Author: Daniele Pinna 2015-08-30 21:02:48
Published on: 2015-08-30T21:02:48+00:00
The email exchange between Daniele and Peter discusses the profitability of individual miners in relation to block size and Shannon Entropy. The result is that an individual miner's profit per block is maximized at a finite block size Q* if Shannon Entropy is communicated during the block solution announcement. This result is important because it shows how a minimum fee density exists and prevents miners from creating enormous spam blocks for "no cost." However, Daniele raises concerns about the lower bound of expected revenue being surpassed and leading to unhealthy fee markets. Peter agrees with the idea that larger hash rates provide a profitability advantage but notes that it's outside the scope of the previous point. Daniele's work is challenged by Gmaxwell's theorem, which suggests that centralization pressures will always be present due to the monotonically increasing marginal profit curve of miner hashrate.
Updated on: 2023-06-10T18:10:30.341420+00:00