Decentralization's Hidden Weak Point: Three Entities Control Half of Bitcoin and Ethereum's Power
A new study by ARK Invest and Glassnode has found that Bitcoin and Ethereum's decentralization has a surprisingly narrow pressure point, with just three entities required to cross critical block-production thresholds on both networks.
For Bitcoin, the calculation centers on mining pools, which can be quite fluid due to individual miners' ability to direct their computing power to pools to smooth out revenue. The study estimates that exiting a 1% Bitcoin mining position can take roughly 30 seconds, making concentration considerably more fluid than the headline number suggests.
Ethereum has a different weak point because it uses proof-of-stake, where an entity or coordinated group controlling more than one-third of staked ETH could interfere with Ethereum's ability to reach finality. The study found that only three staking entities were needed to cross this threshold in their dataset.
The most counterintuitive result concerns Solana, which requires 19 validator entities to coordinate to reach its comparable 33% threshold. However, Bitcoin still ranks as the most decentralized of the three blockchains overall, thanks to low verification costs, geographic distribution, and miners' ability to switch pools quickly.