3 BTC Mining Pools Accounts for 53% of Hash Rate, Bitmain Controls 2; Is Decentralization at Risk?

With the majority of Bitcoin's mining pools being situated in China, the blockchain has to come face-to-face with potential risks to its security.

Bitcoin may not be as decentralized as it is normally touted. According to stats from BTC.com, two Chinese companies control over 52% of Bitcoin's hashrate.

This, combined with reduced rewards from the May 2020 halving, begs the question of whether the leading digital asset is fully decentralized.

The data highlights that three mining pools dominate the BTC network in the following order; F2Pool (22.7%), BTC.com (14.7%) and Antpool (13.8%). Notably, both BTC.com and Antpool are run by Bitmain which means that this Chinese rig manufacturer yields a significant amount of power within Bitcoin's network.

Source; BTC.com

The Decentralization Aspect

Based on this analysis, one could argue that these three mining pools could collide, compromising the BTC network through a 51% attack. Should such a situation occur, Bitcoin's decentralization would be at risk; a factor that might ultimately see the coin lose market confidence due to an erosion of its fundamental philosophy.

On the other hand, BTC halving is not particularly good news for small miners. The new 6.25BTC block reward could see larger players like Bitmain benefit from economies of scale as their struggling counterparts are forced out of the market.

As it stands, such a market shift would spell more dominance from the Chinese players. According to a 2019 report by Coinshares, 65% BTC's mining power at the time was within China,

“At the time of writing, as much as 65% of Bitcoin hashpower resides within China – the highest we’ve seen since we began our network monitoring in late 2017.”

China's Crypto and Blockchain Dominance

Despite strict regulations towards cryptocurrencies, the Chinese market has remained resilient and continues to actively contribute to the volatile space.

Just recently, the PBoC also took an initiative by piloting the country's CBDC in four regions through Agricultural Bank of China. Should the tests be successful, China is expected to gradually integrate the digital yuan within its payment ecosystems for better oversight and to spur FinTech growth.

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Edwin Munyui
Edwin Munyui
Edwin is a FinTech enthusiast with a particular interest in blockchain technology and cryptocurrencies. He has worked as an author in the blockchain space since 2017 and enjoys creating content that both crypto veterans and newbies can understand. His simple writing style and financial market knowledge have made him a reputable fundamental and technical analyst with the ability to handle any topic around blockchain and crypto over the years.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer


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