Bitcoin’s Decentralization Is Threatened by a New Type of Hash Rate’s Centralization

Solutions exist and must be applied to protect Bitcoin from this threat.

The decentralization of its network is one of Bitcoin’s main strengths. This decentralization makes Bitcoin much more resistant to attempts to stop its network since it does not have a single point of failure.

It also makes Bitcoin more resistant to censorship by an entity that would have the power to decide on its own which transactions can be carried out or not.

In order to make such a level of decentralization possible while ensuring optimal security and safety of its network, the validation of Bitcoin transactions is carried out in a process called mining.

During mining, miners make their computing power available to the network to solve the mathematical equation that validates a block of transactions. The more computing power available on the Bitcoin network, the more secure the Bitcoin Blockchain is considered to be.

The computing power available on the Bitcoin network, known as Hash Rate, has been at record levels since the beginning of 2020. Proof, if it were needed, that the Bitcoin network is more secure and safe than ever.

However, a closer look at the distribution of this Hash Rate shows that a new type of centralization is threatening the decentralized side of Bitcoin.