Bitcoin, the software developed by Satoshi Nakamoto, has been updated multiple times since its inception, which resulted in different protocols, networks, and communities. Among all the variations, three chains have kept the core protocol designs while making minor changes: Bitcoin (BTC), Bitcoin Cash (BCH), and Bitcoin SV (BSV).
From the similarities, the three of them have a capped circulating supply of 21 million that will be reached approximately by 2140 with each of their miners discovering blocks in an interval of approximately 10 minutes, guaranteed by the mining difficulty adjustment.
With that in mind, Finbold gathered data from MiningPoolStats to understand the mining decentralization state for the three main chains carrying the name ‘Bitcoin’.
Bitcoin SV (BSV) mining centralized in 1 entity
Worryingly, one single entity has mined more than half of the last 1,000 blocks (or one week) in the Bitcoin SV network. This entity is the mining pool taal.com, with 50.2% of the global block discovery in the last seven days.
Notably, the network hashrate public data shows a different result, with a globally reported hashrate of 18.36 PH/s, and the GorillaPool being responsible for 88% of it with a 16.21 PH/s reported hashrate.
For this reason, Finbold looked to block discovery as a more reliable metric to understand the true decentralization state, as block discovery is proportional to the real Proof of Work being deployed to the network in order to collect the block reward and dominate BSV’s distribution.
With over 50% of the contributed hashrate, Taal Pool could, theoretically, perform a 51% attack on Bitcoin SV. This threat, although theoretical, could affect BSV’s perception of value by the cryptocurrency market, and also directly impact how long users should wait until deeming their transaction securely confirmed.
For BSV, the recommended waiting time would need to be superior to 340 blocks (3,400 minutes, or 56 hours). Meanwhile, expert developers recommend a 2-hour waiting time for the leading cryptocurrency.
Bitcoin (BTC) and Bitcoin Cash (BCH) decentralization
Interestingly, the second most centralized chain is Bitcoin (BTC), with a market capitalization superior to $583 billion by press time, but with only two entities discovering more than 55% of the last 1,000 blocks in a week.
Finbold has already addressed this situation in a previous report on Bitcoin’s centralization state. Particularly on Foundry’s domination, followed by a relevant growing hashrate from AntPool, owned by Bitmain.
Meanwhile, Bitcoin Cash (BCH) leads the SHA-256 Bitcoin mining decentralization, despite having more than 100 times less capitalization than BTC, with less than a $5 billion market cap.
On that, four entities have discovered 54.1% of all the last 1,000 blocks in the last seven days. Mining Dutch is the leader, and also one of the core mining pools on the Bitcoin SV centralized network.
However, it is also noteworthy that the Bitcoin Cash network has a global hashrate of around 3.37 EH/s at the time of publication. This is 120 times less what the Bitcoin network generates, and even the 12th largest BTC mining pool has a higher individual hashrate than BCH’s whole network.
This theoretically makes the Bitcoin Cash network vulnerable to a possible takeover in the future, in case one whole Bitcoin mining pool turns malicious against its most decentralized competitor, which would completely change this spectrum.
Nevertheless, BCH’s global hashrate is far higher than BSV’s estimated hashrate. This contributes to the alarming fact of how centralized Bitcoin SV is in comparison to the other chains.