A Deep Dive into Bitcoin Mining Pools: An Empirical Analysis of Mining Shares

TL;DR

This paper provides an empirical analysis of Bitcoin mining pools, revealing centralization tendencies and distribution patterns of mining rewards among key actors within the pools.

Contribution

It is the first detailed study of reward distribution and economic relationships within major Bitcoin mining pools, highlighting centralization issues.

Findings

Small number of actors receive over 50% of payouts

Miners operate across multiple pools

Centralization tendencies in large pools

Abstract

Miners play a key role in cryptocurrencies such as Bitcoin: they invest substantial computational resources in processing transactions and minting new currency units. It is well known that an attacker controlling more than half of the network's mining power could manipulate the state of the system at will. While the influence of large mining pools appears evenly split, the actual distribution of mining power within these pools and their economic relationships with other actors remain undisclosed. To this end, we conduct the first in-depth analysis of mining reward distribution within three of the four largest Bitcoin mining pools and examine their cross-pool economic relationships. Our results suggest that individual miners are simultaneously operating across all three pools and that in each analyzed pool a small number of actors (<= 20) receives over 50% of all BTC payouts. While the extent of an operator's control over the resources of a mining pool remains an open debate, our findings are in line with previous research, pointing out centralization tendencies in large mining pools and cryptocurrencies in general.