Ethereum mining was controlled by two pools in 2020

One of the main arguments of Ethereum enthusiasts was that their mining process would be more decentralized than that of Bitcoin.

Thus, by allowing GPU mining, ETH would have numerous advantages in decentralization when compared to BTC.
However, a new ConsenSys study showed that miners may be decentralized, but pools are not.

That’s because, Ethermine and Sparkpoo managed to concentrate 50% of the network hash rate in the first half of 2020.
Consensys

According to the report entitled The Ethereum Proof of Work, although 90% of the Ethereum blocks have been processed by a total of 56 mining pools so far, only eight selected groups are influencing the network.
Among them are Sparkpool and Ethermine, which have accumulated more than 49% of Ethereum’s processing power. In this way, dominating mining activities.

However, a new ConsenSys study showed that miners may be decentralized, but pools are not.

That’s because, Ethermine and Sparkpoo managed to concentrate 50% of the network hash rate in the first half of 2020.
Consensys

According to the report entitled The Ethereum Proof of Work, although 90% of the Ethereum blocks have been processed by a total of 56 mining pools so far, only eight selected groups are influencing the network.
Among them are Sparkpool and Ethermine, which have accumulated more than 49% of Ethereum’s processing power. In this way, dominating mining activities.

Threat to Ethereum decentralization

This is the second time in the history of Ethereum that two mining groups have managed to accumulate the largest portion of the hash rate.

The first time it happened was in 2017, when Ethermine and F2pool represented 60% of the hash rate.

In addition, the current distribution of the Ethereum hash rate indicates that there is less and less competition on the network. For this reason, large competitors are able to centralize their power.

However, this weakens the security of the blockchain and exposes the network to possible attacks by 51%. In this attack, an actor or several coordinate to double their spending on currencies, change transaction history or approve blocks that do not comply with the rules consensus.

Although in networks like Ethereum, with a large number of pools involved in mining, this type of attack is very expensive and complex, it is not impossible if one or more malicious entities reach the desired domain.

With this, they are able to accumulate more than 51% of the processing capacity of the entire network, a number very close to reaching Ethermine and Sparkpool.
Safety

However, ConsenSys assures in its report that the implementation of a new Proof of Stake (PoS) algorithm could improve the decentralization of Ethereum “significantly”.

In this way, they hope that the long-awaited launch of Ethereum 2.0 will collaborate to eradicate this problem in the mining ecosystem. Since the new version will migrate from the current Proof of Work (PoW) algorithm to a PoS model.

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