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Can any explain how the economics of mining does not promote the creation of a miner monopoly, aka a "miner Amazon". Once a single entity controls mining, Game

Can any explain how the economics of mining does not promote the creation of a miner monopoly, aka a "miner Amazon". Once a single entity controls mining, Game Over: the economy is owned.

gt_ 9y ago
Anyone with compatible equipment can mine on the network; no permission needed.
- solatic 9y ago
  Anyone who owns 99% of compute capacity can distribute a patch to the "distributed" network forbidding blocks mined by "unauthorized" or "unofficial" clients, and since that person's 99% of the compute power constitutes a majority, newcomers are effectively locked out. Blockchain's dependency on distributed computation remaining democratic with a diverse range of self-interests is axiomatic to the model.
tinco 9y ago
You are answering your own question. Suppose someone would invest billions in obtaining a mining rig that single handedly achieves 51% of the mining power of the network, then he effectively kills that network, and makes his investment worthless. There's a reason the valuations of Bitcoin and Ether waiver every time it seems a pool is coming close to 51% mining power, it's because everyone is scared of what happens when that happens. In the real world, I think miners approaching 51% of mining power is an accidental and temporary thing. It means that the coin is overvalued, and investors are over investing in mining operations. As the article states, the amount of profit these operations turn really isn't that big. They're operating on thin margins, and operations going bankrupt is not unheard of. There's simply no reason to go and "own" the network. Best case, you'll turn a loss, worst case, you destroy the network and lose your entire investment.
- plantsbeans 9y ago
  If you can keep your majority a secret, you can avoid the devaluing scenarios. The trick is to use the majority only when you need to, and to avoid detection.
- bsenftner 9y ago
  Suppose someone would invest billions in obtaining a mining rig that single handedly achieves 20%, or 30% or whatever% of the mining power of the network, then they effectively use that advantage to achieve manipulation of the network or manipulation of the economy via their monopoly/large-entity level oversight of the economy. As you point out, there is no incentive to kill the network, but quite a bit of incentive to manipulate the network. Via modern corporate shells, no doubt people/groups are already trying to achieve this, they do in any market.
stordoff 9y ago
Isn't that incentive enough for any entity to deliberately stay below the threshold? Once they cross it, trust in the network, and thus price, plummets. That's reason enough for most to avoid getting that big.
- matthewbauer 9y ago
  How would you know though? IP addresses can be concealed by VPNs.

Can any explain how the economics of mining does not promote the creation of a miner monopoly, aka a "miner Amazon". Once a single entity controls mining, Game Over: the economy is owned.

gt_ 9y ago

Anyone with compatible equipment can mine on the network; no permission needed.

solatic 9y ago
Anyone who owns 99% of compute capacity can distribute a patch to the "distributed" network forbidding blocks mined by "unauthorized" or "unofficial" clients, and since that person's 99% of the compute power constitutes a majority, newcomers are effectively locked out. Blockchain's dependency on distributed computation remaining democratic with a diverse range of self-interests is axiomatic to the model.

tinco 9y ago

You are answering your own question. Suppose someone would invest billions in obtaining a mining rig that single handedly achieves 51% of the mining power of the network, then he effectively kills that network, and makes his investment worthless. There's a reason the valuations of Bitcoin and Ether waiver every time it seems a pool is coming close to 51% mining power, it's because everyone is scared of what happens when that happens. In the real world, I think miners approaching 51% of mining power is an accidental and temporary thing. It means that the coin is overvalued, and investors are over investing in mining operations. As the article states, the amount of profit these operations turn really isn't that big. They're operating on thin margins, and operations going bankrupt is not unheard of. There's simply no reason to go and "own" the network. Best case, you'll turn a loss, worst case, you destroy the network and lose your entire investment.

plantsbeans 9y ago
If you can keep your majority a secret, you can avoid the devaluing scenarios. The trick is to use the majority only when you need to, and to avoid detection.
bsenftner 9y ago
Suppose someone would invest billions in obtaining a mining rig that single handedly achieves 20%, or 30% or whatever% of the mining power of the network, then they effectively use that advantage to achieve manipulation of the network or manipulation of the economy via their monopoly/large-entity level oversight of the economy. As you point out, there is no incentive to kill the network, but quite a bit of incentive to manipulate the network. Via modern corporate shells, no doubt people/groups are already trying to achieve this, they do in any market.

stordoff 9y ago

Isn't that incentive enough for any entity to deliberately stay below the threshold? Once they cross it, trust in the network, and thus price, plummets. That's reason enough for most to avoid getting that big.

matthewbauer 9y ago
How would you know though? IP addresses can be concealed by VPNs.