Behind two mining pools that control 51% of the global hash rate

Haru Invest

While most of the market focuses on Bitcoin’s price volatility, a larger issue is being overlooked.

Ethereum’s centralization has been one of the hottest topics in the crypto industry since the network’s transition to Proof-of-Stake, with many critics warning of the dangers of such a high market cap cryptocurrency relying on only a few centralized validators.

Since China’s coveted mining ban, the centralization of the Bitcoin network has largely disappeared from mainstream discussions and has become the focus of a niche group in mining.

However, Bitcoin centralization is a problem that plagues the entire market, especially now that only two mining pools produce the majority of its blocks.

CryptoSlate looked at Bitcoin’s global hash rate distribution and found that more than half of it comes from Foundry USA and Antpool.

Two pools have mined more than a quarter of Bitcoin blocks in the past ten days. Since mid-December, Foundry USA has produced 357 blocks, while Antpool has produced 325 blocks. Foundry’s block production accounted for 26.98% of the network, while Antpool was responsible for less than 24.5% of the total block production.

bitcoin hash rate distribution mining pools
Graph showing the estimated hash rate distribution among the largest Bitcoin mining pools (Source:

Antpool has been at the forefront of Bitcoin mining for years, producing almost 14% of the blocks mined in the last three years. On the other hand, Foundry is a relatively new name in the mining space. However, it quickly became one of the top ten pools in terms of hashrate, accounting for 3.2% of the blocks mined last year.

A deeper look at Antpool and Foundry USA reveals an alarming level of centralization and a network of interconnected companies that own half of the network.

Foundry – DCG’s mining behemoth

It took less than two years for Foundry USA to become a force to be reckoned with in the Bitcoin mining space. The mining pool is owned and operated by the eponymous Foundry, a Digital Currency Group (DCG) company founded in 2019.

By the end of summer 2020, Foundry was already among the largest Bitcoin miners in North America. In addition to mining, the company offered equipment financing and procurement. By the end of 2020, Foundry had helped purchase half of all Bitcoin mining equipment shipped to North America.

The Foundry’s huge success as a hardware supplier and miner is a direct result of DCG’s influence in the cryptocurrency industry.

The venture capital firm is one of the largest and most active investors in the space, backing more than 160 cryptocurrency companies in more than 30 countries. DCG’s portfolio is a registry of the biggest players in the industry –, Blockstream, Chainalysis, Circle, Coinbase, CoinDesk, Genesis, Grayscale, Kraken, Ledger, Lightning Network, Ripple, Silvergate and others.

Foundry is its wholly-owned subsidiary that acts as a one-stop shop for all mining needs of these companies. The rapid increase in Foundry USA’s hash rate has led some to speculate that DCG companies are contractually obligated to conduct all mining through Foundry’s pool. However, it should be noted that neither DCG nor any of its portfolio companies have confirmed this.

China’s mining ban last year also helped.

Forced to abandon China’s abundant and cheap hydropower, miners sought alternative locations that offered at least a portion of their profits and a more favorable regulatory environment.

The US presented itself as a perfect relocation location, offering miners a wide choice of locations and energy sources. Having a mining pool as large as Foundry USA on their doorstep certainly didn’t hurt.

Antpool – Bitmain’s monopoly

Founded in 2014, Antpool is one of the oldest operating mining pools on the market. Often accounting for more than a quarter of the global hash rate, Antpool has almost never left the top ten largest mining pools.

The pool’s success is its perfect vertical integration – it is owned and operated by Bitmain, the world’s largest mining equipment manufacturer. The company behind the Antminer series has provided its pool with the newest and most efficient Bitcoin hashers, helping it stay profitable even in the coldest crypto winters.

Bitmain’s influence on the global cryptocurrency market has led many to speculate that the company is forcing its big buyers to mine with Antpool. Since both Bitmain and Antpool are headquartered in China, many are concerned about the country’s influence on such a large portion of Bitcoin’s hash rate.

Corporatization of cryptocurrency

It is important to note that a mining pool is different from a private mining operation. Unlike a private miner, a pool represents the collective hash rate of many machines belonging to different institutions.

The owners of the mining machines, or hashers, divide the profits from the mining pool according to the size of their contributions.

Just because Foundry USA accounts for a quarter of the Bitcoin hashrate doesn’t mean DCG owns every machine that produces it.

However, Foundry provides the foundation and roof for its customers’ mining operations. The company’s weaknesses could undermine a significant portion of the Bitcoin network, leaving thousands of small miners and machines to fend for themselves if it were to shut down.

The same can be applied to Antpool.

The degree of centralization that these two entities have imposed on the industry only increases when looking beyond Bitcoin. Antpool also has pools for other cryptocurrencies – Litecoin (LTC), ZCash (ZEC), Bitcoin Cash (BCH), Ethereum Classic (ETC) and Dash (DASH), just to name a few.

Foundry offers enterprise staking support for Ethereum (ETH), Solana (SOL), Polkadot (DOT), Avalanche (AVAX), and Cosmos (ATOM). The company does not disclose the number of assets it manages.

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