AFAIK, mining algorithms are designed to decentralize the transaction processing and production of coins in the first place.
But it naturally strongly tends to concentrate the minig power since the reward depends on it.
I think this is rather a consequence of the "winner-takes-all" nature of the Bitcoin block reward.
After all there is only a remuneration for the first miner, who successfully mines a block, which makes mining only economical
if you either have a large percentage of the total hashrate or are part of a mining pool that enables
you to partake in the block reward even if you don´t mine the block yourself.
Otherwise there is a really high risk of investing money into hardware and electricity (and the other
associated costs) without ever receiving a single block reward.
On the other hand this design has several advantages, because once the big miners have invested
huge amounts of money into their operations they are heavily incentivized to ensure the integrity
of the system. This is one of the beautiful game theoretical implications, because it simply is uneconomical
to attack the system if you have a huge percentage of the total hashrate, because you would earn
even more by continuing to play by the rules of the Bitcoin network.