Bitcoin mining centralization sparks rare 2-block reorg

• Foundry USA produced seven consecutive blocks, triggering a rare two-block chain reorganization on the Bitcoin network.
• Valid blocks from AntPool and ViaBTC were orphaned as the network followed the heavier chain created by Foundry's dominant hashrate.
• The event highlights a growing trend of mining concentration, driven by high production costs and a recent 7.76% drop in mining difficulty.

The Mechanics of the Chain Reorganization

Late on a recent Monday, the Bitcoin network experienced a two-block "reorg," a situation where the blockchain briefly forks before resolving into a single definitive path. The event began at block height 941,881 when AntPool and Foundry USA discovered valid blocks within just 12 seconds of each other. Initially, the network was split, with some nodes following the AntPool chain and others following Foundry.

The competition intensified at block 941,882 as ViaBTC extended the AntPool chain while Foundry added another block to its own. However, Foundry USA subsequently mined four additional blocks in rapid succession (from height 941,883 to 941,886). According to Bitcoin's consensus rules, the network must follow the chain with the most cumulative proof of work. Consequently, the two blocks produced by AntPool and ViaBTC were abandoned, becoming "stale" or orphaned.

Understanding Orphaned Blocks and Network Security

While a two-block reorganization is uncommon, it does not represent a failure of Bitcoin's security protocols. The network functioned exactly as intended, resolving the temporary conflict through established consensus rules. Transactions contained within the orphaned blocks were not lost; they were returned to the mempool to be included in subsequent blocks by other miners.

An orphaned block occurs when two miners find solutions nearly simultaneously, but one chain eventually grows faster than the other. In this instance, Foundry’s ability to produce six blocks in a row effectively overrode the competing chain. The miners at AntPool and ViaBTC received no rewards for their orphaned blocks, as only the winning chain generates valid block subsidies and transaction fees.

Economic Pressures and Hashrate Concentration

This incident serves as a visible indicator of the increasing concentration of hashrate within a few dominant mining pools. This trend is largely driven by the current economic environment for miners. While Bitcoin has traded around $70,000, the estimated average production cost remains significantly higher at approximately $88,000.

This discrepancy has forced smaller and mid-sized operators to shut down, leading to several key market shifts:

• Mining difficulty recently saw a 7.76% negative adjustment, the second-largest of the year.
• Total network hashrate has retreated to roughly 920 EH/s from its previous record of 1 zetahash.
• As smaller participants exit, the remaining hashrate becomes concentrated in large pools like Foundry USA, increasing the statistical likelihood of consecutive block finds and frequent chain reorganizations.