Concerns about Bitcoin mining centralization have resurfaced following a significant event involving AntPool, the second-largest BTC mining pool. On May 17, AntPool mined seven consecutive blocks between block heights 843,893 and 843,904 within just one hour and thirty-eight minutes.
AntPool’s Remarkable Mining Streak
During this period, AntPool confirmed over 20,000 transactions and earned a total of 23 BTC—comprising 21.875 BTC in mining rewards and 1.283 BTC in transaction fees. This impressive achievement caught the crypto community’s attention, underscoring the dominance of large mining pools like AntPool and Foundry USA.
Dominance Raises Centralization Fears
The significant control these pools exert over Bitcoin’s hashrate has raised alarms. Together, AntPool and Foundry USA command over 50% of Bitcoin’s total hashrate. Foundry USA mined the block before AntPool’s streak and the two blocks immediately after, leading to ten consecutive blocks mined by these two pools within a single day.
A Threat to Decentralization?
Bitcoin developer Luke Dashjr has previously cautioned against the risks posed by the dominance of large mining pools. He asserts that such centralization threatens Bitcoin’s decentralized nature, potentially leading to censorship and control issues. Crypto analyst TOBTC echoed these concerns, pointing to the dangers of power concentration.
“This centralization trend, driven by economies of scale, allows these pools to censor transactions, as seen with F2Pool’s compliance with OFAC sanctions. Such power concentration poses an existential threat to Bitcoin’s decentralized nature and its foundational principle of trustlessness,” TOBTC remarked.
Economic Realities Favoring Large Pools
The dominance of these pools is not entirely surprising given current economic realities. The high costs associated with Bitcoin mining, including rising hashrate and power consumption, make it difficult for smaller miners to compete. JPMorgan recently reported that the average mining cost had reached approximately $45,000 due to these factors.
Regulatory Scrutiny Intensifies
Recent regulatory scrutiny is likely to further pressure Bitcoin miners. Bitcoin mining has become a national security issue in the United States. President Joe Biden recently ordered Chinese-backed MineOne Partners Ltd. to halt the construction of a crypto mine in Wyoming and sell the property.
Global Concerns Over Energy Consumption
Other countries are also worried about the energy consumption associated with Bitcoin mining. Venezuelan authorities have announced plans to disconnect all crypto mining farms from their energy grid. Similarly, the Norwegian government is focused on regulating data centers and curbing energy use for Bitcoin mining.
The centralization of Bitcoin mining in the hands of a few large pools is a growing concern. The dominance of AntPool and Foundry USA exemplifies the challenges to maintaining Bitcoin’s decentralized ethos. As economic pressures and regulatory scrutiny increase, the debate over the balance between efficient mining and decentralization is set to continue.
