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>No, that’s nonsensical. Exchanges are compeltely antithetical to mining. Miners are CC purists.

Thanks for the clarification; I was combining the use of exchanges with that of pools.

Again, I don’t know the other ones, but last I check BTC pays out to whomever gets the right hash at ... 12.5 btc? Pools spread that out across all ‘miners’ which sounds very nice and equitable (less their couple % cut, which seems a better biz to be in than mining).

The thing is: if everyone’s pooling into a few huge collectives because no one individual can win alone, how is that decentralized? And secondly, everyone’s implicitly trusting that the distribution of BTC (or eth, or whatever) is correctly done according to the actual work contributed. Again, the big players are overseas, with no recourse; why assume they’re playing fair (or conversely, if you were running one of these pools and could get massively rich just by tilting the scales very slightly with no consequence, not even a broken law, and the wronged persons are ignorant of your very identity and half a world away...

I’m not an expert so do ring out if I’ve missed something, but the whole thing seems very concentrated in a few hubs.

(On the purely practical side, even assuming all this is clean as snow, when I polled some US people about their energy costs and mining income, they were doing about $0.16 an hour. This is only appealing if you’re mining the next massively cheap coin that then rockets in value 100x or 1000x).

... if everyone’s pooling into a few huge collectives because no one individual can win alone, how is that decentralized?

The miners are free to move to any other mining pool if they want. But, the centralization pressure is real due to economies of scale. The thing to worry about is centralized mining farms where a lot of hash power is under one roof.

But miners, even the big mining farms, are acutely aware that their hardware and electricity investment depends on the value of the system. One of the things that could impact that value negatively is aggregation of anything approaching 50% of the network hash power (really much less than that now).

And secondly, everyone’s implicitly trusting that the distribution of BTC (or eth, or whatever) is correctly done according to the actual work contributed.

Remember, the system is completely transparent. Miners can see a pool's block production and calculate the pool's hash rate (pools post the rate as well). If a miner isn't getting the correct share, they're not just gonna take it. Such a pool operator will quickly find its hash rate migrating to other pools.

Yes, you've accurately described mining pools, but the measurements for work cannot be easily cheated because the work consists of zillions of hashes which are easy to spot check. Since over the long run the work results in successful hashes, any cheating can be detected by lack of rewards for successful hashes contributed by any pool member.

Yes, it is concentrated, and that is a concern for the transaction handling. As I just pointed out it's very hard to cheat on the pooling and impossible to cheat on the work since checking the successful hash takes a zillionth of the time it took to create it. But a concentration of miners could, with successful hashes, cheat on transactions in various ways. It's the 51% attack and has been written about extensively.

Yes, you have characterized the mining game. Nobody does Bitcoin mining except Chinese with free large scale electricity and new hardware. Instead people speculate on the next new CC and appreciation in value. But even more importantly, when there are few miners in the early stages you get much more mining reward. That's before the CC can even be converted to anything else on any exchange. If it succeeds, at least temporarily, then you cash it in and find the next one.