Bitcoin’s hashrate is highly centralized, with a few mining pools controlling most of the blockchain’s mining power. The latest data from Mempool shows that 50% of the total hashrate is held by Foundry USA and Antpool.
Centralized Mining Network
Foundry USA has maintained a hashrate of over 30% of the total Bitcoin network for several weeks. It became the first mining pool of non-Chinese origin to lead the list in November 2021, following the ban on Bitcoin mining in China in the middle of the same year.
At that time, Foundry USA accounted for 17% of the total Bitcoin hashrate. Today, the US-based pool averages 34.1% of the mining power, equal to about 104 EH/s, considering that the Bitcoin hashrate is around 300 EH/S.
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Antpool comes in second with around 18.0% of the total hashrate which equates to around 58 EH/s. The Chinese-based pool used to be the largest Bitcoin pool but was affected by the crypto mining ban which caused some miners in the region to migrate.
What’s Behind This Trend?
The graph shows that more than 80% of Bitcoin mining power is concentrated among only 5 pools. This is in contrast to the beginning of 2022, when these five mining pools barely exceeded 60% of the hashrate.
Several factors may have contributed to this increase. One of them is the location of the pool server. The closer the server is to the mining pool and facility, the lower the latency of information transfer. This means that miners will get more shares in the mining process and earn more Bitcoin (BTC) by connecting to closer servers.
Another factor is the financial incentives offered by these major mining pools. Larger mining pools can continuously distribute profits to their members, who pay commissions for mining with resources, driving more miners into the ecosystem. This is proven by the high mining difficulty in recent weeks due to Bitcoin’s bullish movement, making it difficult for smaller mining pools to be profitable.
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However, Bitcoin’s highly centralized mining system poses a significant danger to the cryptocurrency. Miners can agree to reject transactions that don’t match certain parameters leading to a 51% attack.
We have seen such attacks on other Proof-of-Work blockchains like Ethereum Classic, which could be a problem for Bitcoin. In addition, these pools are recognized by companies and can face pressure from regulatory agencies that try to control activities on the Bitcoin network.
Bitcoin price
So far, Bitcoin is still maintaining a bullish trend, with the leading cryptocurrency up 40% since the beginning of the year. At the time of writing, Bitcoin is trading at $23,400, according to data from Tradingview.com.
Featured images from Pixabay, charts from Trading View, Coinwarz, and Mempool