A miner difference: A subtle change in terminology

    03 February 2021. Written by Daniel Hwang

    F2Pool has not sold a single bitcoin in 2021. But how is this possible if there are charts that show bitcoin outflows from wallets tagged “F2Pool”?

    Key Takeaways

    • A mining pool is not a miner
    • A mining pool does not dictate the actions of its miners

    • F2Pool is not a miner
    • F2Pool does not decide what miners do with their Bitcoin

    Headlines in themselves must be short, pithy, and easy to digest. However, the shorter they are the more easily misinterpreted. Narratives can quickly spawn from pithy headlines and take on lives of their own.

    Unfortunately, there was a particular case of subtle mining pool related terminology that took off on its own dangerous narrative. Let’s correct that with crystal clear transparency and important terminology disambiguations.

    F2Pool is not dumping Bitcoin

    In fact, F2Pool has not sold a single bitcoin in 2021. But how is this possible if there are charts that show bitcoin outflows from tagged F2Pool wallets? Are the charts wrong? Are the articles wrong? From a scrupulous perspective, yes there were inaccuracies.

    Here is the F2Pool Bitcoin wallet

    F2Pool Bitcoin Address


    Some charts show tens of thousands of bitcoin outflows from multiple F2Pool wallets to exchanges. Those are not F2Pool’s wallets. As shown, F2Pool has one wallet. Then whose wallets are those? Are the charts wrong? Are the articles wrong? Again, with scruple, yes inaccuracies existed when it came down to definitions and terminology used and resulting aggregate information.

    CryptoQuant Bitcoin Outflows

    Here is a chart many have seen floating around that supposedly shows F2Pool’s bitcoin outflows

    If F2Pool has only one wallet and holds bitcoin balances that are exponentially lower than the tens of thousands of bitcoin shown in the chart, then what is going on?

    F2Pool is different from the miners that collectively contribute their hashpower to it

    F2Pool is not a miner. It is a service that miners use to collectively pool together their resources to increase their odds of successfully finding Bitcoin blocks. And actually, F2Pool is a global company with staff quite literally all over the world–it’s not just China! Therefore, it is important to understand that F2Pool is a completely separate entity from that of the miners that use its service to mine together. In aggregate, at particular moments in time, a collective group of miners are using the F2Pool service to mine blocks together.

    Casually, it may be simply just easier to refer to the aggregate collective of miners during those moments in time as F2Pool affiliated miners. So in a simple sense, the chart may be correct if the wallets were actually that of F2Pool affiliated miners. It is also possible that they could be different wallets with no affiliation with F2Pool whatsoever. In the case that these were indeed F2Pool affiliated miner wallets, what would be more accurate if it was labeled as “F2Pool affiliated miner wallets” rather than just “F2Pool wallets”. The miners are completely different entities from that of F2Pool.

    F2Pool does not represent the collective will of the miners that use its services

    This is the important part. The narratives that took off on their own started here. Although F2Pool facilitates the coordination of miners, it does not have any say in what the miners choose to do with their bitcoin rewards. The miners are independent entities and can do whatever they wish. They can hold or transfer or sell. F2Pool has no say.

    This is important in two ways:

    1. F2Pool’s relationship with its collective miners ends immediately after rewards are distributed. The miners can then do whatever they wish after receiving their rewards.
    2. F2Pool does not track or monitor the financial activities of miners after payouts. This is an important professional courtesy and relationship of respect to allow miners to retain their rights to do whatever they wish with their rightfully mined bitcoin.

    Now that this has been clarified, this brings us to another important concept.

    Miner outflows can represent natural operational cycles

    It is important to not demonize miners for wanting to efficiently manage their operations. There is no “forever HODL” button that must be held down at all times. It is natural for miners to sell just as it is natural for miners to want HODL. Just as transactions are important to demonstrate a healthy and operational network, the miners are just as important in enforcing the strong security guarantees for a network that has been robustly chugging along for over 12 years (and F2Pool has been supporting it for over 7 years, with over 500,000+ miners strong). At the end of the day, miners need to pay their bills, recoup their energy costs, and manage to maintain a profit to continue operations.

    It has been many of these miners who have also HODLed through the crypto winter in the roughest of bear markets and continued to dutifully mine to support the Bitcoin network. They had no specific obligations to continue mining, yet they still did in their commitment to the network–just as many of us have in our unwavering faith in Bitcoin.

    Knowledge is power

    At the end of the day, clear communication is key in battling misinformation and any potential fear, uncertainty, and doubt. We’ve seen the power that words can have in shaping massive narratives that can have significant consequences on the collective psyche and markets. 2020 has been a year of global instability that has demonstrated the value of self-sovereign, decentralized, and censorship-resistant cryptocurrency, Bitcoin. And the world has agreed. The people have come to adopt Bitcoin. The institutions are here. Governments are here. All eyes are focused on Bitcoin and naturally, us. This makes it all the more important to ensure that everyone has access to explicit and accurate information. With that knowledge, they then have the power to navigate the ecosystem with accurate and actionable insights. As the world’s largest and one of the oldest Bitcoin mining pools, we understand that we hold an important responsibility to communicate the state of the network and will continue to strive to work collaboratively, transparently, and clearly with you all.

    Footnote: We’d also like to add an update provided by the CryptoQuant team as well following up their recent statements on mining pools outflows here:

    Written by Daniel Hwang

    Daniel Hwang