Top crypto exchange Binance has launched its mining pool, however, the crypto community is concerned about the centralization of hashing power.
Leading cryptocurrency exchange Binance launched its mining pool “Binance Pool” on April 27.
The pool will operate with zero fees until May 31, after which the rate will be set at 2.5%. The press release for the pool states that large miners can contact Binance to negotiate an extension of the fee-free period.
Approximately 15 of Binance’s more than 1,000 employees work full-time towards the pool’s operation.
Cross-platform integration
Binance Pool supports both Proof-of-Work (PoW) and Proof-of-Stake (PoS) mining mechanisms.
The pool is integrated with the rest of Binance’s platform — allowing miners to easily transfer funds between Binance Pool and the company’s various platforms, including trading, lending, and staking.
Speaking to Cointelegraph, head of Binance Pool Lisa He stated, “We aim to establish a comprehensive platform for miners that will bring more possibilities to the mining industry by bridging traditional mining to financial services.”
Binance founder and chief executive Changpeng Zhao said, “As an integral part of the global crypto market, empowering miners will therein enable significant growth and scale in the larger industry.”
On April 24, Zhao tweeted that Binance Pool had mined its first block.
Community is cautious of centralization
Binance Pool has received mixed responses from the crypto community, with some commentators expressing concerns that Binance’s pool will result in a further centralization of Bitcoin (BTC) hash rate among a small number of pools.
Twitter user ‘HsakaTrades’ tweeted a chart of Bitcoin’s hash rate distribution accompanied by the caption: “This hash distribution chart is soon going to be composed of just one colour.” Another user wrote:
“This either ends super good for Bitcoin with multiple competing mining pools offering mass decentralisation or…. well I guess you can figure out the flipside of the coin.”
Binance claims to be a decentralizing force
In response to the criticism, Lisa He argued that the launch of Binance Pool will comprise a decentralizing force upon the mining sector.
“In 2018, the mining pool of a mining machine manufacturer owned nearly 51% hashing power of the whole Bitcoin network, and the security of the Bitcoin network was doubted,” she stated, adding:
“With industry players like Binance continuing to enter the mining space and contribute computing power to the industry, the mining industry is actually getting more decentralized than it was two years ago. 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.”
