TD₿: How Centralized is Bitcoin Mining Really? by Shinobi
TL;DR There are many factors to consider in weighing the centralization of Bitcoin mining, and the industry can only be as decentralized as any one.
Hey Bitcoiners,
Bitcoin mining has always fascinated me because it represents the physical world of Bitcoin.
As a mining business, you are dealing with physical hardware and because of this, you have to deal with all the headaches involved with supply chains, manufacturers, taking inventory, and setting up and maintaining your operations.
When we consider the entire mining process from the chip foundries all the way to the mining pools, currently there are different levels of centralization that occur at each step of the journey.
Ideally, we want every single facet of this process to be as decentralized as possible. The good news is we are seeing trends of this occurring like Block and Blockstream recently getting into ASIC manufacturing, and new chip foundries being built in the USA.
That being said, there are still highly centralized components of the Bitcoin mining industry that exist today.
Shinobi wrote this article that took a closer look at how centralized Bitcoin mining is today (12/06/2021).
The trend is moving in the right direction, but it’s important to understand where centralized bottlenecks currently reside in the mining industry in order to improve it.
Tick tock next block,
Cory Klippsten
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Quote of the Day
“People’s main complaint about decentralization is that it’s difficult. They’re right. Centralization is easy. Decentralization is hard. Security is hard. Privacy is hard. The UX is hard. If you don’t get the idea of self-sovereignty then these solutions won’t make sense to you.” - Alex Bosworth, Head of Lightning Liquidity at Lightning Labs
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