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In our crazy eggs space we tend to act much faster than we are capable to produce the rational underpinning out actions. It explains to me the fact that the great majority of valuable reports I’m seeing are either useless or long overdue.
One of those, named ‘The Ethereum Proof of Work Mining Report’, explores the performance of the Ethereum mining network in a period of 2015–2020. It has a collective of three authors (Everett Muzzy, Bogdan Gheorghe and Danning Sui) and is backed by Consensys, which is, usually, not a very good sign, as this organization too very often tends to sponsor ‘marketers’, which main objective is to ‘increase Ethereum adaption’ often to the expense of the reports’ content.
Although this 21-pager for the large extend does follow the traditional ideology-driven ‘Consensys path’, it, however, also publicly exposes the worrisome fact (long ago recognized by frequent visitors of etherscan.io ‘Top 25 Miners by Blocks’ page), that since 2018 almost all (>90%) of Ethereum block rewards, as well as the unshakable majority (>80%) of hashrate can be associated with a limited number of mining pools whilst individual miners had been almost completely wiped out of the existence.
Most importantly, however, is that during the past two years (up to the the second quarter of 2020) only four pools — Ethermine, Spark Pool, Nanopool and F2Pool — have mined 70% of all blocks.
It appears that this hashrate power over-centralization, which exceeds even that ‘achieved’ by Bitcoin Chinese miners, is due, primarily, to the limited number of already familiar to us by the ‘BTC mining saga’ factors: sharply falling and then painstakingly long stagnating (if we disregard the ‘Bart Simpson’ pattern) prices coupled with the decrease in block rewards associated with the Byzantium and Constantinople upgrades in Q3 2017 and Q1 2019, respectfully.
Although, of course, we can argue that there’s nothing particularly wrong with (as they all claim on their pages) ‘widely geographically distributed pools’ until they turn Byzantine, it is also well known that with time all efficient mining facilities tend to cluster in countries blessed by the cold climate and the government lavishly sponsoring domestic electricity producers. We do not know too many of such countries left in the World, don’t we? :)
As a result, as authors helpfully suggested, ‘Ethereum 2.0 and Proof of Stake will be a welcome improvement to the centralization of Ethereum’.
Quod Erat Demonstrandum.
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