Reducing energy consumption and increasing security at the same time

Summary:

Cheng Wang has shared his work on reducing energy consumption in PoW without compromising security. He has developed a new algorithm called PoLW, which can shift some of the external costs of mining (primarily energy consumption) to the internal cost of the network. In PoLW, miners can give up part of their coinbase rewards to get weight for the block hash they produce. The total cost of generating a new block would still be equal to maximal coinbase reward in equilibrium. Cheng analyzed two algorithms in his paper: linear PoLW and exponential PoLW. Linear PoLW could reduce energy consumption by almost half in equilibrium, while exponential PoLW could reduce energy consumption by an arbitrary factor in equilibrium. If we transition from PoW to PoLW, the external costs of mining would decrease and the internal costs will increase. However, the decrease in external costs would be less than the increase in internal costs since mining is profitable. Therefore, the total cost of block generation would get higher, resulting in increased security.Cheng acknowledges that the external costs of existing systems cannot be reduced immediately. However, the principle of applying PoLW is to keep the absolute external cost increasing all the time, but the percentage of external cost in the total cost gets lower eventually. This work is based on solid math calculations, and Cheng is looking forward to feedback and discussions. His paper is available at https://github.com/alephium/research/raw/master/polw.pdf. The work is inspired by the recent great paper of Itay, Alexander, and Ittay, which can be found at https://arxiv.org/abs/1911.04124.

Updated on: 2023-06-13T22:51:37.568659+00:00