Bitcoin-native credit is essential infrastructure for Bitcoin's long-term decentralization. Here's why.
**The Centralization Crisis No One's Talking About**
The top two mining pools now control 44% of hashrate—dangerously close to the theoretical 51% attack threshold. But the real story goes deeper.
Recent blockchain analysis (Mononaut/0xB10C, 2024) reveals that just 4-6 entities actually create the block templates that determine which transactions make it into Bitcoin blocks. Evidence also suggests that a single custodian controls the coinbase payout addresses for at least 9 major mining pools, representing approximately 47% of Bitcoin's total hashrate.
This isn't the decentralized mining landscape Bitcoin was designed to create.
**How Financing Accelerates Centralization**
Centralization is further amplified by capital concentration with major mining pools and manufacturers offering bundled financing—but only if miners commit to their ecosystem.
When miners seek capital, especially when conditions are difficult (hashprice at multi-month lows, difficulty at all-time highs), the choice becomes stark:
Accept integrated financing and cede independence, or struggle alone with limited capital access
For smaller operators especially, this creates an impossible situation. They need capital to survive the current environment, but accessing that capital means surrendering exactly the independence that makes Bitcoin resilient.
This is why independent capital matters.
**What Bitcoin-Native Credit Actually Enables**
In previous posts, I've written about Bitcoin-native credit as superior economics: measuring success in Satoshis, keeping capital in the Bitcoin economy, generating real productive yield.
All of that remains true. But the trends described here highlight something equally important: independent capital providers are critical infrastructure for Bitcoin's decentralization.
When credit providers, pools and manufacturers act independently—and don't force miners into specific economic relationships—smaller operators can:
Access competitive financing without surrendering independence
Maintain the freedom to choose pools and equipment based on economic, technical merit and philosophical alignment
Stay competitive against integrated giants without compromising on decentralization principles
This isn't theoretical. Miners across the world are building independent operations that strengthen Bitcoin's geographic and operational diversity. But they need capital partners who understand that Bitcoin's value comes from its decentralization—not from consolidating control over its infrastructure.
**The Next Phase of Bitcoin Capital Deployment**
Much of the recent Bitcoin narrative has focused on treasury companies and their "Bitcoin yield" strategies. These companies have played a crucial role: they proved Bitcoin belongs on corporate balance sheets and created a template for corporate adoption. That was Phase 1, and it worked brilliantly.
But as Bitcoin matures, it's worth distinguishing between different types of Bitcoin-denominated returns. When companies issue debt to acquire more Bitcoin, they're employing leverage—a perfectly valid strategy, but fundamentally different from productive yield generation. We don't call it "gold yield" when funds borrow to accumulate more gold, or "property yield" when REITs use debt to acquire buildings.
Productive yield comes from deploying Bitcoin into activities that strengthen the ecosystem: financing mining operations, funding infrastructure development, supporting network growth. These activities generate returns that reflect actual time value and credit risk—measured in Satoshis, naturally—while simultaneously building Bitcoin's productive economy.
Both approaches serve important functions. But as Bitcoin scales, the ecosystem needs robust infrastructure for productive capital deployment, not just accumulation strategies. This is Phase 2: building the credit markets that keep Bitcoin decentralized, liquid, and productive.
**Why This Matters for Bitcoin's Future**
We're at an inflection point. As institutional capital flows into Bitcoin, the question isn't just how much capital, but what kind of capital.
Capital that demands consolidation and control? Or capital that supports independence and decentralization?
Capital measured in dollars seeking short-term dollar returns? Or capital measured in Satoshis supporting long-term ecosystem health?
Bitcoin's resilience depends on competitive, independent infrastructure at every layer:
Mining operators who choose pools based on merit, not financing constraints
Credit providers who strengthen decentralization rather than exploit capital gaps to consolidate control
Financial infrastructure that keeps Bitcoin productive within its own economy
This is why Bitcoin-native credit isn't just about better unit economics or superior returns. It's about building the financial infrastructure that keeps Bitcoin decentralized as it scales.
**Building Phase 2**
At BTSF, we measure success in Satoshis—not in convertible debt premiums. We provide Bitcoin-denominated credit to Bitcoin operators—including miners—specifically because we believe Bitcoin's long-term value depends on maintaining the decentralization that makes it unique.
When smaller miners can access competitive capital without surrendering pool independence, everyone wins:
Miners stay economically viable through challenging periods
Pool concentration decreases
Bitcoin's network remains robust and censorship-resistant
Real productive yield flows to capital providers who take actual credit risk
This is Phase 2: building credit infrastructure that keeps Bitcoin decentralized, liquid, and productive—without compromising the principles that made it valuable in the first place.
The conversations that currently dominate the narrative make it clear: we need more independent capital providers who understand that Bitcoin's financial infrastructure should strengthen, not undermine, its foundational promise.
The future of Bitcoin isn't just about how much capital flows in—it's about whether that capital strengthens or weakens the network.
If you're interested in supporting Bitcoin's decentralized future while generating productive yield, or if you're building Bitcoin infrastructure that needs independent capital, DM me.
