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Mine with it or sell it: the superhashing power dilemma

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In proof of work blockchain systems, there are strong incentives towards designing hardware that can mine faster and/or with less power consumption. There are two ways of taking advantage of such devices: one can use them to mine more coins with less power, or he can sell it to other miners. The two strategies are not independent, of course: if everybody has the boosting technology, the difficulty will rise, and it won't be an advantage anymore. On the other hand, if the boost is above a certain threshold, being used only by a small subset of miners might mean centralizing the system, with potentially dangerous consequences on the platform credibility. In this paper we analyse the impact of different strategies to exploit a significant increase in mining hardware efficiency. To do so, we developed a multi-agent based simulator, that mimics the relevant mechanics of the mining ecosystem, as well as some features of the miners as economic actors. We then characterized different significant sell-it-or-mine-with-it strategies, and observed the simulated outcome.
Original languageEnglish
Title of host publicationACM SIGMETRICS Performance Evaluation Review
Number of pages4
Volume46
PublisherAssociation for Computing Machinery
Publication date3 Dec 2018
Pages127-130
DOIs
Publication statusPublished - 3 Dec 2018
Externally publishedYes
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    Research areas

  • mining, bitcoin, ethereum, blockchain, hash, hardware, simulation

ID: 83839634