17 Jan 2022
How decentralized is the Bitcoin mining network?Miners are a vital infrastructure in the Bitcoin network, so keeping the mining network decentralized is essential - How decentralized is the Bitcoin mining network?
Source: Blockchain.com, btc.com, public filings
The Bitcoin mining network consists of many mining companies that combine their hashrate in various mining pools. To estimate how decentralized the Bitcoin network is, we can look at Bitcoin's hashrate dominance by mining company or mining pool.We start with the mining companies. Several publicly traded mining companies have grown to control a significant share of Bitcoin's hashrate. The largest publicly traded mining company, Marathon, generates almost 2% of Bitcoin's hashrate. In total, the five biggest publicly traded miners control around 7% of Bitcoin's hashrate - a negligible share.When it comes to mining pools, things look more centralized. Antpool is the biggest, with 16% of the total hashrate. Together, the five biggest mining pools control 70% of Bitcoin's hashrate.These numbers show that the main centralization bottleneck for the Bitcoin mining network is not the mining companies but the mining pools.Some Bitcoin enthusiasts see decentralized pools as the future for Bitcoin decentralization, but for now, the vast majority of hashrate is concentrated in centralized mining pools.Still, it's essential to be aware that company or pool hashrate dominance is not the only potential centralization bottleneck in the Bitcoin mining network. Geographic hashrate dominance or machine supplier dominance can also be centralizing factors.