Bitcoin (BTC) Mining Centralization Could Be Worse Than Ever, New Study Warns

A study published by pseudonymous analyst b10c (@0xb10c, on X) suggests that mining operations centralization could be worse than ever.

Bitcoin (BTC) mining operations might be more centralized than previously thought, a recent study suggests. According to pseudonymous analyst b10c, multiple large mining pools appear to be using the same block template as AntPool, a mining pool operated by Bitmain.

The study, published on April 17, claims that BTC.com Pool, Binance Pool, Poolin, EMCD, and Rawpool are all using the same template, which could indicate a level of coordination between these pools. Together, these pools account for over 31% of Bitcoin's hashrate.

“Five of the largest Bitcoin mining pools might be using the same block template as AntPool. For context, these pools found 47.28% of all Bitcoin blocks in the last six months,” wrote b10c.

The analysis is based on examining the merkle branches that mining pools send to miners as part of stratum jobs. According to the study, the BTC.com, Binance, Poolin, EMCD, Rawpool, and possibly Braiins* mining pools have the same template and custom transaction prioritization as AntPool.

“Looking at the merkle branches that mining pools send to miners as part of stratum jobs, it's clear that the BTCcom pool, Binance pool, Poolin, EMCD, Rawpool, and possibly Braiins* have exactly the same template and custom transaction prioritization as AntPool.”

A block template is used by a miner to add transactions to a block, which are then confirmed in the network. While the templates can sometimes be similar, especially when it comes to including transactions with the highest fees first, the study found a pattern for what it believes are manually added transactions for the first transaction in each block of these pools after the coinbase transaction.

A coinbase refers to the transaction that carries the block subsidy, which is created by and paid to the miner who signs the block.

“Here, branch0 is the txid of the first transaction in the block after the coinbase. In the AntPool/Binance/BTCcom/.. template, it's a manually prioritized transaction paying 9.03 sat/vbyte. Many of the other pools didn't prioritize a transaction and included the highest feerate transaction paying 301 sat/vbyte. ViaBTC prioritized another transaction and has a vastly different template.”

The study's findings are significant as they suggest that a large portion of Bitcoin's hashrate might be controlled by a single entity, despite the decentralized nature of the network. This could raise concerns about the network's resilience and the potential for censorship.

However, it's worth noting that the analysis is based on a limited set of data and does not definitively prove any coordination or centralization. Further investigation and analysis would be needed to fully understand the implications of these findings.

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