One of the greatest qualities of Blockchain technology is its decentralization. Well, from the beginning, blockchains have presented themselves as a mechanism to avoid the concentration of power in a single entity or person. Bitcoin being the representation of this ideal in reality. However, after eleven years of life, and in the face of the emergence of mining farms, it is necessary to ask ourselves if Bitcoin is really decentralized.
Decentralization: A Blockchain Ideal
Since Bitcoin’s birth more than a decade ago, most cryptocurrency users have identified with one of the main ideals of Blockchain technology: decentralization.
And, after all, the world’s first cryptocurrency was designed by Satoshi Nakamoto after the 2008 financial crisis. In an attempt to avoid the kind of concentration of power that made the manipulations that led to that year’s crisis possible .
In this way, the objective of creating Bitcoin on a blockchain, was to distribute the governance over the cryptocurrency among all its users. Without any entity or individual that controlled the issue of the currency by itself. If not, this would be a collective process carried out by thousands of users around the world, connected through the Blockchain.
This process of decentralization in Bitcoin also extends to the programming of your code itself. Well, to carry out changes in it, it would be necessary to reach a high level of consensus among its users. Particularly among cryptocurrency miners. Who at the end of the day are the ones who have the ability to decide whether an update is implemented or not.
With these mechanisms in place, Satoshi Nakamoto hoped that Bitcoin’s development would take place on a decentralized basis. Managing to attract more and more people towards this model of monetary governance over time. Until finally displacing fiat money as the main currency in the world.
The role of Bitcoin farms
Now, this first community ideal for the development of Bitcoin, has encountered certain unforeseen developments since the birth of the currency. Especially, with the rise of BTC mining farms. Which have been born from the increase in the difficulty of mining the cryptoactive, which forces the acquisition of expensive mining machines ASICs if you want to participate in this process.
Thus, mining farms would be large companies with the financial muscle to acquire hundreds of mining equipment. Which are put to work at the same time in big industrial enclosures. Thus allowing them to become the main miners of the network. And, therefore, also in its main decision-makers.
In this way, according to CoinShares, only the mining farms located in China controlled by the end of 2019 65% of the total Bitcoins issue. With industry giants like Bitmain and Canaan leading the mining numbers, bringing much of the computing power required by the BTC Blockchain.
The consequences for the BTC chain
This, of course, has important consequences for the crypto world, and its decentralization. Well, the phenomenon of the emergence of mining farms, has displaced over the years the role of the individual user within the Bitcoin chain. Now these large companies are the main actors for the governance of the cryptocurrency.
The immediate consequence of this is that decisions like updating the Bitcoin code are concentrated in a few dozen large mining farms. Which have at their disposal the ability to do and undo within the BTC blockchain.
However, as serious as this possibility is what has finally ended up happening. Well, as was demonstrated in 2017 when it was debated whether to increase the size of Bitcoin blocks to improve their scalability. It is very difficult for mining farms to agree even to make decisions that improve the cryptocurrency.
Thus, logical changes that probably would have happened without major inconvenience in a community managed by several thousand users around the world. They have been systematically blocked by this handful of mining farms, which seek in the first place to protect their economic interests, and thus the status quo within BTC.
So although there is indeed still a significant level of decentralization in Bitcoin, and it is impossible for the blockchain to be hijacked by a single entity or organization. The truth is that the emergence of mining farms has ended up threatening the ideals on which BTC was created. Making you wonder if Bitcoin is really decentralized.