Bitcoin mining is becoming more centralized every single year and we need to fix it somehow…

I decided to take a look at the past 2 years of mining hashrate distribution, my targets were: November 2020, October 2021 and October 2022.

The thresholds I decided to look at were:

25% hashrate distribution: which refers to the “selfish mining” attack vector of PoW networks like Bitcoin that can be quite damaging 51% hashrate distribution: which refers to the heaviest chain consensus attack vector and censorship 90% hashrate distribution: which refers to governance decisions, eg. Taproot activation last year

I’ll jump straigh into it… the numbers do not look good at all.

Every single threshold has been in a steady decline and the scariest part is that 90% of the hashrate is managed by just 7 mining pools right now, while this number used to be 11 2 years ago and 9 last year.

Decline in bitcoin mining decentralization

The biggest issue with this is censorship and double spending attacks.

The mining pool is the entity that builds the block and it can exclude any transaction at will without any say from its delegators. Moreover, having more than 50% of the hashrate would allow these few pools to consistently build a longer chain than the rest of the network and permanently censor transactions included by honest miners.