Mining pool centralization is fundamentally caused by capital centralization.
Miners use pools to reduce their variance, and pools mine for other pools (as proxies) to reduce their variance.
Mining pools will only become decentralized if the capital to reduce payout variance becomes decentralized.
Until then variance based pooling pressure will cause further hashrate aggregation into megapools that threaten the censorship resistance of Bitcoin.
BitcoinAlchemist / James Pierog
npub1u8…xjcky
2024-09-30 07:42:19
Author Public Key
npub1u8r69esh5r7jt29nj9ufmz4yvuwp6cwl5xqp4e3d46vl8wla5smsexjckyPublished at
2024-09-30 07:42:19Event JSON
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"content": "Mining pool centralization is fundamentally caused by capital centralization.\n\nMiners use pools to reduce their variance, and pools mine for other pools (as proxies) to reduce their variance.\n\nMining pools will only become decentralized if the capital to reduce payout variance becomes decentralized.\n\nUntil then variance based pooling pressure will cause further hashrate aggregation into megapools that threaten the censorship resistance of Bitcoin.",
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