Bitcoin Leads Ethereum and Solana in Decentralization, Ark Finds

A new joint study from ARK Invest and Glassnode, released September 1, ranks Bitcoin as the most decentralized major digital asset network, with a Nakamoto coefficient of just three entities needed to cross a critical production threshold. Ethereum and Solana show higher concentration under different metrics, though the report warns that raw entity counts do not capture the full complexity of ownership and control. The 32-page report, titled *The Decentralization Spectrum: Design Tradeoffs in Digital Assets*, compares the three networks across six dimensions: ownership, exit fluidity, verification costs, critical resilience, reconstruction costs, and infrastructure distribution. The findings challenge simplistic narratives about which blockchain is truly "decentralized," revealing trade-offs that vary by design. The Nakamoto Coefficient: Bitcoin’s Three-entity Threshold The report applied a 51% hash-rate threshold to Bitcoin. It found that three mining pools collectively exceeded that threshold: Foundry USA represented 27.27% of the measured hash rate AntPool at 17.06% F2Pool at 16.96% Together, the three pools exceeded 61%. This produced a Nakamoto coefficient of three, defined as the minimum number of measured entities needed to cross a network’s critical production threshold. ViaBTC controlled another 9.50%, while SpiderPool represented 5.82%. The findings do not mean three companies control Bitcoin. The metric counts mining pools and staking platforms as entities, even when the underlying hardware, stake or node operators belong to separate participants who may withdraw or redirect their resources. Mining pools coordinate block construction and distribute rewards, but they do not necessarily own the machines producing their hash rate. Independent miners connect to pools to receive steadier income and can redirect their computing power elsewhere. That mobility limits how closely pool concentration can be equated with permanent control. The report estimated a Bitcoin miner could switch a 1% hash-rate position in approximately 29 seconds. A coordinated attack or censorship attempt could prompt participants to leave the responsible pools. Pools still influence transaction inclusion and ordering because they usually provide the block templates miners use. Pool concentration therefore represents an operational risk, even if it overstates the concentration of underlying mining ownership. The issue is not new. Earlier crypto.news reporting found that two mining pools produced a majority of sampled Bitcoin blocks in late 2022. Pool shares have changed since then, but production continues to be concentrated among several large coordinators. Ethereum’s Different Threshold: 33% Stake Concentration ARK and Glassnode applied a 33% stake threshold to Ethereum because participants controlling one-third of staked ETH can disrupt finality. This differs from Bitcoin’s 51% majority threshold, so the two coefficients do not describe identical powers. Under this metric, Ethereum also required three entities to cross the 33% barrier, reflecting concentration among major staking providers and liquid staking protocols. The report emphasizes that Ethereum’s lower threshold for disruption (33% vs 51%) means that even if the number of entities is the same, the potential for harm is greater. However, like Bitcoin, the actual distribution of stake among individual node operators is far broader than the entity count suggests. Solana: a Wider Network of Validators Solana required 19 entities to cross its measured block-production thresholds, according to the study. This higher count reflects Solana’s different validator model and lower barriers to participation. However, the report notes that Solana’s infrastructure distribution and verification costs present different trade-offs, which may affect long-term resilience. The report’s comparisons across all six dimensions yield a nuanced picture: Network / Asset Critical Threshold Entities Needed Key Risk Factor Notable Trade-Off Bitcoin 51% hash rate 3 Mining pool influence on transaction ordering High miner mobility (29 seconds to switch) Ethereum 33% staked ETH 3 Finality disruption Lower threshold for attack; broader stake distribution Solana Block production majority 19 Validator coordination Higher entity count but different infrastructure costs Design Tradeoffs: Ownership, Exit Fluidity, and Verification Costs The report delves into six dimensions that define decentralization: Ownership: Who holds the native asset and how concentrated are holdings? Bitcoin’s UTXO model shows a relatively broad distribution, but large holders exist. Exit fluidity: How easily can participants withdraw resources? Bitcoin miners can redirect hash power quickly; Ethereum stakers face unbonding periods. Verification costs: The expense of running a full node versus the cost of verifying transactions. Bitcoin’s node requirements are lower, enabling broader participation. Critical resilience: The network’s ability to withstand attacks or censorship. Bitcoin’s high hash rate and global mining distribution contribute to resilience. Reconstruction costs: The effort required to rebuild the chain from scratch after a catastrophic failure. Infrastructure distribution: The geographic and entity dispersion of nodes, miners, and validators. ARK and Glassnode caution that no single metric tells the full story. The choice of threshold (51% vs 33%) and the definition of “entity” (mining pool vs individual operator) significantly alter the results. Market Context and Immediate Reactions The report arrives amid ongoing debates about blockchain governance and security. Bitcoin’s price remained stable at around $27,400 following the release, while Ethereum traded near $1,720 and Solana at $20. Analysts pointed to the study as a data-driven contribution to a conversation often dominated by marketing claims. Regulators have increasingly scrutinized network concentration. The U.S. Securities and Exchange Commission has cited staking concentration as a factor in its classification of some tokens as securities. The report’s explicit comparison of Bitcoin, Ethereum, and Solana may inform future policy discussions. What Is the Nakamoto Coefficient? The Nakamoto coefficient is a metric that measures the minimum number of entities (e.g., mining pools, staking providers) that would need to collude to disrupt a blockchain network. A higher coefficient indicates greater decentralization. For Bitcoin, the coefficient is 3 under a 51% hash-rate threshold, meaning three mining pools could theoretically halt or censor the network. How Does Bitcoin Compare to Ethereum in Decentralization? Bitcoin and Ethereum both have a Nakamoto coefficient of 3 under their respective thresholds (51% for Bitcoin, 33% for Ethereum). However, the thresholds represent different attack vectors. Bitcoin’s 51% threshold allows a majority to rewrite history, while Ethereum’s 33% threshold enables finality disruption. The report emphasizes that Bitcoin’s mining pool concentration is mitigated by the ease of switching pools, while Ethereum’s staking concentration is harder to exit quickly. Why Does Solana Require 19 Entities to Cross Its Production Threshold? Solana’s higher entity count reflects its validator model, which requires less capital to participate compared to Bitcoin mining or Ethereum staking. More validators are needed to reach a majority of block production. However, Solana’s infrastructure is more centralized in terms of hardware requirements and geographic distribution, which the report evaluates separately. What Are the Risks of Mining Pool Concentration on Bitcoin? Mining pool concentration poses operational risks because pools control block templates and can influence transaction ordering. Although individual miners can switch pools rapidly (in about 29 seconds for a 1% hash-rate position), a coordinated attack or censorship attempt could still cause temporary disruption. The report notes that the underlying ownership of mining hardware is far more decentralized than the pool entity count suggests. What Methodology Did Ark and Glassnode Use in the Report? The report applied a 51% hash-rate threshold to Bitcoin, a 33% stake threshold to Ethereum, and a block-production majority threshold to Solana. It counted mining pools and staking platforms as entities, not individual miners or node operators. The analysis also considered six dimensions: ownership, exit fluidity, verification costs, critical resilience, reconstruction costs, and infrastructure distribution. The full 32-page document is available from ARK Invest and Glassnode.