This is not the prisoner's dilemma table. The Nash equilibrium is the best possibility for both. When a player chooses S, he helps the collective but also helps himself selfishly. There is nothing anyone can gain by "defecting". Every miner chooses S because it benefits him, not because he has some sort of pact where the other miner does the same.
The defector does gain by defecting; They gain market share. This isn't a prisoner's dilemma, it's just the best way for a mining entity to out-compete the other. It doesn't make a lick of difference that they can make more profit (
Split between the two) by cooperating over a long period of time by not leveraging a competitive advantage over that same period.
Market share and out-competing are means, not an end. The goal of a miner is to maximize his profits. A big miner does this by creating large blocks. Why would he care that the other miner also gets more profit? Is he jealous or something? Please clarify what it is exactly that you're trying to say...
Not sure about this, but maybe two things Meni says could be contested:
- "The goal of a miner is to maximize his profits": If miners were individual humans I would say this is false (let's hope it's not and they act rationally maximizing their profits). There are studies showing that humans prefer a small gain to a large one if it is comparatively larger than some implied gain of some other person. Say a choice between receiving 1 Bitcoin or receiving 2 Bitcoins is offered, but another person receives 0 Bitcoins in the first case and 10 in the second case. Then the individual will tend to choose to receive only 1 Bitcoin, just to receive "more than the other guy". That's not "maximizing profit", that's maximizing some kind of "relative perceived profit" and yes, it boils down to jealousy (or rather 'envy'). Not sure this applies here, but I think it's possible. In case such psychological effects do apply, there's more human peculiarities that might be of interest, like loss aversion, where avoiding losses is preferred to acquiring gains of the same amount.
- "The miner has higher profit choosing S over N": I think this might be dumbfruits point: there might be some other, indirect effects stemming from the increased profit given to the competition influencing the miners profit in the long run. Let's take for a example a rather efficient miner. Let's say he can cover his cost in both cases S and N and let's say his counterpart mines with higher energy cost. Choosing S might push his competition into the profit zone, while choosing N might force the competition to shut down operations. In such a scenario, choosing N would be the more profitable option. Or maybe less crass: by reducing the competitions profit overproportionally to it's own, a miner can maybe slow down their expansion or increase of efficiency and maybe deven drive them out of the game entirely.
;tldr: I'm not so sure if it isn't a prisoners dilemma after all. Sure, Menis math checks out, but maybe that model (looking only at direct profit) is inadequate for predicting miner behaviour because it possibly omits important side effects
or (less likely imo) makes false assumptions about miner motivation / decision making premises.