Mining pools have existed for nearly 11 years since the creation of the world’s first Bitcoin mining pool “Slushpool” on November 27, 2010. As the cryptocurrency market has gone through several bull and bear cycles, the mining pool industry has also witnessed a streak of “major reshuffles”. Many once mining pool hegemons have pitifully disappeared from the public view. By comparison, there are also many up-and-coming stars who have survived grueling tests, grown stronger along the way, and edged into the forefront of the industry. For the industry, the past 11 years is a history marked by vicissitudes. Below is a retrospective of the trajectory mining pools have taken so far.
After the appearance of the first Bitcoin mining pool Slushpool, Eligius hit the market in June 2011. Back then, the mining pool industry was still in its infancy. The combined hashrate of then major mining pools accounted for less than 20% of the mining industry’s total that year. Mining pools really began to enter the public view in 2012. Under the leadership of Eligius, some far-sighted miners realized that mining pools could bring them more stable income. Therefore, there emerged the dominant mining pool — BTC Guild (taking a nearly 50% share of the entire network’s hashrate at its peak). As of the end of 2012, the combined hashrate of all mining pools accounted for nearly half of the entire mining industry’s total.
After its creation in July 2013, GHash.IO grew so fast and led its peer pools all the way. Thanks to its operating strategy of charging no fees, the mining pool reached its heyday in July 2014. It once went beyond the critical threshold: 51% hashrate of the entire network. A “51% attack” means a potential attack on a blockchain network, where a single entity or organization is able to control the majority of the hashrate (51%). In such a scenario, the attacker could intentionally initiate some conflicting transactions to cause network disruption. Therefore, GHash.IO prompted the entire community to worry about a 51% attack. Fortunately, the cooperative management of GHash.IO suspended the registration of new users in time, calling on users to choose other mining pools. Through these steps, GHash.IO brought its hashrate down back to the level of 42% of the network’s total.
The mining industry started to rise rapidly in China from the second half of 2013. Given the network speed, miners prefer to access their own country’s mining pools. The ever-growing ranks of Chinese miners have led to the rise of mining pools in the country. In the same year, AntPool and BTCC started from scratch and quickly ranked among the top five. F2Pool, created also in the year as China’s oldest mining pool, officially topped the list of mining pools by hashrate. Whereafter, some old mining pools such as BTC Guild and GHash.IO were gradually left behind.
The year 2014 witnessed many Chinese mining pools becoming industry leaders. In the year, F2Pool ranked first, and AntPool and BTCC also made their way to the top ten. According to the data in December 2014, the aforesaid three mining pools contributed 22.59%, 11.03%, and 6.20% to the total hashrate, respectively.
In June 2015, the once-dominant mining pool BTC Guild announced the indefinite closure. At that time, its hashrate share fell less than 3% of the entire network. Along with BTC Guild, a string of once-thriving mine pools like Eligius and GHash.IO also vanished from sight. It is also in the year that the mining pool industry saw its landscape broadly settling: small ones were gradually squeezed out, and the combined hashrate of those outside the top ten plunged from about 30% at the beginning of the year to less than 5%. There formed a duopoly between F2Pool and AntPool. At the peak, the combined hashrate of the two even took up a 50% share of the mining industry’s total. So far, the center of the world’s mining industry has basically shifted to China.
In 2016, the birth of three new Chinese mining pools, ViaBTC, BTC.com, and HaoBTC helped smooth out the wild swings in the entire mining industry to some extent.
In 2017, the mining pool industry got stabilized after a “reshuffle”. Some Chinese mining pools such as ViaBTC, BTC.com, AntPool, and F2Pool made the bulk of the hashrate across the entire market, marking that Chinese mining pools became the “universe’s center”.
In 2018, Huobi Pool was created. In November of the same year, BTCC announced the indefinite closure. The collapse of the giant mining pool that ever owned 15% of the global Bitcoin hashrate was mainly attributed to a drain on hashrate, from 4% to less than 1% in the year alone.
In 2019, BytePool and OKExPool rose to prominence and made it into the top ten of the world. However, the boom of BytePool withered away fast. It shut its mining operation in 2020, faced up with the pressure from the plummeting currency prices and the BTC halving. Likewise, OKExPool fell out of top 10, due to the sharp hashrate dive in January 2020.
In 2020, the mining pool industry remained relatively stable. Binance Pool jumped into the top five list, immediately after its official launch.
In the first half of 2021, the cryptocurrency industry turned out a resounding success. The crypto market kept surging all the way up, thanks to the endorsement of Elon Musk, Tesla CEO and also a cryptocurrency supporter, on Twitter. This phenomenon was hailed as the “Musk Effect” by industry insiders. On June 19, 2021, things got worse for the Chinese Bitcoin mining industry. On that day, Sichuan mines, which mostly rely on clean energy — hydropower, were ordered to shut down by local authorities, following the similar bans in Inner Mongolia, Qinghai, and Xinjiang. By then, Chinese Bitcoin miners lost their last stronghold in the country. After the sweeping closedown of Sichuan mines, the average Bitcoin hashrate of the entire network dropped to 102E, down about 43% from the highest level of 181E. As of 11 a.m. on June 20, ViaBTC saw its hashrate dropping by 2.37%, F2Pool by 14.19%, BTC.com by 15.66%, Binance Pool by 24.62%, Huobi Pool by 26.71%, and AntPool by up to 29% within 24 hours, according to the data from the BTC.com explorer. In striking contrast, the North American mining pool Foundry USA experienced a hashrate surge of 90%. This may mean that bitcoin mining begins to rise overseas in the wake of its fall in China. Now, it is high time for Chinese miners to seek opportunities in foreign countries.
Compared with its Chinese counterparts, ViaBTC not just survived the policy crackdown nearly unscathed. More importantly, it seized this opportunity to top the list of Bitcoin mining pools by hashrate. This is because the mining service provider has embarked on a path of international development by branching out into overseas markets two years ago.
The ongoing reshuffle across the mining industry poses both challenges and opportunities to Chinese mining pools. History has proven that those that can survive bull and bear cycles by continuous reform and innovation will become strong and prevail. Let us wait and see!
