Once again, a large Ethereum (ETH) mining pool has announced that it will stop. BeePool recently announced that it was ceasing all its activities. China’s crypto transaction ban is the main cause.
BeePool is Ethereum’s fourth largest mining pool. It currently generates 7% of the total computing power and thus is a significant player in securing the Ethereum network and processing transactions. The reason for closing the platform is obvious:
— beepool.org (@beepools) September 28, 2021
BeePool no longer accepts new registrations. On October 15, all operations will be discontinued and the existing balances paid out. The Pole is not the first to take this striking step. Recently, Spark Pool, an even larger mining pool, announced a similar move.
Spark Pool will also close its doors. It is the second largest Ethereum mining pool in the world after Etheremine. The pool of miners account for a whopping 16% of the total computing power on the Ethereum network. Together with BeePool, the mining pools generate about a quarter of the total computing power on Ethereum.
What is the effect?
Ethereum is a proof of work (PoW) blockchain, which means miners secure the network. They perform complex calculations to prove that the transactions they processed have been processed correctly (otherwise the hard work would have been for nothing). But now that the computing power on Ethereum is likely to drop considerably, the network will in principle become more insecure and slower.
At least that would be the case if there were no difficulty mechanism had been. This automatic mechanism determines how easy it is to mine. If many miners go offline, the difficulty decreases, making it easier for other miners to mine. This keeps the network in balance.
An effect could therefore be that we will see a dip in the hash rate, but that miners in other parts of the world will soon step in.
