The centralization of Bitcoin: Behind the two mining pools controlling 51% of the global hash rate

While most of the market focuses on Bitcoin’s rate volatility, a much bigger problem appears to go unnoticed.The centralization

of Ethereum has actually been one of the hottest subjects in the crypto market given that the network’s switch to Proof-of-Stake, with lots of critics cautioning about the risks of such a high market cap cryptocurrency counting on only a handful of centralized validators.Since the coveted mining ban in China, the centralization of the Bitcoin

network primarily disappeared from mainstream discussions and became the focus of a specific niche group in the mining sphere.However, Bitcoin’s centralization is a problem that worries the entire market, specifically now when just two

mining swimming pools produce the majority of its blocks.CryptoSlate looked at Bitcoin’s international hash rate circulation and discovered that over half of it came from Foundry USA and Antpool.The 2 pools mined over

a quarter of Bitcoin obstructs in the past 10 days each. Because mid-December, Foundry USA mined 357 blocks, while Antpool mined 325.

Foundry’s block production accounted for 26.98%of the network, while Antpool was responsible for just under 24.5 %of the overall block production. Chart showing the approximated hash rate distribution among the biggest Bitcoin mining swimming pools(Source: Blockchain.com)Antpool has actually been at the forefront of Bitcoin mining for many years and produced nearly 14%of the blocks mined in the past 3 years. On the other hand, Foundry is a fairly new name in the mining area. However, it rapidly rose to become one of the top 10 pools by hash rate, representing 3.2%of the blocks mined in the past year.A much deeper look at Antpool and Foundry USA shows a worrying level of centralization– and a web of interconnected companies that successfully own half of the network.Foundry– DCG’s mining leviathan It took less than 2 years for Foundry USA to end up being a force to be reckoned with in the Bitcoin mining area. The mining pool is owned and run by the eponymous Foundry, a business Digital Currency Group(DCG)produced in 2019. By late summer season 2020, Foundry was already amongst the biggest Bitcoin miners in North America. Aside from mining

, the business provided devices funding and procurement. By the end of 2020, Foundry assisted procure half of all the Bitcoin mining hardware delivered to North America.Foundry’s massive success as a devices procurer and miner straight results from DCG’s impact in the crypto

industry.The equity capital firm is among the area’s biggest and most active financiers, backing more than 160 crypto companies in over 30 countries. DCG’s portfolio is a registry of the industry’s greatest gamers– Blockchain.com, Blockstream, Chainalysis, Circle, Coinbase, CoinDesk, Genesis, Grayscale

, Kraken, Ledger, Lightning Network, Ripple, Silvergate, and dozens more.Foundry is its wholly-owned subsidiary that functions as a one-stop shop for all of these

companies’mining requirements. The quick development in Foundry USA’s hash rate led some to speculate that DCG’s business were contractually obligated to do all of their mining through Foundry’s swimming pool. However, it’s important to note that neither DCG nor any business in its portfolio confirmed this.The mining ban instated in China in 2015 helped as well.Forced to leave China’s abundant and cheap hydropower,

miners were trying to find alternative areas providing at least a portion of their revenue and a more inviting regulative environment.The U.S. presented as a best moving spot, offering miners a wide selection of locations and power sources. And having a mining swimming pool as large as Foundry USA at their doorstep definitely didn’t hurt.Antpool– Bitmain’s monopoly Established in 2014, Antpool is one of

the earliest operating mining swimming pools on the marketplace. Regularly representing over a quarter of the worldwide hash rate, Antpool has almost never left the leading ten largest mining pools.The pool’s success is its best vertical integration– it is owned and operated by Bitmain, the world’s biggest mining hardware producer. The business behind the Antminer series has actually provided its swimming pool with the newest and most effective Bitcoin hashers, helping it remain successful even in the coldest crypto winters.Bitmain’s impact over the worldwide

crypto market has led many to hypothesize that the company was obliging its large buyers to mine with Antpool. With both Bitmain and Antpool having headquarters in China, many also worry about the nation’s impact over such a large portion of Bitcoin’s hash rate.The corporatization of crypto mining

It’s important to note that a mining swimming pool differs from a personal mining operation. Unlike a personal miner, a pool represents the joint hash rate of lots of devices owned by numerous entities.Owners of mining makers, or hashers, divided the profits created by the mining swimming pool according to the size of their contribution.That Foundry USA accounts for a quarter of the Bitcoin hash rate doesn’t

suggest that DCG owns every device that produced it.However, Foundry provides the foundation and the roof for its customers’mining operations. The company’s weak points could shock a significant part of the Bitcoin network and leave thousands of smaller sized miners and makers fending for themselves if it were to shut down.The very same can be applied to Antpool.The rate of

centralization these 2 entities troubled the market ends up being even greater when looking beyond simply Bitcoin. Antpool has pools for other cryptocurrencies too– Litecoin (LTC), ZCash(ZEC ), Bitcoin Cash(BCH)

, Ethereum Classic (ETC), and Dash(DASH ), just to name a few.Foundry uses business staking support for Ethereum (ETH), Solana(SOL), Polkadot

(DOT ), Avalanche (AVAX), and Cosmos(ATOM). The business doesn’t divulge the variety of assets it manages.Posted In: Bitcoin, U.S., Analysis, Mining Recent Bitcoin Stories Bitcoin mining difficulty falls 3.6%following winter freeze Mike Dalton · 1 day ago · 1 min checked out Bitcoin miner income down 37.5%in 2022 YoY Soumen Datta · 2 days earlier · 2 minutes read Research: Short-term Bitcoin holders was up to its most affordable level at 15% of the supply Samuel Wan · 2 days earlier · 1 min checked out