We know that although Bitcoin is an example of a decentralized cryptocurrency, its mining community is not terribly decentralized.
For years now, statistics have shown how much of Bitcoin generation is clustered in large mining rigs, often housed in areas of China.
Now, Bitmex is suggesting that more mining consolidation is taking place specifically with Application Specific Integrated Circuits or ASICS gear that has replaced the common GPU system as the most efficient means of mining the cryptocurrency.
“Consolidation among ASIC manufacturers themselves, as BitMEX’s analysis suggests, therefore implies increasing concentration at various levels of the industry,” reports Marie Huillet at Cointelegraph.
Citing companies like Canaan, Bitmain and MicroBT, Huillet suggests that we’re going to see greater consolidation in the future, and that some of these conglomerates are moving out of China. Huillet quotes MicroBT marketing manager Elsa Zhao this way:
“The customer base is moving more and more out of China. Since the halving the return on investment period is growing … After the Bitcoin halving, competition is getting more serious and only the most competitive mining machines will survive. Further consolidation is likely.”
This article also brings up the risk of a 51% attack, which is on the forefront of many people’s minds when they hear about mining consolidation.
The 51% attack happens when a single party or stakeholder controls over 51% of a blockchain’s mining capacity.
This overlord can suddenly make or break rules on that immutable ledger, creating chaos.
With Huillet citing the possibility of only two or three miners generating the bulk of Bitcoin, the 51% attack comes closer to the realm of possibility.
If you are trying to get to the details of BTC markets, keep an eye on consolidation. It could end up mattering – a lot.