Author: Peter Todd 2013-11-15 19:09:40
Published on: 2013-11-15T19:09:40+00:00
In this email exchange, Michael Gronager and Peter Todd discuss the economics of mining pools in Bitcoin. Gronager suggests that participating in a mining pool can be advantageous due to the economy of scale it provides, even though miners have to pay a fraction of their income to the pool owner. However, the underlying issue is the comparison of expenses between solo mining and joining a pool. Mining has an overhead cost, which can be amortized among many hashers in a pool but not among solo miners. Todd agrees that there is an incentive for miners to join pools and centralize, which can only be countered by regulation or social pressure. The equations show that the incentive exists at any amount of hashing power, but p2pool might be an exception since it doesn't require a linear blockchain to function.
Updated on: 2023-06-07T20:04:27.969905+00:00