As a seasoned analyst with over two decades of experience in the tech and finance industries, I have witnessed the meteoric rise and evolution of digital currencies like Bitcoin. Observing the dominance of US-based mining pools in securing the Bitcoin network has certainly piqued my interest. The rapid growth of Foundry USA, now the single largest mining pool by hashrate, is nothing short of impressive.
However, I am concerned about the potential centralization of hashrate. While it’s true that China-based mining pools still hold a majority share, the increasing dominance of US pools could potentially tip the scales further. This raises questions about the decentralized nature of Bitcoin and its implications for national security, as highlighted by Rajiv Khemani from Auradine.
In an ideal world, we’d want Bitcoin to remain as neutral and decentralized as possible, with computing power evenly distributed across various jurisdictions. But let’s be real, in the world of crypto, nothing is ever that straightforward! It’s like trying to herd cats on a roller coaster – it’s always an exciting ride!
Just remember, when Bitcoin was first mined, Satoshi probably didn’t imagine his creation would one day be secured by pools with catchy names like Foundry USA and MARA Pool. Now we just need to find a mining pool called “Analyst Anon” – because who better to secure the future of crypto than an analyst who can’t stop analyzing?
In late 2024, approximately 40% of the global computing power securing the Bitcoin network was controlled by the United States, primarily through two mining pools based in the country, Foundry USA and MARA Pool, which mined over 38.5% of all Bitcoin blocks.
Based on information from TheMinerMag, Foundry USA significantly increased its computing power, or hashrate, from approximately 157 billion hashes per second (EH/s) at the beginning of 2024 to around 280 EH/s by December.
Presently, Foundry holds the largest position among all mining pools in terms of computing power, managing approximately 36.5% of the overall computational power in the Bitcoin network.
According to data from the Hashrate Index, MARA Pool is presently controlling around 4.35% (or about 32 exahashes per second) of the total computational power. However, despite recent growth in computing capacity, mining pools based in China continue to dominate the global hash rate distribution.
Hashrate dominance draws debate
In September, the head of CryptoQuant, Ki Young Ju, pointed out that Chinese mining pools were responsible for managing about 55% of the worldwide hashrate, even though there was a ban on cryptocurrency in place during 2021.
Chinese miners can evade the restriction by employing Virtual Private Networks (VPNs), these tools conceal their IP addresses, enabling them to link up with mining pools.
Moreover, these peer-to-peer applications enable Chinese residents to circumvent the country’s internet firewall and trade digital currencies as well.
As a crypto investor, I’ve come to realize that determining the real hash rate dominance can be quite challenging due to the dispersed location of miners, especially smaller ones who collaborate within mining pools. This geographical distribution makes it tough for accurate estimations.
As a seasoned crypto investor with years of experience under my belt, I’ve come to appreciate the intricate web that forms the backbone of the mining pool ecosystem. While some mining pool headquarters may be based in one country, they often tap into computational power from miners scattered across the globe. This global network allows them to mine digital coins efficiently while keeping their physical operations confined within a single jurisdiction. It’s fascinating how technology can blur geographical boundaries and enable cooperation on such a massive scale!
Concerns arise over hashrate centralization
The high concentration of computing power within a limited number of mining pools has sparked concerns among leaders in the industry.
In October, the co-founder and CEO of mining chip producer Auradine, Rajiv Khemani, expressed to CryptoMoon that Bitcoin’s decentralized nature is crucial for national security reasons.
To minimize potential disruptions from supply chains, the leader of Auradine advises against manufacturing essential mining components like Application-Specific Integrated Circuits (ASICs) in a single geographical region, as this could leave us vulnerable to various risks.
Khemani emphasized that it’s important for no single nation to dominate more than half of Bitcoin’s computational power, or ‘hashrate’, to ensure the decentralized digital currency maintains its impartiality.
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2025-01-03 23:27