TheMinerMag has raised an important hare in the bitcoin industry. Around ten pools would have formed a cartel.
Collusion between pools
As a reminder, a pool is a kind of cooperative allowing miners to pool their hashrate in order to smooth their income.
There are only about a dozen pools, which is a threat to the decentralization of bitcoin. Especially since the five largest pools control 85% of the hashrate. Only two pools (Foundry and Antpool) control approximately 60%.
But according to the investigation of TheMiningMag, the reality is worse than that. Indeed, 10 of the 15 largest pools send the rewards gleaned for each block to the same addresses…
Since the beginning of 2022, coinbase payment addresses of Antpool, Binance Pool, Ultimus Pool, BTC.com, 1THash, Poolin, EMCD Pool, Luxor (changed after December 7), SECPool and Braiins Pool are sending part , if not all, of the rewards at the same addresses.
In other words, the pools also pool their hashrate to protect themselves from periods of bad luck. This agreement comes from the fact that the pools have adopted the so-called Full pay-per-Share (FPPS) system which requires the pools to pay the miners in cash.
Clearly, even if a pool is unlucky by finding few blocks, it will have to advance the money to the miners while waiting to have better luck. This is a significant selling point for minors.
It is therefore crucial for a pool to have a solid financial foundation. This makes it possible to cope with lean periods by continuing to pay miners as if nothing had happened.
Unfortunately, the FPPS system has the unfortunate consequence of encouraging collusion. The identity of the entity at the heart of this affair is not clear, but one of the addresses in question was first accessed by the Chinese Antpool. It is therefore reasonable to think that it is Antpool.
TheMinerMag also believes that the pools diverted hashrate to Antpool as part of these funding agreements. This could explain the fact that Antpool overtook Foundry USA in November in the number of blocks mined.
The FPPS system seems harmful for the decentralization of bitcoin. It would be better for the pools to agree not to use this clientelist system. In any case, it amounts to the same over a period of several months.
This is the case of the small and new Ocean pool which instantly pays miners via Coinbase.
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