March 15, 2023 • 22 min read One of bitcoin’s main value propositions is its decentralized nature. However, decentralization only comes when there are enough disparate participants on the network. One major group of participants in the Bitcoin network are miners — those that consume electricity and contribute computing power to help secure the network. Individuals or entities like mining companies often band together to form “mining pools.” Today, two mining pools control more than 50% of Bitcoin’s total hash rate. This raises concerns of increasing centralization and potential censorship from mining pool operators.1 In this research article, we explore why we think this is unlikely to be a persisting issue because of Bitcoin’s incentive structure, how mining pools work, and new mining protocols on the horizon that could reshape how we think of mining pools entirely. Read the article Share: Download Article 1https://mempool.space/mining The information herein was prepared by Fidelity Digital Asset Services, LLC and Fidelity Digital Assets, Ltd. It is for informational purposes only and is not intended to constitute a recommendation, investment advice of any kind, or an offer or the solicitation of an offer to buy or sell securities or other assets. Please perform your own research and consult a qualified advisor to see if digital assets are an appropriate investment option. Services provided by Fidelity Digital Asset Services, LLC, a New York State-chartered, limited liability trust company (NMLS ID 1773897) or Fidelity Digital Assets, Ltd. Fidelity Digital Assets, Ltd. is registered with the U.K. Financial Conduct Authority for certain cryptoasset activities under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The Financial Ombudsman Service and the Financial Services Compensation Scheme do not apply to the cryptoasset activities carried on by Fidelity Digital Assets, Ltd. This information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Persons accessing this information are required to inform themselves about and observe such restrictions. Digital assets are speculative and highly volatile, can become illiquid at any time, and are for investors with a high-risk tolerance. Investors in digital assets could lose the entire value of their investment. Fidelity Digital Asset Services, LLC and Fidelity Digital Assets. Ltd. do not provide tax, legal, investment, or accounting advice. This material is not intended to provide, and should not be relied on, for tax, legal, or accounting advice. Tax laws and regulations are complex and subject to change. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Fidelity Digital Assets and the Fidelity Digital Assets logo are service marks of FMR LLC. Mailing Address: Fidelity Digital Asset Services, LLC 245 Summer Street, Boston, MA 02210 Mailing Address: Fidelity Digital Assets, Ltd. 1 St. Martin's Le Grand, London, England, EC1A 4AS © 2023 FMR LLC. All rights reserved. 1075400.1.0