What Is a ‘Mining Cartel’ and How Does It Relate to PoW Centralization?
A mining cartel is a secret agreement or collusion between multiple large mining pools or individual miners to collectively control a significant portion of a PoW network's hash rate. While not a single entity, their combined power could reach or exceed the 51% threshold, allowing them to execute attacks or censor transactions.
This represents a centralization risk even if no single pool controls 51% individually.
Glossar
Secret Agreement
Concealment ⎊ Secret agreements within cryptocurrency, options trading, and financial derivatives often manifest as non-public understandings influencing market participation.
Large Mining Pools
Pool ⎊ Large mining pools represent aggregated computational resources dedicated to solving cryptographic puzzles inherent in proof-of-work blockchain networks, primarily Bitcoin.
Centralization Risk
Concentration ⎊ Centralization risk within cryptocurrency, options, and derivatives manifests as systemic vulnerability stemming from the disproportionate control exerted by a limited number of entities ⎊ exchanges, clearinghouses, or large market participants.
Decentralized Governance Models
Framework ⎊ Decentralized governance models, particularly within cryptocurrency, options trading, and financial derivatives, represent a paradigm shift from traditional hierarchical structures toward community-driven decision-making.
Mining Cartel
Formation ⎊ A Mining Cartel describes the collusive arrangement among independent Proof-of-Work miners, typically organized within a single mining pool, to concentrate computational resources and maximize their collective probability of discovering the next block.