Recently, an examination of the Bitcoin blockchain has brought to light that an unidentified institutional custodian, suspected to be Cobo Custody, holds significant influence over the Bitcoin network. According to a post on platform X, this custodian is reportedly in charge of at least nine mining pools associated with Coinbase, collectively accounting for approximately 47% of the overall hash rate.
For every hundred newly extracted Bitcoins, forty-seven are given to this guardian. Placing control in a single hand brings up worries about potential hazards and the importance of transparency and dispersed custody among Bitcoin mining pools.
Bitcoin Mining Pool Overreliant On One Custodian
It was observed that well-known Bitcoin mining pools such as AntPool, F2Pool, Binance Pool, Braiins, btccom, SECPOOL, and Poolin are said to deposit their Coinbase with the same custodian. Furthermore, the Coinbase addresses of ULTIMUSPOOL and 1THash are also believed to be managed by the same entity.
Previously, Luxor had employed the same custodian for their services. However, they made a change in their setup upon realizing that they too depended heavily on this custodian. (Or) After discovering their heavy reliance on the custodian, Luxor decided to switch up their setup and hire a new one instead of relying solely on the previous custodian.
A Coinbase address functions as a unique identifier for a mining pool. When a mining pool validates a batch of transactions every ten minutes and obtains a reward of 6.25 Bitcoins during the current epoch, they transfer those newly earned coins to their designated Coinbase address.
The merging of transactions into one batch increases fears that Bitcoin’s storage is becoming more controlled by a single entity. While technically, Bitcoin relies on a decentralized network of miners, no individual miner holds more than half of the overall mining power.
In simpler terms, the hash rate represents the total computational power being used by the network. A higher hash rate means greater security for the network as it makes it harder for potential attackers to gain unauthorized access. As per YCharts data, Bitcoin’s current network hash rate stands at approximately 603 Exahashes per second.
Security And Centralization Risks
Recent research indicates that approximately half of all new Bitcoin is being generated by a singular entity. This concentration of control might present a security concern. In the event that this guardian is breached, the associated mining pools may sustain significant losses. These setbacks could negatively affect the network’s security and public perception.
The research revealed that apart from depending on one custodian for their Coinbase, these nine pools contribute hash rate for AntPool’s transaction speed-up feature. It is reported that the custodian frequently employs AntPool and ViaBTC’s transaction acceleration services for large-scale withdrawals.
Transaction accelerators are typically designed to quicken the confirmation process for specific transactions. This can be beneficial, particularly during network congestion. However, there’s a potential downside: these accelerators may lead to centralization of transaction processing control.
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2024-04-11 05:11