When Satoshi Nakamoto designed Bitcoin (BTC), they based its security on a consensus mechanism called Proof-Of-Work (PoW). However, given its consensus decentralization current status, Bitcoin’s security might be in peril.
At least, this is what the crypto researcher Chris Blec thinks, according to a post on X on December 14:
“This is not a good chart. 2 mining pools (both of them force all miners to KYC) comprise 55% of the Bitcoin hash rate. We could be one chess move away from some big problems for Bitcoin. But even worse is the fact that nobody really wants to talk about it. Where’s the urgency?”
— Chris Blec
Total Bitcoin Hash Rate by Mining Pool (December 14, all chains). Source: coin.dance
Notably, the mentioned chart shows Foundry USA and AntPool with 27.6% of Bitcoin’s global hashrate each. Both Bitcoin mining pools are Bitcoin mining companies’ cooperatives seeking to improve block discovery and, consequentially, their profits.
More than just pointing to the worrying dominance of two pools on Bitcoin’s consensus, Chris Blec also calls the community out on a lack of awareness about this problem. Interestingly, Finbold reported about it on September 23: “This is how centralized Bitcoin mining has become over the years.”
Why does Bitcoin mining pool centralization matter?
As it is today, Bitcoin mining pools work centralized in the pool’s coordinator. It is the coordinator who creates the block template (adding transactions from the mempool), filters unwanted transactions, discovers the next block using their miner’s hashrate, broadcasts the mined block to the network, collects the mining reward, and distributes it proportionally to the miners.
Therefore, it is this single entity that performs the relevant actions that directly impact Bitcoin’s security. Recently, we have seen mining pools arbitrarily deciding not to pay their miners on specific occasions. In particular, F2Pool and AntPool – both with 8.8% and 27.6% of the global block discovery rate, respectively.
In yet another episode, a newly created Bitcoin mining pool was also accused of deliberately filtering privacy-related BTC transactions.
Essentially, these events evidence the importance of having a decentralized pool-based consensus. Moreover, a Bitcoin Core developer explained why BTC transactions should wait two hours to be considered safe. Also affected by the current state of low decentralization.
All things considered, Bitcoin’s value proposition is directly related to its security and decentralization. It is possible that the current state of the network could interfere with the market’s perception of the value of the leading cryptocurrency.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
