Binance moves into Bitcoin mining

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Earlier this week, Coinlife broke the news that China-based bucket shop Binance was preparing a launch into the Bitcoin mining pool sector. This news comes at a curious time with less than eight weeks before Bitcoin’s third halving event. After the halving occurs, many digital currency experts expect the transaction processing industry, aka mining, to undergo a contraction once the production price of block mining on the BTC network becomes economically untenable. 

The news report was confirmed by Binance CEO Changpeng Zhao (CZ), who later tweeted about the new project. It is part of an expansion in the exchange’s financial services that include: staking, savings, credit cards, and loans.

https://twitter.com/cz_binance/status/1245361117301358592

The exchange is following in the footsteps of its industry peers, OKex and Huobi, which launched their mining pools in late 2019. CoinDesk reported that Sigmapool mining pool Head Jakhon Khabilov went on record stating the bucket shop is already offering potential clients “generous” referral bonuses as it has been reaching out to some miners in China to promote the upcoming new service. Coinlife published that Binance has already hired several specialists for this purpose and planned to launch the latest offering in Q2 of this year. 

In an online AMA that touched on a wide range of topics, CZ provided more details about the Bitcoin mining pool. The new “Binance Mining Pool Team” would operate independently with more information still to come. Once launched, anyone can join the Binance mining pool. Binance plans to support both Proof-of-Work and Proof-of-Stake mining. They have not announced the digital currencies the platform will support.

CZ alluded to why Binance chose to move into the mining business. Signaling his ambitions, CZ declared that mining is “an important” business area Binance wants to support. He mentioned that BTC transaction processing is “a bit centralized.” Binance wants more players to take part in the sector and also provide a better service for existing miners.

The mining industry is going to transform over the next few years from a business that mines for the block reward review to one that processes transactions. If CZ wants to be true to his words of encouraging adoption as well as show to the world he understands what is going to take place after the Bitcoin halving to the mining sector as a whole, he should allow members to mine Bitcoin (BSV) and relist the original Bitcoin on his exchange. If he doesn’t, this new venture is doomed to fail before it even starts.

This project is another attempt by Binance to expand its services and diversify beyond its exchange roots. Alongside the announcement of mining pool was confirmation that Binance has purchased CoinMarketCap. CZ said the CMC team would continue to operate independently and promised the Binance exchange would receive no special favoritism or unique data sharing over its peer. Whether or not this is true remains to be seen.