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[TL; DR]

AntPool and Foundr USA controls over 51% of the current Bitcoin computing power.

If firms that collectivel control more that 51% of the bitcoin hash rate collude the ma prevent confirmation of certain transactions which reduce BTC users freedom.

The entr of new node operators in the bitcoin mining sector will likel reduce centraliation.

Introduction

Innovation has led to changes in different crpto ecosstems. While most innovations result in positive developments, some lead to unexpected outcomes. For instance, the popularit of bitcoin mining as a source of sustainable income for investors has led to its professionaliation, which has resulted in centraliation. This article explores the impact of the dominance of a few crpto mining firms in the bitcoin sector.

Dominance in the Digital Depths: AntPool and Foundr USA's Hash Rate Control

In the earl das of crptocurrencies, people mined bitcoin using central processing units (CPUs), which are standard processors in computers. Satoshi Nakamotos original vision was to support the decentraliation of the financial sstem, which means that anone who had a computer could mine bitcoin.

However, as the price of bitcoin soared and the crptocurrenc became ver popular man companies turned crpto mining into a professional business that required much investment. Right now, bitcoin mining is in the hands of a few big firms. For example, b the end of Ma over 50% of bitcoin hash rate was in the hands of AntPool and Foundr USA.

Bitcoin Mining: Transition from Decentraliation to Centraliation

Bitcoin decentraliation was probabl much higher in the earlier das than the later ones. Basicall, as the ears moved on bitcoin mining became more centralied than before. This was a result of the transition of bitcoin mining from personal computers to newer machines that include GPUs and application-specific integrated circuit (ASIC) miners. For instance, GPUs became popular in 2010 while ASIC miners came onto the market in 2012.

When the ASIC miners started dominating the market large companies invested much in bitcoin mining. In practical terms, the miners that control much hash rate mine man blocks, thereb collecting much more bitcoin block reward than the smaller mining firms. That development led to the formation of bitcoin mining pools. As a result, man small-scale miners opt to join the pools to cut costs and increase revenue.

With mining pool dominance man small to medium-sied mining firms lend their computing power to bigger firms in the industr. Although AntPool and Foundr USA are the biggest plaers in the sector there are other big bitcoin mining companies that include Marathon, Riot, Hut 8 Mining Corp, CleanSpark and Canaan Inc. In all, large mining pools lead to bitcoin mining centraliation resulting in blockchain integrit threats.

The Evolution of Mining: From CPUs to ASIC Giants

For us to understand the rise of bitcoin mining centraliation lets look at the technological development that occurred in the sector. During the earliest das of crptocurrencies people used Central Processing Units (CPUs) to mine bitcoin. This meant that anone who had a computer would participate in BTC mining. However, a few ears later there was a transition from GPUs to CPUs. Notabl, the CPUs had higher hash power and could discover blocks faster than GPUs. The introduction of CPUs in the sector marked the start of competitive bitcoin mining and the emergence of centraliation.

Nevertheless, miners that aimed to further improve their bitcoin mining efficienc sought better mining equipment than CPUs. That led to the introduction of Field Programmable Gate Arras (FPGAs). This blockchain technolog for bitcoin mining was more efficient than GPUs and demanded less electricit as well. However, the FPGAS did not last for a long period due to the introduction of the ASICs which became the most preferred bitcoin mining technolog.

Application-Specific Integrated Circuits (ASICs) revolutionied the bitcoin mining sector since the are efficient in terms of various parameters such as block discover. The miners impact is also high as the have led to lower costs than before, thereb increasing profit. Nonetheless, the have contributed much to bitcoin mining centraliation. This is because these machines are expensive to bu and maintain. The also consume a lot of energ which means that miners in regions with lower electricit have a competitive advantage over those in areas where energ is expensive.

Design Flaw or Destin? Satoshi Nakamoto's Oversight

From what we have discussed above ou can guess that the existing scenario in the bitcoin sector ma not be the one that Satoshi Nakamoto, the bitcoin founder, might have envisioned. It is mostl likel that at the time that Nakamoto invented bitcoin he thought that man people might participate in bitcoin mining using CPUs.

