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If you accept that (1) there are economies of scale in Bitcoin mining and (2) miners are rational and will only mine when it is profitable, then doesn't this su
by danblick 10y ago
If you accept that (1) there are economies of scale in Bitcoin mining and (2) miners are rational and will only mine when it is profitable, then doesn't this suggest that large amounts of mining power should become concentrated in the hands of just a few major miners? Doesn't that seriously undermine Bitcoin's validity?
- danblick 10y agoThis article seems to support my suggestion. https://www.cryptocoinsnews.com/declining-profitability-for-new-miners-threatens-bitcoin-decentralization/ https://www.cryptocoinsnews.com/declining-profitability-for-... Quoting the conclusion of the referenced paper: "Each future halving of the Bitcoin block reward will narrow the range of profitable entry for new Bitcoin miners considerably. The stronger relative position of incumbents compared to that of new entrants supports further consolidation of Bitcoin mining. Consequently, the distributed Bitcoin ledger, the blockchain, may become more vulnerable to attack, and its trustless nature may ultimately even be destroyed."
- globuous 10y ago" Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free" - btc whitepaper Transaction fees will take over mined bitcoins once there is non left to mine.
- danblick 10y agoOkay but that does not solve the problem I am concerned about. That doesn't ensure a diverse mining pool. Already it doesn't make sense for me to mine Bitcoin (I don't have access to these ASICs). I think that economic forces will tend to concentrate mining power and that's a problem.