Published on: 2015-09-01T08:52:46+00:00
In an email exchange on the bitcoin-dev mailing list, Daniele Pinna clarified his previous assertions about the revenue per unit hash advantage for miners. He pointed out that while his paper showed a decrease in the advantage with the block reward, this does not necessarily mean that the real revenue per unit hash advantage also decreases. Pinna believes that the orphaning factor used in the calculations is incorrect or incomplete. Peter Todd agreed with Pinna's clarification and shared a link to his own math proof, which demonstrated that larger miners earn more money per unit hashing power.Peter Todd, a developer of the Bitcoin software, wrote an email in 2015 discussing his math proof that showed larger miners earn more money per unit hashing power. He provided a link to his proof and stated that he did not believe anyone was arguing otherwise. Another participant in the discussion, Dpinna, had claimed that his paper showed the advantage of larger miners decreased as the block reward diminished or total fees increased. Peter considered this claim reasonable but did not verify the math. The email exchange occurred on the bitcoin-dev mailing list.On August 30, 2015, Daniele Pinna posted a theorem on the bitcoin-dev mailing list. According to the theorem, all hashrates generate revenue per unit of hash, with larger hashrates generating more revenue. Pinna argued that an optimal hashrate exists where the average revenue for each hash in service is maximized. This balance stems from the fact that larger miners must mine larger blocks, which carry a higher orphan risk. If a large miner chooses to mine a seemingly "sub-optimal" block size identical to a smaller miner, they will both carry identical orphan risks and win identical amounts whenever they successfully mine a block. However, this contradicts the assumption that an optimal hashrate exists beyond which the revenue per unit of hash decreases. This theorem suggests that the marginal profit curve increases monotonically with miner hashrate. Peter Todd supported Pinna's argument by sharing a link to his own math proof, which also demonstrated that larger miners earn more money per unit hashing power. Todd disproved all conclusions of Pinna's work and emphasized that centralization pressures will always be present. The email exchange also includes a digital signature.In summary, the author presents a theorem stating that larger miners generate more revenue per unit of hash. This balance is due to the fact that larger miners must mine larger blocks, which carry a higher orphan risk. If a large miner chooses a seemingly "sub-optimal" block size identical to a smaller miner, they will earn the same revenue per unit of hash. This contradicts the assumption that an optimal hashrate exists beyond which the revenue per unit of hash decreases. The theorem implies that the marginal profit curve increases monotonically with miner hashrate. It disproves the author's conclusions and suggests that centralization pressures will always be present, as orphan risks favor larger hashrate miners leading to greater revenues per unit of hash.
Updated on: 2023-08-01T15:52:27.236265+00:00