FPPS Payouts Driving Centralization in Bitcoin Mining Pools

The Full-Pay-Per-Share (FPPS) payout model, widely regarded for its predictable revenue streams, is contributing to a significant centralization of Bitcoin mining pools. As of 2024, more than 50% of the global Bitcoin hashrate is concentrated in just two pools—Foundry USA and Antpool. This concentration is closely linked to the capital-intensive nature of FPPS, which requires pools to maintain substantial financial reserves to handle payout variability.

Due to the consistent payouts that FPPS offers, it has become the preferred choice for most miners, even though the model necessitates large reserves to smooth out variance in block production. Pools like Antpool and Foundry USA, backed by companies with deep pockets, dominate the space, further centralizing Bitcoin mining. Smaller pools and independent miners are often unable to compete, pushing the hashrate distribution into fewer hands. With more than half of the hashrate controlled by these two pools, the risk of centralization and even potential manipulation has become a growing concern for the Bitcoin network’s future security and decentralization