Number of Bitcoin Miners Far Higher Than Popular Estimates

If you ask most bitcoiners today how many miners there are hashing away at the bitcoin blockchain, you're likely to get a number somewhere around 5,000 or lower. This figure tends to reflect the number of full nodes shown on the blockchain data maps.

However, a full node is not a miner. Any computer that connects to the bitcoin network is called a node. Full nodes run the original Bitcoin Core wallet, or implement the bitcoin protocol, and form the backbone of the network. These nodes help the network by accepting transactions and blocks from other full nodes, validating those transactions and blocks, and then relaying them to further full nodes. This means that many of the roughly 5,000 full nodes, perhaps as many as half of them, aren't mining at all.

Add to this the fact that none of the major mining pools - not to be confused with p2p pools - require participants to download their own copy of the blockchain and the correlation dwindles further. Pools tend to host full nodes for the their miners, in this way many thousands of miners could be using the same full node at the same time.

Taken together, these two situations make counting the number of miners much more complex than most people would think. Thankfully, at least one miner and statistician has been keeping tabs on the situation.

Australian bitcoin miner Andrew Geyl, known in Bitcoin circles as organofcorti, has run an authoritative mining research blog called Neighbourhood Pool Watch since March 2012. It's filled with impressive statistical analysis and many different types of colorful charts on every page. His recent data shows a much higher number of miners than 5000, perhaps as high as 100,000, although that number is faltering in line with bitcoin's price. If the price of bitcoin doesn’t cover the overheads of mining, miners will tend to stop.

- Geyl

Geyl has a background which enables him to collect data on miners, and make it presentable. Having sporadically mined since early 2011, and having recently left Coinometrics.com, Geyl has a range of skills that lend themselves to researching the mining network. Interestingly, he says that it was his day job in healthcare that gave him the statistical knowledge and experience he needed, as a starting point, to analyze bitcoin mining pool data and the bitcoin network.

When asked about his reason for doing all of this work Geyl stated that, “the research never stops being interesting. Cryptocurrencies in general and bitcoin in particular are new and evolving areas. There are so many things left to be discovered and contributions to be made, even by someone like me who only researches in his spare time.”

His latest report displays the following chart with the clarification, “The known number of miners is calculated using the miner hashrate distribution that some pools provide.”

In it you can clearly see the number of miners estimated to be around 100,000. This may sound like a surprisingly large number to some people, especially given the size of the fledgling bitcoin industry as a whole, but it’s not the highest this number has been.

When asked how he was gathering this data, Geyl replied that it's an extrapolation of statistical user data provided from different pools. This data includes the number of accounts at each pool and their cumulative hashing amounts.

“I estimate the number of miners using the hashrate per miner data, that some pools make available, and then scale this up to the size of the public part of the network.” Geyl explains, “I derive my estimate from a model of the distribution of miner hashrates.”

Although none of the top 4 pools are represented, Geyl listed 9 separate pools that give him statistical data on users. Between them they make up about 15% of the current total mining capacity. Those pools include; Slush's pool, BTCGuild, Ghash.IO, Eligius, BitMinter, P2pool, MMPool, Ozcoin, and Polmine.

To ensure that miners can't be identified, and that no ones' privacy is being breached, Geyl makes sure to only receive anonymized statistical metadata.

- Geyl

Unfortunately, as time goes on the proportion of miners Geyl has data for is becoming less and less accurate. The newer pools are reluctant to share user data, no matter how anonymized. As these pools become more popular the percentage of all miners that he has data on gets smaller.

- Geyl

It's important to note that this doesn't mean the number of miners is getting smaller, but it does substantially affect a researcher's ability to be accurate when modeling this data.

Bitcoin's price is not the only thing that affects how many miners bitcoin has, says Geyl. When asked how high the price of bitcoin would have to go before seeing another huge surge in hashrates, as we’ve seen in the past, Geyl responded that “Price has had some recent effect on hashrate, but ASIC mining is still a developing field”

- Geyl

The opposite fear would appear to be unfounded as well. When asked how large a drop it would take in bitcoin's price to create a widespread miner panic, where we start to lose large amounts of hashing power, he responded that “It depends on how long it took to get there. If the change was slow enough, the network would adjust and difficulty decrease and the remaining miners could still make a profit. If the price plunged rapidly, it would probably still take miners a while to adjust.”

- Geyl

Many bitcoin critics and doomsayers should have very little reason to believe that Bitcoin's mining network could be less than strongly resilient. If Geyl is right in his estimations, there is nothing to fear from bitcoin’s price going too low, nor having too few miners.