Bitcoin mining is in peril, but Trump can save it by keeping this campaign promise

The following is a guest post by Kadan Stadelmann, CTO of Komodo Blockchain.

Bitcoin miner centralization threatens Bitcoin, but former President Donald Trump’s pledge to slash energy prices can ensure its decentralization. 

Bitcoin mining pools, the majority of Bitcoin mining being done, appear to be centralized in China around a handful of entities—with Chinese mining pools making up approximately 54% of the Bitcoin hashrate, according to blockchain analytics firm CryptoQuant. 

News reports about China banning the mining of crypto assets exaggerated the situation on the ground. The country still dominates the hash rate, largely thanks to its cheap electricity and infrastructure. 

A bitcoin mining pool is a network of miners who work together to mine Bitcoin blocks and share mining rewards, the benefits received for mining a new block. Most miners point their hash power toward pools because it’s easier, cheaper, and increases the chances of finding a block. 

These mining pools have resulted in a consolidation of Bitcoin mining in fewer and fewer miners to the point where just two mining pools today are responsible for nearly 50% of Bitcoin’s hash rate, USA Foundry and Antpool.

This poses a risk to the security and resilience of Bitcoin. If enough of the mining pools form a cartel and coordinate the use of their hash rate, they can influence the processing of transactions across the entire Bitcoin network, with the power to censor transactions—essentially acting as a bank that can “freeze” your account in a system intended to have no middleman.

Centralized Mining A Real Threat

What’s more, these Bitcoin mining pools—including Btc.com, Binance Pool, Poolin, and others—not only make up the majority of the Bitcoin mining, they also use identical block templates (pre-formatted structure of mining software) to select and order transactions exactly like one another and Antpool, according to an analysis by a bitcoin developer who goes by 0xB10C. 

The fact that these mining pools all employ the same block template, transaction selection, and ordering rubric indicates collaboration or standardization in mining operations across these platforms. This could potentially undermining Bitcoin decentralization and threatening the network’s security. 

If Bitcoin mining is consolidated between a few mining pools, these entities could then standardize transaction selection and begin excluding transactions. For instance, pools could refuse to process…