who are using Ethereum, they should please read this,” Hetzner tweeted today with a link to the post. In the post, Hetzner all but confirmed that it has a blanket ban on crypto. An excerpt read: 

“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… Even if you just run one node, we consider it a violation of our ToS.” 

The post added that the company was “aware that there are many Ethereum users currently at Hetzner.” It prompted several responses from Hetzner users, some of whom questioned the ban and flagged the company’s mention of a mining ban. 

“Considering that 16% of Ethereum PoW nodes are running on your platform, but these are being migrated to PoS, can you explain to your customers WHY you actually don’t allow this in your Terms & Conditions?” one posting under drhexc wrote. 

“I don’t think that whoever is operating your account here, maybe Katie, here on Reddit, really understands what mining is and I wanted to try and explain, first of all, I do zero mining using hetzer. In fact, hetzner would not provide any meaningful competitive advantages for mining,” added another going by faddat. 

Ethereum’s Decentralization 

As Hetzner is a web hosting service, it doesn’t accommodate crypto miners, who use raw computing power to mine cryptocurrencies like ETH and BTC. However, it’s popular among node operators. 

Multiple Twitter users within the Ethereum community also criticized Hetzner over its policy. “Gotta give Kudos where it’s due,” wrote Rotki founder Lefteris Karapetsas. “@Hetzner_Online does more to push us towards decentralisation than the majority of the projects in this space.” 

Crypto Briefing reached out to Hetzner to request an explanation on its anti-crypto policy, and a sales representative said that it prohibits Ethereum and other crypto activity because some tokens cause problems. “If you haven’t received a notice from the company, stay with us,” he said. 

Ethereum’s reliance on services like Hetzner and Amazon Web Service has been the subject of intense debate in the past, with some arguing that the network’s decentralization suffers as a result. Today’s development comes after weeks of discussions over the network’s ability to remain censorship resistant following the Treasury’s Tornado Cash ban. Detractors say that Ethereum will be prone to attack once it completes “the Merge” to Proof-of-Stake, which is slated to happen next month. Ethereum’s creator Vitalik Buterin weighed in on the issue, saying that he would consider compliance with a regulatory ban as an attack on the network. 

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.