Wealth concentrations and inequality is one of the big challenges of our time, and new research by the National Bureau of Economic Research (NBER) has highlighted this phenomenon as an emerging trend in the digital asset space.
The research report comprised a three-part study into the Bitcoin network transaction volume and participant structure, concentration and composition of active SHA-256 BTC miners, and an analysis of Bitcoin holdings (and their holders).
Ownership of BTC is more concentrated than previously thought, the NBER findings showed that the top 1% of Bitcoin owners possess more than 27% of total supply – and this is without consideration that multiple-wallets may be under the same ownership.
On-chain analytics demonstrated that around 8.5m BTC is held by individual investors, with a further 5m BTC held by intermediaries such as exchanges.
While initially this paints a bleak picture for crypto, surprisingly these findings still suggest that Bitcoin has more equal wealth concentrations than the fiat world.
After all, globally the top 1% still own more than 50% of the world’s wealth, and furthermore America’s 1% have 16x the relative wealth of America’s bottom 50% – so in comparison BTC could be seen as remarkably equal – for how long? Only time will tell.
Halving-events force mining concentration
NBER research into Bitcoin mining also spotlighted the impact of May’s Chinese exit on the SHA-256 hashrate; and the knock on effects this has created.
It would seem BTC mining is becoming increasingly concentrated into a handful of major players, and that this concentration appears to be tied to halving-event cycles – with the reduction in rewards increasing pressure on small independent miners – driving an increase in market share for big firms.
This could impact the future integrity of the Bitcoin network, as reductions in mining activity during and after halving events dramatically exposes the network to its only really risk of a successful 51% attack.