Binance Rolls Out Crypto Mining Pool Amplifying Centralization Concerns

On April 27, top crypto exchange Binance launched its mining pool “Binance Pool”.

The pool will operate with zero fees until May 31, after which the rate will be established at 2.5%. The announcement for the pool notes that large miners can contact Binance to negotiate an extension of the fee-free period.

Around 15 of Binance’s more than 1,000 employees work full-time towards the pool’s operation.

Cross-platform integration

Binance Pool supports both Proof-of-Work (PoW) and Proof-of-Stake (PoS) mining algorithms.

The pool is integrated with other Binance’s services, allowing miners to easily transfer funds between Binance Pool and the company’s different platforms, including trading, lending and staking.

Head of Binance Pool Lisa He said, “We aim to establish a comprehensive platform for miners that will bring more possibilities to the mining industry by bridging traditional mining to financial services.”

Binance founder and chief executive Changpeng Zhao stated, “As an integral part of the global crypto market, empowering miners will therein enable significant growth and scale in the larger industry.”

On April 24, Zhao noted on Twitter that Binance Pool had mined its first block.

Community raises centralization concerns

Binance Pool has received mixed responses from the crypto community, with some commentators noting that Binance’s pool may lead to a further centralization of Bitcoin (BTC) hash rate among a small number of pools.

Twitter user “HsakaTrades” shared a chart of Bitcoin’s hash rate distribution with a comment: “This hash distribution chart is soon going to be composed of just one colour.” The other user noted:

“This either ends super good for Bitcoin with multiple competing mining pools offering mass decentralisation or…. well I guess you can figure out the flipside of the coin.”

Binance claims to be a decentralizing force

Responding to the criticism, Lisa He said that the launch of Binance Pool will comprise a decentralizing force upon the mining sector.

“In 2018, the mining pool of a mining machine manufacturer owned nearly 51% hashing power of the whole Bitcoin network, and the security of the Bitcoin network was doubted,” she stated, adding:

“With industry players like Binance continuing to enter the mining space and contribute computing power to the industry, the mining industry is actually getting more decentralized than it was two years ago. The largest pools have less than 20% of the computing power of the whole network, and the assets on the Bitcoin network become more secure.”