The professionaliation of the bitcoin mining sector and the resultant competition mean onl a few financiall capable firms can mine the precious asset efficientl. Thus, the influx of corporate interests has pushed individuals and small miners out of the sector, leading to crptocurrenc centraliation risk.

Apart from the financiall well-endowed firms the small to medium companies are joining crptocurrenc mining pools which have become large consortiums that control much bitcoin hashrate. Also, most of these companies are located in regions where electricit is cheap. What this means is that the miners that operate in areas with high electricit costs are exposed to more crpto investment risks than those based in regions where power is relativel cheaper.

The 51% Attack Scenario: A Real Threat to Bitcoin's Network?

In theor the increase in bitcoin mining centraliation ma lead to 51% attack if the few dominant plaers collude to do so. However, in practical terms it is ver expensive to carr out such an attack. Generall, though, the fact is that if two or more bitcoin mining giants and mining pools agree to execute a 51% attack the can succeed as long as the own at least 51% share of the bitcoin hashrate.

In the current situation, we have alread seen that onl AntPool and Foundr USA control more than 51% of the hash rate. Now, if these two firms collude with three or four other leading bitcoin miners to launch the 51% attack the can succeed.

The Debate over Transaction Censorship: Safet vs. Freedom Apart from a 51% attack, a few firms that control at least 51% of the bitcoin hashrate can also make unilateral decisions that affect the bitcoin network securit and bitcoin user trust. Upon making an agreement such firms ma prevent the confirmation of certain crpto transactions. That would violate the bitcoin users freedom as that prevents some bitcoiners from using their holdings as the desire.

As ou ma be aware of, bitcoin transaction censorship occurred in the past. At one time, several miners censored bitcoin wallets that were on the sanction list of the Office of Foreign Assets Control (OFAC), a financial intelligence and enforcement agenc under the U.S. Treasur. In October 2023, for example, a bitcoin developer with the address 0xB10C discovered that his/her transactions were intentionall filtered. When the developer queried wh his/her transactions were not confirmed Chun Wang, F2Pool co-founder, admitted that the had not approved it due to the sanctions the United States had imposed on Russian companies and citiens.

As things stand, influential countries like the United States and China ma force certain bitcoin mining consortiums to exclude transactions from certain bitcoin blocks. More significantl, if a few firms control much of the bitcoin computing power the can censor certain transactions and even double spend some assets. If such a situation occurs it will show that the supposedl decentraliing bitcoin network has become dsfunctional. However, currentl no such situation has been recorded, showing the integrit of the current large-scale bitcoin miners. Also, despite these emerging bitcoin network securit issues, it is essential to realie that due to the open nature of the proof-of-work sstem man other bitcoin miners can join in, especiall if some highl capitalied bitcoin investors notice the growing dominance of the existing bitcoin mining companies.

The Future of Bitcoin: Navigating the Challenges of Centraliation

Mining pool consolidation poses a great risk to the global effort to decentralie the Bitcoin network. However, in the future, the entr of new node operators will likel reverse the current bitcoin mining dominance, thereb reducing the centraliing force of large mining corporations and consortiums. To achieve this, the smaller node operators should join different mining pools.

Obviousl, the bitcoin communit will continuousl monitor developments in the sector to prevent overcentraliation of mining activit. Once governments realie that some miners are posing blockchain integrit threats, the ma create relevant crpto regulation to deal with the issue. Read also about the future of bitcoin mining. where to bu Lido Staked Ether Bitcoin mining centraliation that is arising from mining pool dominance is posing a great threat to the industr. For example, currentl AntPool and Foundr USA own more than 51% of bitcoin computing power. Apart from these two, there are other large bitcoin miners that include Marathon, Riot, Hut 8 Mining Corp, CleanSpark and Canaan Inc. The emergence of new mining firms will prevent further dominance of a few corporate entities in the sector.