8 Ethereum Miners Wield ‘Overwhelming Influence’ Over the Network
The Ethereum (ETH) network is dominated by just over 50 powerful mining pools – with an inner cabal of eight maintaining the lion’s share of the blockchain, according to the findings of a new report.
The ConsenSys-produced “The Ethereum Proof of Work” report concluded that as recently as Q2 of FY2020, just two mining pools had a majority of “just over 51%” of the network’s hashrate – only the second time in history this has occurred on the network.
The two pools in question are Ethermine and Spark Pool.
Last time this occurred was back in Q2 of 2017, when Ethermine and F2Pool accounted for nearly 60% of the network’s total hashrate for the quarter.
However, although the report’s authors believe that the Q2 dominance coincided with “skyrocketing” ethereum (ETH) prices “perhaps suggesting that mining rigs were rushing to contribute,” they seem less certain of what lies behind the latest Ethermine and Spark Pool “centralization” trend.
Instead, the authors noted that the movement “has been the result of a gradual upward trend since Q1 2018,” and is a “gradual increase” that should be “a greater warning signal to the Ethereum community.”
“Gradual power concentration over the last two years (compared to sudden power concentration in Q2 2017) also means that a +51% dominance might be harder to mediate.”
The authors wrote that they identified “notable mining ‘whale’ outliers such as Ethermine, Spark Pool, F2Pool and Nanopool,” but added that “for the last two years, at most 56 mining pools have been responsible for over 90% of the block production and block rewards, and over 80% of the hashrate on Ethereum.”
And they went on to add:
“Since the launch of the network in 2015, through significant on- and off-chain events, we have seen power and influence concentrate in the hands not just of mining pools, but of a very select few mining pools. It can assuredly be said that the majority of activity on the Ethereum blockchain is maintained by at most 56 miners, and is overwhelmingly influenced by fewer than eight.”
However, as Ethereum aims to move from the Proof of Work consensus mechanism to the Proof of Stake (PoS), this might change.
“With reduced barriers to entry and the elimination of concerns about minimizing electricity costs, PoS networks are significantly more decentralized at the node level than PoW networks,” ConenSys argued.
Although over 36% of miners are unknown in origin, F2Pool is the largest single, identifiable mining pool, with almost 9% of the hasrate, marginally ahead of AntPool’s almost 8%.
From there, it is a significant drop down to two pools on just over 5%: SlushPool and BTC Guild, with nobody else mustering more than just over 3.5%.