The number of Cardano stakers surpassed 1.3M

The number of Cardano stakers has surpassed 1.3M. Their number increases by several hundred every day. Does this seem like a high or low number of delegators? Bitcoin is said to be the most decentralized network. So let's compare the number of ADA stakers with the number of miners in the Bitcoin network. You might be surprised how many more ADA stakers there are than BTC miners.

Staking was started by the Shelley hard fork

The Shelley hard fork took place in July 2020 and started the staking of ADA coins on Cardano. At the time of writing, 3 years and 1 month have passed since this event.

From Cardano's perspective, staking started in epoch 208. In this epoch, only 17,305 people staked ADA. The mark of 100K stakers was crossed in December 2020 (epoch 235), i.e. in 5 months.

The year 2021 was a bull market. This had a positive effect on the growth of stakers. In March 2021 (Epoch 251), Cardano had 300K stakers. In June 2021 (Epoch 270) it was over 600K. The 1M stakers mark was crossed in December 2021 (Epoch 311). In just one year, 900K people joined staking. The daily average was 2,465 new stakers.

In a bear market, the growth of new stakers has slowed. Cardano crossed the 1.2M stakers mark in November 2022 (Epoch 374). We reached the new ATH, i.e. 1.3M stakers, in August 2023 (Epoch 431).

In 2022, the average daily growth of new stakers was approximately 700. In 2023, the average is something around 200 new stakers per day. In 2023, only about 50K new stakers joined staking.

In a bear market, growth is up to 12x slower than in a bull market. If growth in the next bull market (2025) were similar to 2021, roughly 500K to 1M new stakers would be added to staking. Cardano could have roughly 2M to 2.5M stakers in total by the end of 2025.

PoS networks have the advantage that every new DeFi user or holder (not all holders use DeFi) are potential stakers. Economic incentives and the Cardano protocol are designed so that if you hold ADA coins, it is also beneficial to stake them. Therefore, the number of accounts on which the ADA value is correlated with the number of stakers. At the time of writing, the account count is 2.35M. This is about 1M less than the number of stakers.

The growth of DeFi users will have a positive effect on the number of stakers, i.e. on the decentralization of Cardano. On the other hand, part of ADA coins can be locked in DeFi protocols (which offer yields + staking rewards). This can pose a certain risk, as multiple users can rely on a specific smart contract that can be hacked. It's similar (but significantly less) risky to staking ADA coins through centralized exchanges.

It can be assumed that if the number of stakers increases in a bear market and the growth is significantly faster in a bull market, the decentralization of Cardano will increase in the future. This only applies to the absolute number of stakers. Of course, it is necessary to take into account whales, which hold huge amounts of ADA. Stakers are not equal to each other. In the context of decentralization, it is necessary to take this into account.

For the purpose of the article, we need to know that Cardano has 1.3M stakers. Different tools provide different information, so you might find 1.29M or 1.28M. Some tools show the number of stakers lower by several 100K or more. 1.3M stakers is a figure taken from the Cardano Foundation's new explorer, so let's trust it.

1.3M is a number that will not correspond to the number of unique stakers. One entity can have multiple staking accounts. Exchanges will also have multiple accounts. For example, we know that 2 staking accounts always delegate ADA to Binance pools, so Binance can have several dozen of them. Realistically, Cardano can have roughly 1.1M to 1.2M stakers.

Let's now think about whether it is a lot or a little. We can compare it with the Bitcoin network, as it is considered the most decentralized. In this article, we are only concerned with the number of delegators (stakers vs. miners). We will not deal with the number of block producer nodes or other details.

How many unique miners are there in the Bitcoin network?

Unfortunately, in the case of Bitcoin, the number of miners is not publicly known. We know which pools produce blocks and in what ratio, but we don't know how many miners delegate the hash rate to these pools.

The recent ATH in the Bitcoin network in terms of hash rate was around 445M TH/s. We will try to calculate how many ASICs are needed to provide this hash rate. Subsequently, we will try to reveal how many ASICs are in the hands of unique miners.

In the image below you can see several currently popular ASIC devices including their purchase price (we looked for the lowest possible purchase price) and performance.

Of course, there are more ASICs on the market with very similar parameters. Unfortunately, we do not know in what proportion individual ASICs are used by miners. Trying to be as efficient as possible in mining forces miners to change ASICs frequently. We think that the old less efficient ASICs will be represented to a lesser extent. Let's assume that the big miners have more modern ASICs.

If we take the data from the table above, we can easily calculate how many pieces of ASICs are needed to deliver a hash rate of 445M TH/s.

As you can see, if all miners used Antminer S19 XP Hyd, we would need 1.7M devices. On the contrary, if they used Antminer T19, it would be 5.3M devices. We know that the Antminer S19 Pro is a popular ASIC device. So let's consider that 4M ASIC devices are needed to achieve the current Bitcoin hash rate.

In practice, the number may be different. They can be 3M or 6M ASIC devices. Let's assume that we are approaching reality.

Also, note the cost of buying such a large number of ASICs. The cost of ASICs is significantly higher than the cost of energy in the context of the 51% attack on Bitcoin.

Now comes the most difficult part. Estimate how many large, medium, and single miners there are.

A study from 2021, which among other things dealt with hash rate concentration in the Bitcoin network, can help us in our search.

