Miner Weekly: KucoinPool a Poolin White Label?
Here’s how they were connected via on-chain transactions
Hashrate whac-a-mole?
Following the news of Poolin suspending wallet withdrawals earlier this month, the mining pool has had a massive hashrate outflow. The hashing power connected to Poolin dropped from its recent top of around 26 EH/s to 10 EH/s now. Meanwhile, the combined market share of the three biggest pools – Foundry, AntPool, and F2Pool – increased from ~50% earlier this month to 58%.
As major mining pools absorb the hashrate flood from Poolin and set new records, we noticed that the hashrate on KucoinPool, the pool service of the crypto exchange Kucoin, has plunged from 6.6 EH/s to a little more than 0.1 EH/s, which seemed oddly coincidental. So, we took a quick look at the two pools’ coinbase payout addresses and found signs that suggest KucoinPool might be a Poolin white label.
On-chain data shows that Poolin’s coinbase payout address, which starts with 1GNgwA8, has historically been sending block rewards to intermediary hops before distributing them to customers. One of the large intermediary addresses, which starts with 3AzgiiyA, has 0 BTC balance but has received and sent over 160,000 BTC since 2019.
Now let’s take a look at KucoinPool. It was launched in August 2021 and quickly became one of the top ten pools. It even touted breaking a new record last month when it celebrated its first anniversary. But since launch, there have been many instances where KucoinPool’s coinbase payout address, which starts with 1ArTPjj6, sent mined block rewards to the same 3AzgiiyA address either directly or through multiple hops. The most recent one happened just a few days ago.
If white labeling was really the case, then the hashing power on Poolin prior to its wallet withdrawal suspension could be over 32 EH/s and saw over 20 EH/s of hashrate unplugged over the past two weeks.
That said, the incident did not stop Bitcoin’s hashrate and mining difficulty from setting all-time highs. But it does remind us of a similar relationship between BTC.com and BinancePool two years ago, and that between BTC.top and HuobiPool before China's crackdown. In both cases, crypto exchanges used white labels of established pool operators to attract customers. The fact that seemingly separate pools share the same operator means that the Bitcoin network's hashrate is dependent on fewer pool operators than what the usual pool-pie-charts suggest.
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