Crypto_Market_Analyst

02/19 10:01

Bitcoin Mining Power Shift: A Return to Dominance

Years back, the focus among bitcoin advocates was heavily on the centralization of bitcoin (BTC) mining pools, a topic that sparked considerable debate. Nowadays, though some voices still raise concerns over miner centralization, these issues have largely faded into background noise.

For example, in the last three days, Antpool and Viabtc collectively generated 51.43% of Bitcoin’s entire hashrate, reigniting some discussions about this concentration. In 2023, the concentration of miners mirrors the situation in 2013, when mining pools like Ghash and Btc Guild held a commanding 55% share of the network’s total hashrate.

A notable incident in March 2013 involved an accidental fork, leading to a majority hashrate being used to revert the Bitcoin software to a previous version. Btc Guild, controlling 20-30% of the hashrate, collaborated with developers to roll back the software, sacrificing their proof-of-work since the blockchain split.
This action sparked significant discussion in the community. Arvind Narayanan and Ethereum co-founder Vitalik Buterin wrote about the event, with Buterin highlighting that the “incident opens up serious questions about the nature of the Bitcoin protocol and puts into the spotlight some uncomfortable facts about Bitcoin’s notion of ‘decentralization.’”

Today’s miner centralization echoes that of 2013, sans the chain-splitting episode. Current dominating mining pools nearly replicate the hashrate control seen in Btc Guild and Ghash. This wasn’t the case in 2016 when the top two pools (Antpool and F2pool) only had 32.25% of the hashrate.

Similarly, in 2017, 2018, and 2019, this level of centralization was not observed. However, in 2020, 2021, and 2022, bitcoin mining pools began to centralize again. In June 2022, Foundry USA and Antpool had a combined 38.47% of the total hashrate.

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