Mining Centralization Threatens Bitcoin's Security

Public miners have witnessed a significant 15% month-over-month decrease in production, as the hash rate and difficulty levels have reached all-time highs. This development has raised concerns about the centralization of mining pools and its impact on Bitcoin's transaction finality and security.

Bitcoin's transaction finality, traditionally achieved with six-block confirmations, is now taking over a week, according to Bitcoin Core developer Luke Dashjr. He attributes this delay to the increasing centralization of mining pools, particularly Antpool, which controls a substantial portion of the network's hash rate. Dashjr argues that achieving 95% security now requires over 800 blocks, equivalent to approximately 5.5 days.

Industry experts have expressed concerns about the growing dominance of a few mining pools, warning that it exposes Bitcoin to potential censorship and even a 51% attack. Bob Burnett, CEO of Barefoot Mining, emphasized the existential threat to Bitcoin's censorship resistance and the prolonged achievement of immutability. He proposed that retail investors play a role in restoring decentralization by pressuring publicly traded mining firms to spread their hash power across smaller pools.

However, not everyone agrees that the issue is as severe as Dashjr claims. Daniel Roberts, the co-founder of Ltd, downplayed these concerns, suggesting that Bitcoin's design allows it to self-regulate over time. He believes that these types of issues are generally either self-correcting or built into the design intentionally.