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55% of Bitcoin’s On-chain Volume is represented by Roughly 11,000 Entities

Researchers are confident that approximately 11,000 entities are responsible for more than half of the on-chain volume for the world’s leading cryptocurrency. In addition, they found that a tenth of all Bitcoin miners control 90% of the network hash rate.


An In-depth BTC Study

The National Bureau of Economic Research (NBER) conducted a study and published its results on Thursday, 21 October, claiming that 11,043 on-chain entities represented 55% of the volume on the Bitcoin network. 75% of this on-chain volume is estimated to come from cryptocurrency exchanges.

The report also found that 15.9% of circulating Bitcoin or 3 million BTC is controlled by the top 1,000-largest investors. Then following closely behind are the next 9,000-largest investors who hold about 10.6% of circulating Bitcoin or 2 million BTC combined.


Crypto’s Dominant Coin

The study’s authors concluded that the BTC network maintains a centralized pool of individuals and entities, despite a surge of new investors enticed by the dominant coin’s 2021 bull market. The authors stated that:

The Bitcoin ecosystem is still dominated by large and concentrated players, be it large miners, Bitcoin holders or exchanges.

Further within the report, the authors noted that individual BTC holders represented 45.1% of its supply or 8.5 million BTC.


A Miner’s Paradise

Also identified within the report was the significant concentration within Bitcoin’s mining sector. It is estimated that 10% of miners control 90% of Bitcoin’s global hash rate. In addition, roughly 50% miners or 0.1% of the network, take charge of 50% of the Bitcoin network’s total hashing power.

The NBER hinted on how risky it is for the Bitcoin network to centralize its hashing rate this way because it places it at a significant risk of attack – approximately 51% risk. However, the authors did not bring in an hypothetical situation where the world’s top miners would get incentives for them to launch an attack on the network. This goes to show that the NBER is confident in the dominance the Bitcoin network has shown over the years.

The Cambridge University’s Bitcoin Electricity Consumption Index (BECI) claims that the global distribution of hash power has seen a significant upsurge since September 2019 when China’s share peaked at 75.5%.

The recent crackdown on domestic Bitcoin miners by China has seen multitudes of them seeking greener pastures and cheaper electricity in North America, Central Asia, and Eastern Europe. Even before the April crackdown, data from BECI suggests that Chinese hashing power had already fallen by 40%.

Image courtesy of pixabay

Edward Nored

Edward Nored

Edward is a naturally curious BTC lover with a deep interest in blockchain, fin tech, fields which he dedicates his time to researching.


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