Cryptocurrency purists believe that financial tokens can only be trusted as long as their blockchain networks are fully decentralized, meaning that decisions are made by all digital currency holders and not by a select group of individuals. For this reason, major digital currencies such as Ripple are often dismissed as not being true cryptocurrencies, and this extends to stablecoin projects such as Tether, which critics think need to be manipulated in order to maintain their value pegged to the United States dollar.

Based on the above, it is not surprising to learn about the backlash received by Binance, one of the world's leading cryptocurrency exchange and trading platforms, after announcing the launch of a new mining pool. The Binance Pool announcement was made on Monday, and it did not take long for critical opinions to arrive. This mining operation is largely based on the Ethereum blockchain; it supports the usual proof-of-work and proof-of-stake protocols needed to claim mining rewards, and the company will not charge any fees from now until May.

The first block mined by the new Binance pool was confirmed on April 24, but it was not exactly welcomed by the cryptocurrency mining community. Binance certainly has the hardware resources required by a large-scale mining operations, and it is this conglomeration of hash power that makes cryptocurrency analysts concerned about the future of mining.

Significant centralization of mining operations has been taking place since 2018. As the situation stands, dominant mining cartels based in China held about 50% of the global hash power rate. Now that a major player such as Binance has entered the cryptocurrency mining sector, hash power is now nearly centralized and in the hands of few players.

Not surprisingly, Binance has taken exception to this characterization of the company's new mining pool project. Pooling platforms allow individuals to enter the cryptocurrency mining world without having to set up expensive rigs that require substantial investment. Binance argues that mining pools actually introduce decentralization in the mining markets because it gives prospective miners a shot at earning tokens while keeping blockchain networks running. Starting in June, miners who sign up for a spot in the Binance Pool will have to contribute 2.5% of their mining rewards.