Binance announces Binance Pool, will they also dominate Bitcoin Mining?

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Binance, one of the world’s leading exchanges is adding yet another project to its ecosystem after launching its own mining pool called, “Binance Pool”. Supported by both Proof-of-Work (PoW) and Proof-of-Stake (PoS) mining mechanisms, Binance Pool will mine Bitcoin initially, before more tokens are added. Binance pool hopes to add more decentralization into the Bitcoin mining ecosystem, which is currently dominated by major players such as F2Pool and Antpool. On top of this Binance pool will offer Ethereum Mining and Staking options.

Head of Binance Pool Lisa He told Cointelegraph, that her 15 staff members were working hard to, “establish a comprehensive platform for miners that will bring more possibilities to the mining industry by bridging traditional mining to financial services.”

Introductory offer of zero Mining Pool fees

In an attempt to bring customers in, the Pool is operating on zero fees until May 31 but following the initial grace period, the fee will be 2.5%. Larger miners are not an exception to this rule and they too will have to pay the fee in the future. Despite this, Binance maintains that Binance Pool will have one of the lowest fees on the market. 

As for where Binance Pool fits into the Binance group, it would seem the mining system will not be independent of other branches. Instead, it is integrated into it, allowing fund transfers between the Pool and other services Binance provides like trading, staking, and lending. Not only that, but mining rewards go directly to the participants’ exchange accounts, rather than blockchain addresses. 

For Binance founder and CEO, Changpeng Zhao the launch of Binance Pool represents a positive, not just for users but also for the larger industry as it will “enable significant growth and scale.” However, many are unconvinced at the positives of an economic juggernaut like Binance entering the mining industry.  

Binance Receives Centralization Accusations 

The reason for this concern stems from the Bitcoin hash rate. For many, Binance represents a real threat to the opportunities for smaller miners as they, alongside other more powerful pools, amass Bitcoin hash rate. One Twitter user aptly summed up many worries, tweeting “This hash distribution chart is soon going to be composed of just one color” next to a pie graph.

Current hashrate distribution of top Bitcoin Mining Pools

These concerns are only heightened when the much-anticipated Bitcoin halving event arrives and the circulation of the currency dwindles even further and with it the hash rate. Miners are already working hard to increase the hash rate prior to halving but whether smaller BTC miners will survive post halving as profits lower is the question. If not, then centralization and control could fall into a company like Binance’s hands. 

However, for Lisa He, centralized control is not the incentive of Binance, rather they will facilitate the opposite, with the Binance Pool launch fostering decentralization in the mining sector. 

Pointing to when Bitmain almost owned 51% of the Bitcoin hash rate (something that would give them complete control of the currency) in 2018, He argued that the entry from major companies like Binance with their computer power, has actually made the mining industry “more decentralized than it was two years ago,” as “the largest pools have less than 20% of the computing power of the whole network, and the assets on the Bitcoin network become more secure.”

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