The study concludes the following:

• The top 10% of miners control 90% of the Bitcoin hash rate
• 0.1% of all miners are roughly 50 miners
• 50 miners control close to 50% of Bitcoin hash rate

The total number of miners should only be around 50K. If we compare the results of the study with our tables, about 2M ASIC devices are controlled by 50 large miners. This means that 2M ASICs are in the hands of medium-sized businessmen and single miners.

Unfortunately, the study is old and the bear market has a negative effect on miners. Let's try to find some more data.

Marathon Digital Holdings, one of the largest American mining companies, currently has a hash rate of around 17.7 EH/s and wants to increase it to 23.3 EH/s by the end of the year.

Let's assume that the average ASIC device has a performance of 100 TH/s and let's count the number of devices used by Marathon.

Marathon has 177K ASIC devices and wants to have 230K by the end of 2023. One mining company can thus have a 5% share of the total hash rate. So it is easy to believe that a few dozen similar companies can control more than half of the total hash rate.

There are several large mining companies on the market that are rapidly increasing their share of the total hash rate. These companies are pushing medium-sized, but mainly single miners out of the market.

So let's assume that the top 50 miners can control around 65% hash rate in 2023. In terms of ASIC devices, it would be 2.6M. So there are only 1.4M ASICs left for medium and single miners.

It is necessary to realize that the trend of mining centralization will not stop. We can observe the gradual centralization basically since the first ASIC devices came on the market. It is therefore fair to assume that the share of large miners increased by 5-20% during the bear market, as we know that several miners went bankrupt.

It is very likely that the large miners are putting the mid-sized ones out of business, and at the same time, the mid-sized ones are pushing the single miners out of business. The largest miner can have over 200K ASICs, so the smaller ones can average around 50K ASICs. Medium miners can have something like 1K to 10K ASICs. How many medium miners can there be?

If there were 200 of them and each had an average of 1000 ASICS, they would control 200K ASICs together. There will probably be at least 10 times more medium miners than big miners. Consider 500 medium miners who on average have 2000 ASICs. Together they would control 1M ASICs.

These numbers would mean that there will only be 400K single miners. That's still a very positive number in the context of the study mentioned above, which puts the total number of miners at only 50K.

My guess is that there are on the order of several tens of thousands to hundreds of thousands of medium-sized miners. Some of them can only operate, let's say, tens or hundreds of ASICs. I dare to say that running a single ASIC is almost not worth it, as it is necessary to find a suitable place for the device in the home. ASICs are very noisy and need good cooling.

If we were to consider that mining is only worthwhile if someone has at least 10 ASICs, there would be around 140K medium-sized miners. This is close to the 50K that was reported in the study.

The total number of miners in the Bitcoin network is at least 50K. If we were to admit that the study is not accurate, we can still believe that a few large miners have control over more than 50% of all ASICs in the network. If there were no medium miners and everyone else were single miners, there would be 2M. It is obvious that this assumption is wrong. It is very likely that there are 50K to 200K miners in the Bitcoin network. I would believe that there could be 500K miners, but this number is very unlikely.

ADA stakers vs. BTC miners

Based on the numbers mentioned above, it seems that ADA stakers are 6 to 24 times more than BTC miners.

It needs to be emphasized again that we compared the total number of delegators. This says very little about decentralization, as we have to take the big players into account. We did this only in the case of Bitcoin, as we needed to find out the total number of miners.

In the case of Cardano, it does not make sense for stakers to distribute ADA coins to multiple staking accounts. It is very likely that a minority of stakers do this if they want to delegate to multiple pools. I don't think one entity would want to delegate to 10 pools. However, in the case of Bitcoin, it makes sense to run multiple ASIC devices. Therefore, it makes sense to try to count how many miners actually exist if we want to compare the number of stakers and miners.

In the case of Cardano, one entity can hold ADA coins in multiple wallets. It is realistic (however unlikely) that one entity can control 50% of all ADA coins through a large number of addresses.

We can explore the Cardano richlist.

If we assume that each address belongs to a single entity, then we see that the top 100 holders have control over only 20% of ADA coins. In the context of decentralization, this is a significantly better result than in the case of Bitcoin, where 50 miners control more than half of the hash rate. To say this with certainty would require a deeper analysis.

It is necessary to realize that if one entity controls more than half of the resource (coins or hash rate), it does not matter how many delegators hold the remaining 50%. It can be 10M or even 100M delegators, but a single entity will already be in control of the network.

In a long-term context, the trend is important. Ideally, decentralization should increase over time, not decrease. In the case of Bitcoin, we observe gradual centralization. This is logical, as the big players have the advantage of their size and can drive each other out of business economically. In addition, getting involved in mining represents a high entry cost.

Staking is more inclusive, so it is very likely that the decentralization of PoS networks, including Cardano, will grow over time as staking becomes more and more popular. The number of stakers in the Cardano network has been constantly growing for the past 3 years, and we have not registered any period of decline.

It can be expected that the number of staking accounts in the case of many PoS networks will be higher than the number of ASIC devices in the Bitcoin network in the foreseeable future.

Conclusion

There may be errors in our estimates, as some information is difficult to find or difficult to verify. This is especially true with Bitcoin. Pools do not disclose how many miners delegate hash rate to them. Cardano is more transparent in this regard, but in the context of decentralization, the number of staking accounts can be misleading.

Definitely don't be afraid to comment on our conclusions and provide us with information that would help refine our estimates. Our goal is not to question the quality of other projects but to show that the development of new technologies makes sense and can improve the quality of decentralization. Next, we want to give the numbers more context. This is important for people to realize how Cardano compares to other projects.