Poolin, the fifth biggest bitcoin ming pool at the start of 2022, acknowledged liquidity issues and froze withdrawals back in September 2022. Its computational power declined by 86% through the year, from 11.57% in January 2022 to 1.57% in January 2023. 

Smaller mining pools, like Btc.com or Braiins Pool, gradually decreased operations. Meanwhile, mining giant Foundry significantly strengthened its positions, which it gained after China’s crypto ban in 2021 when local BTC miners massively transferred their devices and operations into the United States.

For years China acted as the home base for most BTC mining operations. But since the country’s mining crackdown, the United States quickly established itself as the world’s biggest bitcoin mining hub.

According to the Cambridge Center for Alternative Finance data, US miners contributed 37.84%  to the average monthly BTC hash rate at the beginning of 2022. China’s nearest competitor accounted for a lower hash rate share of 21.11%.

The United States currently hosts the biggest mining pool. It also hosts major institutional-grade mining companies like Marathon Digital Holdings (which, on average, mined 15.3 bitcoins per day in December 2022), Riot Blockchain, and Hut 8 Mining. 

As bitcoin was invented as an alternative to centralized money, any centralization is often considered a risk to the network’s core principles and security. One hotly debated issue is Bitcoin’s vulnerability to a “51% attack.” 

According to centralization critics, anyone controlling the majority (more than 50%) of the BTC hash rate can manipulate the network. They can censor the confirmation of new transactions, halt them, and even alter the blockchain.

51% of attacks are usually expensive and difficult to maintain, but they may cause huge reputational damage to Bitcoin. Since its early days more than a decade ago, Bitcoin has never suffered a security breach or attack of the majority.

On the other hand, the Bitcoin community questions the potential threat of power concentration among a few mining pools that are nothing more than clusters of separate miners. Miners combine their computational power to increase the chances of winning a block and then share the reward. 

However, the growing competition among mining pools leads to them decreasing their fees, eventually reaching similar levels. Theoretically, this leaves mining pools open to miner migration from one pool to another. 

According to crypto miners, switching between pools helps to “ensure adequate decentralization and hedge against pool-derived 51% attack.”

When Bitcoin and its white paper first appeared in 2008, it was built on the concept of a decentralized network and accessibility to anyone. 

More than a decade later, statistics show it may have become centralized. This means it is dominated by large players, not only large mining pools but also by large bitcoin holders amd crypto exchanges.

Theoretically, the concentration of power could make Bitcoin susceptible to risks such as a 51% attack. It can also imply that most gains from further adoption could fall disproportionately to fewer participants.