For many, the level of centralization found in the Bitcoin mining ecosystem is the biggest issue for the peer-to-peer digital cash system today. As a technology that relies on decentralization in order to provide a censorship-resistant bearer ecash, any trend towards centralization should be viewed as problematic.
In 2014, economist Kevin Dowd claimed the incentives of pooled mining are “totally destructive of the Bitcoin system.” The amount of mining that takes place in China led former Bitcoin developer Mike Hearn to state, “Bitcoin is controlled by the Chinese Government.”
Those who believe bitcoin mining is far too centralized mainly point to factors such as ASIC hardware, where mining takes place, and various mining strategies as the main drivers behind this perceived centralization. In a recent presentation, Bloq Economist Paul Sztorc explained how the problems associated with bitcoin mining centralization may be overstated.
“Mining is, in my view, the single new puzzle piece that makes it all work, but Bitcoin is protected by a lot of awesome things that were created way before mining,” said Sztorc.
Efficient Miners Secure the Network
One of the key points made