Bitcoin Mining Pools Control Majority of Hashrate
Crypto analyst Chris Blec recently raised concerns about the dominance of two major mining pools in the Bitcoin network, which now control over half of the total hashrate. Blec suggests that this concentration of power could lead to the transformation of the bitcoin mining industry, with regulatory standards and the implementation of Know Your Customer (KYC) guidelines becoming mandatory for all miners.
Overview of Bitcoin's Hashrate Control
At present, Antpool holds the largest share of Bitcoin's total hashrate, accounting for 30%. Foundry USA closely follows with a 26% share. Together, these two pools exert a significant influence, controlling 56% of the network's 468 exahash per second (EH/s) hashrate. Chris Blec, a respected figure in the crypto research community, emphasized the seriousness of the situation and clarified that his concerns are based on factual information rather than FUD (Fear, Uncertainty, and Doubt).
According to Blec, the two largest bitcoin mining pools have been in control of over 50% of the hashrate for more than a year. These pools are compliant with regulations and require miners to adhere to KYC guidelines. As a result, the government has clear identification, visibility, and control over more than 50% of Bitcoin's miners in terms of hashrate. This concentration of power raises concerns about Bitcoin's decentralization and the impact on game theory.
Debating the Impact of Mining Pool Control
Some individuals argue that the dominance of these two pools is temporary and contingent upon their current behavior. Jon Black suggests that any misbehavior on their part could lead to a shift in hashrate towards smaller pools that do not require KYC compliance. However, Blec dismisses this theory as purely speculative.
Harry Beckwith counters Blec's argument, stating that mining pools should not be viewed as single players but rather as co-ops where individual miners have the freedom to make their own choices. Beckwith adds that if miners disagree with the direction of the co-op, they can switch to other pools.
The complex nature of hashrate control is an essential aspect of this ongoing debate. Under Stratum mining software version one (v1), pool operators handle the infrastructure and transaction selection for mining blocks. Individual miners contribute computational power but do not directly influence how this power is utilized. However, their ability to migrate to other pools if dissatisfied does impact the dynamics of the co-op.
The Impact of Stratum Mining Software
The introduction of Stratum version two (v2) brought significant changes to the dynamics of mining. This version includes "Job Negotiation," which empowers individual miners to choose transactions for their block templates, reducing the influence of pool operators on block contents. However, most pools currently use Stratum v1, with alternatives like Stratum-mining and BraiinsOS/BraiinsOS+ offering Stratum v2 functionality.
A report by Galaxy.com highlights the division within the mining industry regarding the adoption of Stratum v2. Miners prefer v1 due to its ease of use, while developers continue to work on the full feature set of Stratum v2. This division between ASIC manufacturers and developers adds to the concerns about mining centralization.
The validity of concerns about mining centralization is underscored by the fact that Stratum v1 is not designed to handle the high hashrate levels experienced today. While bitcoin mining pools maintain their current practices, critics like Chris Blec argue that this alone is not enough.
Share your thoughts and opinions on Chris Blec's argument regarding mining centralization in the comments section below.
Frequently Asked Questions
Are gold IRAs a good place to invest?
You can invest in gold by purchasing shares in companies that mine it. To make money in investing in gold or other precious metals, such as silver, you should purchase shares in these companies.
Two drawbacks exist when you own shares directly.
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However, if you want to separate your investments from your financial affairs, physical gold can still be a great investment option. A gold IRA can help diversify your portfolio and protect against inflation.
You can find out more information about gold investing on our website.
What are the three types?
There are three basic types of IRAs. There are three types of IRAs: Roth, Traditional, and SEP. Each has its own advantages and disadvantages. Each type will be covered in detail below.
Traditional Individual Retirement Account (IRA).
A traditional IRA allows you contribute pretax money to an account which can be used to defer taxes and earn interest. Withdrawals from this account are exempted from tax once you have retired.
With a Roth IRA, you deposit after-tax dollars into an account, which means any earnings grow tax-free. When you withdraw funds from the account for retirement purposes, withdrawals are also exempted from tax.
Similar to a Roth IRA except that employees must make additional contributions. The additional contributions are taxed but earnings remain tax-deferred. You may choose to convert the entire amount to a Roth IRA when you leave the company.
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Are precious metal IRAs a good way to invest?
How willing you are to risk your IRA account losing value will decide the answer. These are good if you have $10,000 of cash and don't expect them grow quickly. These are not the best investments if there is a long-term plan for saving money (like gold) or if you want to invest more in assets that will rise in value over time. These fees can reduce any gains.
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Does a gold IRA make money?
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Diversifying your investments is important. When there is inflation, gold does well. It is important to invest in assets that increase with inflation. Stocks are able to do this because they rise as companies make more profit. Bonds also do this well. They pay interest every year. They're very useful during periods of economic growth.
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So they can see both sides of each coin. Inflation and deflation. They will see a return over time.
- The IRS also allows American Eagle coins, even though they do not meet gold's 99.5% purity standard. (forbes.com)
- SEP-IRA”Simplified employee pension” For self-employed people like independent contractors, freelancers, and small-business ownersSame tax rules as traditional IRASEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less4. (sltrib.com)
- Same tax rules as traditional IRA SEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less Before setting up a Silver IRA, understand the fees and IRS restrictions. (sltrib.com)
- To qualify as IRA allowable precious metals and be accepted by STRATA, the following minimum fineness requirements must be met: Gold must be 99.5% pure, silver must be 99.9% pure, and platinum and palladium must both be 99.95% pure. (stratatrust.com)
Things to Remember: Best Precious Metals Ira, 2022
Precious Metals Ira remains one of the most sought-after investment options. This article will provide information on how to understand the appeal of precious metals ira and make sound investment decisions.
The main attraction of these assets is their long-term growth potential. The historical data shows incredible returns for gold prices. Over the past 200-years, gold prices have gone from $20 per ounce up to $1900 per ounce. The S&P 500 Index was only up by 50%.
Gold is also considered a haven during times of economic uncertainty. When the stock markets is down, people tend not to hold onto their stocks but rather move into the safety and security of gold. Gold is also seen as a hedge against inflation. Many economists believe that inflation will continue to exist. Accordingly, many economists believe that inflation will always be present. Therefore, physical gold can be considered a way for you to safeguard your savings from future price rises.
Before you buy any precious metal, such as silver, gold, palladium or platinum, there are some things you should consider. First, you should know whether you want to invest in bullion bars or coins. Bullion bars usually come in large amounts (e.g 100 ounces), and are stored away until needed. Coins are smaller versions of bullion bars, which can then be used to buy small amounts of bullion.
The second is to think about where you intend to store precious metals. Some countries are more safe than others. You might find it more sensible to store your precious materials overseas if you are a resident of the US. If you intend to store them in Switzerland, though, you might need to question why.
You should also decide whether to invest in precious metals directly or via “precious-metals exchange-traded funds (ETFs). ETFs, which track the performance different commodities like gold, are financial instruments. You can use them to get exposure without actually owning precious metals.
By: Jamie Redman
Title: Critics Alarmed as 2 Major Mining Pools Dominate Over 50% of Bitcoin Hashrate
Sourced From: news.bitcoin.com/critics-alarmed-as-2-major-mining-pools-dominate-over-50-of-bitcoin-hashrate/
Published Date: Thu, 16 Nov 2023 19:00:57 +0000