Miner Weekly: These Pools Are Consolidating Bitcoin Rewards with Antpool

This article first appeared in Miner Weekly, BlocksBridge Consulting’s weekly newsletter curating the latest news in bitcoin mining and data analysis from TheEnergyMag. Subscribe to receive in your inbox once a week.

One of the most notable developments in bitcoin mining in 2023 was the resurgence of hashrate connected to Antpool, which surpassed Foundry USA in November in the number of blocks mined. 

Although it appears that Foundry has regained the upper hand, on-chain transactions imply that the hashrate diverted to Bitmain-tied Antpool could be larger than expected.

TheEnergyMag has recently noticed that 10 of the largest 15 mining pools have been consolidating coinbase block rewards. Many of these pools were launched as independent operators with no notable financial backers.

Since early 2022, the coinbase payout addresses of Antpool, Binance Pool, Ultimus Pool, BTC.com, 1THash, Poolin, EMCD Pool, Luxor (changed after Dec. 7), SECPool, and Braiins Pool have regularly sent at least a portion, if not the entirety, of their block rewards to the same output addresses in single transactions.

For instance, Antpool, Binance Pool, Braiins Pool, and Poolin recently sent about 100 BTC in a transaction to two output addresses. Other recent transactions exhibited similar behaviors by other pools, and this pattern could be traced back to April 2022, as mapped out in the diagram below.

In March 2022, Antpool was the only pool sending block rewards to the 3EKWP address shown above. BinancePool and Ultimus Pool started to route their coinbase payouts to the same address in April in single transactions with Antpool. 

After July 2022, Antpool, Ultimus Pool, Binance Pool, BTC.com and 1THash began consolidating their block rewards to the 38HXyg address. They were soon joined by Poolin, and much later, Luxor and EMCDPool, followed by a new pool called SECPool, and most recently Braiins (previously known as Slushpool).

Since April 2022, these pools have also consolidated block rewards in single transactions to the bc1q0q address, which has been interacting with the 38HXyg and 3EKWP addresses since 2020. After consolidation, these three addresses further transact block rewards to the 3BPAodH6 and then 3Hemup addresses before what appeared to be the final payout distributions.

It seems that this consolidation pattern results from certain payout processing agreements between these pools and an entity that is financing their daily payouts.

All the aforementioned pools adopt the Full Pay-per-Share (FPPS) model, which means they have daily liabilities to miner customers regardless of their luck in producing blocks. Hence, having strong financial backing becomes increasingly necessary to hedge against bad luck. Notably, Braiins Pool announced in November that it would switch to FPPS. As the longest-running bitcoin mining pool, Braiins previously paid out miners based on actual blocks mined.

Given that those block rewards have been consolidated in single transactions to the same outputs, the financing entity likely controls those coinbase addresses and hopping addresses.

It is unclear who the supposedly financing counterparty is. Still, it is reasonable to believe it is Antpool or Bitmain-tied entities, given Antpool’s transactional pattern as early as March 2022. That would raise a question of whether or how many of these pools have also diverted hashrate to Antpool as part of the financing agreements. 

For context, Antpool has mined 26.6% of the blocks in December thus far while Binance Pool, the second largest pool within the group, mined 6%. The remaining parties in the group account for another 6% this month. It’s worth noting that Binance used to be partially a hashrate proxy of BTC.com when it started in 2020 before BTC.com was sold by Bitmain in 2021. 

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