Concerns are growing among industry experts about the potential for increased centralization stemming from the imminent Bitcoin halving.

The worry is that as block rewards decrease, older mining equipment could become unprofitable, leading to a consolidation of hashing power among fewer miners. A trend toward centralization within mining pools on the Bitcoin network has been evident in recent years, and the halving is expected to exacerbate this issue and hasten the trend.

Historical data obtained from btc.com reveals that between 2016 and 2021, the top two mining pools typically controlled approximately 30–40% of the hash rate during any given three-day period.

Recent statistics from Coin Dance indicate a further concentration of hashing power. As of February 28, the top two mining pools, Foundry USA and AntPool, collectively commanded nearly 50% of the network’s hashing power.

Additional data from mempool.space indicates that since Bitcoin’s inception, approximately 26.55% of total blocks have been mined by unknown or unaffiliated sources. Among identified mining pools, F2Pool accounted for 10.11% of all blocks mined, while AntPool mined 10.02%.

However, over the last three years, mining pool concentrations have increased, with Foundry USA mining 21.55% of all blocks, AntPool mining 18.78%, and F2Pool mining 14.25%.

In the past three months alone, centralization has intensified, with Foundry USA mining 30.32% of blocks, AntPool mining 26.03%, ViaBTC mining 12.52%, and F2Pool mining 11.94%.

Jesper Johansen, founder and CEO of venture capital firm Northstake, is among those predicting heightened volatility in BTC mining, resulting in increased centralization.

Johansen explained to Cointelegraph: “The halving will introduce hash rate volatility as miners with higher operating costs and outdated setups go offline. This will further centralize hash rate, with large-scale mining pools operating at significantly lower marginal costs per hash rate — thus heightening centralization concerns.”

He outlined two main areas where challenges may arise, undermining Bitcoin’s decentralized nature:

“Firstly, with significant control over the mining process, centralized entities might wield undue power to censor transactions by opting not to confirm them, which contradicts Bitcoin’s ethos of decentralization and censorship resistance.” “Secondly, centralized mining pools could exert disproportionate influence over decisions concerning Bitcoin’s protocol updates or changes, potentially skewing development in favor of their interests rather than the broader community,” he added.

Bitcoin researcher Chris Blerc has been consistently warning about the dangers of centralization. According to Blerc, centralized mining poses several risks to BTC, including the potential for certain products, like coin-joining services, to be blacklisted.

In December 2023, Blerc used the social media platform X to draw attention to the fact that the two largest mining pools controlled 55% of the hashing power. Both AntPool and Foundry USA, the top two mining pools, adhere to regulatory compliance and require all miners to meet Know Your Customer obligations. This arrangement effectively places control in the hands of U.S. regulators.

Blerc expressed concern, saying, “We could be just one move away from significant problems for Bitcoin. What's even more troubling is the lack of urgency surrounding this issue.”