New research suggests Bitcoin mining centralized around Bitmain

For years, rumors have circulated that Bitcoin’s largest mining machine manufacturer has secretly centralized a majority of Bitcoin’s hash power. The theory is down to more than a simple observation of the logo stamped on most mining cases.

No, skeptics think that Bitmain’s pool itself — not just its machines — secretly creates the vast majority of blocks that are added to Bitcoin’s ledger.

A sleuth found a clue in Antpool’s block template: A manually prioritized transaction immediately after the 6.25 BTC block reward or ‘coinbase’ transaction. This new research by pseudonymous Bitcoin developer 0xb10c seemingly confirms long-rumored practices by Antpool hiding its massive operation under the names of ostensibly independent pools.

In short, it warns that despite tens of thousands of decentralized nodes, Bitcoin might actually be quite centralized from a mining perspective.

One template and custodian for supposedly independent pools

Specifically, 0xb10c detected that Pool, Binance Pool, Poolin, EMCD, and Rawpool show signs of using Antpool’s method for prioritizing the post-coinbase transaction.

Antpool might also use a sixth pool, Braiins, but 0xb10c was still analyzing its merkle branches as of the research publication time. Nearly identical merkle branches might indicate that these five or six pools often use the exact same template as Antpool for selecting transactions to include in a block.

In other words, all of these pools often use Bitmain’s machines, often assemble transactions according to Bitmain’s block template, often prioritize the same manually-configured post-coinbase transaction as Bitmain, and often send coinbase and transaction fees to the same custodian as Bitmain.

It certainly makes Bitcoin look a little centralized.

Bad news for Bitcoin decentralization.

Has Bitmain secretly centralized Bitcoin’s proof-of-work?

Founded in 2013, Bitmain is one of the oldest continuously operated Bitcoin companies. It’s also gigantic and six years ago sought to IPO for over a billion dollars.

Every miner knows that Bitmain machines generate nearly all hash power on the Bitcoin network. What’s not common knowledge is the size of Bitmain’s coinbase- and fee-sharing pool, AntPool.

According to its publicly-reported hash rate, Antpool by Bitmain claims to generate just one-quarter of Bitcoin’s hash rate. However, 0xb10c suspects it might secretly control a majority.

Because Bitcoin’s mining rewards arrive randomly to the single miner who guesses the Bitcoin difficulty threshold’s lottery-like winning number every 10 minutes, miners pool together to share work and average out these random 3.125 BTC payouts.

Prior to the halving, coinbase rewards were 6.25 BTC. On April 20, 2024, that number halved to 3.125.

Today, just three mining pools control the majority of Bitcoin’s hash rate. However, new research is suggesting that Bitmain’s Antpool has been disguising its work and submitting its winning blocks under the name of third-party pools.

That Bitmain has a near-monopoly on Bitcoin’s physical machinery is common knowledge. By far the most prevalent mining rigs performing proof-of-work hashing around the globe are Bitmain machines.

Despite its famously poor customer service and product quality variability, its proprietary ASIC technologies have made its rigs unstoppably ubiquitous.

Antpool claims to generate just a quarter of Bitcoin’s hash rate.

Read more: Here’s why decentralized finance is actually very centralized

Corroborating research on Bitmain’s Antpool dominance

Mononaut found more evidence that seems to support 0xb10c’s theory that Antpool might secretly use third-party pools to cloak Bitmain’s dominance. 

Mononaut traced coinbase rewards from mining pools AntPool, F2Pool, Binance Pool, Braiins, BTCcom, SECPOOL, Poolin, ULTIMUSPOOL and 1THash, and Luxor. He found suspicious levels of cooperation from these supposedly competitive entities in allocating coinbase rewards to a shared — possibly Antpool-controlled — custodian.

0xb10c couldn’t confirm that SECPOOL and SigmaPool entirely cloned AntPool’s template, although they seemed to share a similar template. In all, it seems unlikely that up to nine major bitcoin mining pools use a shared custodian for coinbase rewards unless a single entity is behind all of their operations.

Antpool had little to say about the suspicious activities or research reports by 0xb10c and Mononaut. Its most recent English-language tweet only referencedmaking every hash count.’

Marty Bent, Matt Odell, and Matt Corallo discussed the allegations during a lengthy podcast. Corallo agreed with 0xb10c and Mononaut: “There’s one pool that has near 50% of hash power.”

In summary, if Antpool doesn’t control more than half of Bitcoin’s hashrate through collusion with or control over other mining pools, it seems to be getting pretty close. Bitcoin developer 0xb10c as well as Mononaut found evidence suggesting that Antpool and its alleged associates might control a majority of Bitcoin’s average hashrate.

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.