Serious Early Bitcoin Dominance Fears Highlight Ongoing Centralization Debate
Eleven years ago, the Bitcoin ecosystem faced its first major test of concentration when the hash rate of the dominant Ghash.io mining pool surged to 50%. While a similar situation now involves three large pools surpassing combined 50% dominance, historical precedent underscores the fragility of consensus security when centralized control approaches critical mass.
Peak Ghash Dominance (November 2013)
Ghash.io, owned by exchange CEX.io, was widely regarded as Bitcoin’s premier mining pool in early 2014. It offered automated payouts, low fees, shared transaction costs, and advanced features like merge-mining support and hash rate trading.
“Bitcoin pirates with their DDOS botnets” is a great name for a punk band.
Its user base swelled, however, triggering alarms. An anonymous Bitcointalk user compared its rise to Facebook’s early dominance, noting the danger of reaching over 90% control.
Fears peaked as Ghash crossed the 50% hash rate threshold, drawing calls to migrate:
“GHash is at 48% WTF. … This is fucking serious people get off GHash… consequences for 51% are huge…”
Description as the “Mark Zuckerberg of mining” was the antitrust justification for concerns, alongside warnings that 51% control could enable double-spending.
Concerning early exits by miners pushed Ghash’s share down significantly but following months saw a renewed push, prompting BitFury to block Ghash from using 1 PH/s, initiating a cooldown procedure.
Decentralization Principle
Like today’s network, the primary Bitcoin tenet was—and remains—resistance to any single entity controlling significant network hashing power:
“Bitcoin is optimal when no one entity controls even close to half of the hash rate.”
While the danger of malicious double-spending was clear technically, the significance often extended to network stability and community trust.
Historical Comparison
Although three large pools (e.g., Foundry, AntPool, F2Pool) now frequently contribute over 50% combined hash rate, observers note this is preferable to the concentrated threat of 2014. However, the conversation persists about fragmented mining, where hundreds or thousands of independent operators generate proof-of-work.
David Tor version of the problem points beyond collusion risk:
“Everything is decentralized except for the blocks. Let’s say the top five players build more than 80% of the blocks. … What if the Chinese government… says stop doing that?”
He argues the central threat stems from mining pools directly generating the blocks, citing United States or Chinese operators controlling such power.
Start-up projects like OCEAN and DMND aim to counter this by incentivizing block creation away from pool operators toward independent hashers, promoting an architecture where every persistent block structure comes from a distributed source.
These initiatives, however, also appear as natural competition among pools for the loyalty of the mining community—albeit one predicated on existence within the Bitcoin protocol.
