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Hypothesis HY10006

Bitcoin is supposed to be decentralized. But 3 mining pools control over 50% of hash rate. They could theoretically censor transactions or collude against users.

Trading hypothesis

What traders get wrong

False assumption:

"Bitcoin is decentralized. No single entity controls the network."

Truth:

Mining is highly concentrated. A small number of pools control majority hash rate.

Problem for trader:

Censorship capability exists. MEV extraction is possible. Geographic concentration creates regulatory risk.

Key takeaways

What you should consider as a trader

1. Pool concentration is high - Top 3 pools often exceed 50% of hash rate.
2. Pools can censor - Transactions can be excluded from blocks.
3. MEV exists in Bitcoin - Transaction ordering manipulation is possible.
4. Geographic risk - Hash rate concentration in specific countries.
5. Decentralization is relative - More decentralized than banks, less than advertised.

Data you need

Monitor mining centralization:

Data points:

• Pool hash rate distribution
• Censorship detection
• Geographic distribution
• Pool behavior analysis

👇 Access this data now

Comparison of data sources

Where to get crucial data feeds

BTC.com Pool Stats

Data available: ⚠️ Partial

Basic pool distribution.

Mempool.space

Data available: ⚠️ Partial

Transaction analysis.

Madjik

Data available: ✅ Yes

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Available metrics for this hypothesis:

Science behind hypothesis

Research supports this hypothesis

Historical data shows mining has become more concentrated over time, not less.

Bottom line

Concentration risk is network risk. Monitoring mining pool distribution helps you understand the real decentralization of your 'decentralized' asset. Madjik tracks hash rate concentration across pools and geographies, alerting you to centralization risks that could affect network security.