Who controls bitcoin?

A quarter of all bitcoins are controlled by 0.01% of owners

The Bitcoin system is “highly concentrated,” according to two researchers who have analyzed all transactions in this crypto-currency since its creation. Behind the stated ambitions of decentralization, we find known mechanisms of concentration of wealth in the hands of a handful of actors.

We knew the “1%”, now there are the “0.01%”. A large portion of the bitcoin in circulation today would be concentrated in the hands of a very, very small percentage of owners, according to a study by the National Bureau of Economic Research published in October 2021, and picked up in late December by the Wall Street Journal (WSJ).

Just 10,000 owners of bitcoin accounts would own 5 of the 19 million bitcoins in circulation worldwide. Given that there are an estimated 114 million Bitcoin-owning individuals and entities, this represents 0.009% of Bitcoin owners who own 26.3% of all Bitcoins. This concentration is not unlike that of fiat currencies: 1% of Americans owned a quarter of the country’s income, in 2011.

Researchers Igor Makarov and Antoinette Schoar analyzed the entirety of bitcoin transactions since its inception in 2008, to better understand who the players in these exchanges are. “It’s a very concentrated system,” Antoinette Schoar commented to the WSJ, going against the grain of the imagination carried by this crypto-asset, which is supposed to represent a model of alternative, horizontal and decentralized finance.

Originally, this is how Bitcoin was conceived: a virtual currency based on an open-source protocol, in which anyone is supposed to be able to participate in “mining” in order to generate it through the resolution of very complex calculations. These operations are used to verify and maintain the blockchain, a kind of virtual public register where all crypto transactions are registered and recorded.

A bitcoin that doesn’t look anything like a coin normally, but it had to be illustrated.

50 miners control 50% of total mining capacity

Therefore, a lot of  things have modified a lot in the last few years. On the one hand, on the side of the miners, who must have increasingly powerful computers to perform the calculations required. “The top 10% of miners control 90% of the mining capacity,” reads the study, which continues with this surprising information: only 50 miners (or 0.1%) control 50% of the total mining capacity.

On the other hand, there have been major developments on the side of those who own, use and trade bitcoin. Already, the two researchers have shown that 90 percent of the bitcoin transactions recorded on the blockchain are “not related to activities that make sense, economically speaking,” but simply consist of a single person (or entity) making transfers to themselves. Since all transactions are public, because they are recorded on the blockchain, no one can really be anonymous. Many therefore multiply transfers to other accounts in an attempt to erase their virtual trace.

Of the remaining 10% of “meaningful” transactions, “75% of bitcoin volume can be linked to online trading entities, such as virtual wallets, direct trading desks (DTOs) or international trading entities,” it reads. In comparison, the use of virtual currency for illegal purposes or gambling actually accounts for only 3% of the total.

This important study thus deconstructs preconceived notions about the most famous crypto-asset, and better understands its overall functioning. However, it is still complicated to know exactly who are the actors of the transactions, and who are the famous 10,000 richest owners. We know, however, the most publicized: Elon Musk, for example, revealed that his company Tesla had bought for 1.5 billion bitcoins in early 2021, before “discovering” that the mining of this crypto-currency was very polluting. These kinds of announcements have helped to send the value of bitcoin soaring.

There are a finite number of bitcoin worldwide (21 million): this is how this crypto-asset was thought of when it was created. By the end of December 2021, nearly 90% of bitcoin had been mined, but that doesn’t mean the end is near. Thanks to the phenomenon of halving (which we explain in detail here), generating a bitcoin is getting longer and longer.


This is not investment advice. Do your own research and only invest money you can afford to lose.