Binance has joined OKEx and Huobi in launching a crypto mining pool product which is “dedicated to empowering miners and the global crypto mining industry.” Binance Pool, a cloud mining service that will start with Bitcoin, will complement the Binance Staking product that has been operating for almost six months and marks another step in CEO Changpeng Zhao’s plan to expand the company’s range of staking, earning, savings, and loan services.
Introducing #Binance Pool, an Inclusive Crypto Mining Platform That Empowers Miners#BinancePool is launching with a bitcoin mining solution plus a special offer of zero-fee starting rate for #Bitcoin miners for our first month.https://t.co/gv7vliZzLg
— Binance (@binance) April 27, 2020
Proof-of-Work and Proof-of-Stake Service to be Offered
Zhao confirmed the company’s intention of launching a mining pool at the start of April and last week tweeted that the service had mined its first Bitcoin block:
The first block ever mined by the @Binance Mining Pool. Still in closed-beta. Going live soon.
As always, LOWEST FEES of any mining pool.
If you wish to join, email: [email protected] pic.twitter.com/uewbRM6UIy
— CZ Binance 🔶🔶🔶 (@cz_binance) April 24, 2020
The blog post announcing the launch stated that Binance Pool will offer a combination of Proof-of-Work (PoW) and Proof-of-Stake (PoS) consensus mechanisms, thanks to “Binance’s technology and computing power.” Bitcoin will be the first coin Binance Pool will mine, with more cryptocurrencies to come in the future once the platform beds in.
The service is claimed to have the lowest fees on the market, which of course Binance can afford to do given its position as a market leader in the crypto space and the earnings that come with that. They also claim to offer a better service to miners due to their ongoing quest to make Binance Pool “the most rewarding mining pool in the market”, as well as “protection to miners regardless of the market”.
Centralization Issues Persist
While this is of course good news for Binance, there are concerns from some quarters about the company’s move into the mining sector. Firstly, while cloud mining does have a reputation as a scammers paradise, there are legitimate companies out there who have been working for years to offer a competitive service.
With this move however, Binance is threatening to do an Amazon and put legitimate smaller cloud mining companies out of business due to their ability to offer lower prices and their big name attracting newcomers to the space.
Centralization issues were also raised by other observers:
This is a galaxy brain power move by @cz_binance that also makes me a little nervous. Not saying this will happen but you can imagine a future in which exchange-owned mining pools prioritize their own transactions or even censor transactions to competitor exchanges. https://t.co/65jBZCRuxo
— Spencer Noon (@spencernoon) April 25, 2020
Binance joins other exchanges in offering a mining pool service, joining Huobi, who launched their offering in April 2018, and OKEx who launched its pool in late 2019 but already has more than 7% of hash rate. We can therefore expect KuCoin to offer KuCoin Mining any day now.
