Quote from: alfredaino on Today at 06:08:47 AM

Quote from: Cricktor on January 21, 2024, 01:58:31 PM

I've glimpsed over your cited paper and their methodology to try to identify individual miners who point their hashpower to pools looks quite legit (to me). It's not fool-proof but to my understanding they tried to apply reasonable efford to make a good miner attribution (in the sense to identify pool payout to individual miners and thus those miner's hashpower contribution).

It's not too surprising that in Bitcoin mining bigger is better as you gain advantage with size because certain cost factors don't scale linearly with size. A very simple example is an individual miner with 10 ASICs. This individual could likely handle also 20 ASICSs alone, so no additional expenses for labour. Maybe this miner also has the space for the additional 10 ASICs, so almost no additional cost for storage of his mining rig. On the other hand he has doubled costs for energy and likely cooling. I'm very much simplifying here…
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My first paper in my first post confirms the results:
A Deep Dive into Bitcoin Mining Pools https://github.com/MatteoRomiti/Deep_Dive_BTC_Mining_Pools
we conduct the first in-depth analysis of mining reward distribution within three of the four largest Bitcoin mining pools and examine their cross-pool economic relationships. Our results suggest that individual miners are simultaneously operating across all three pools and that in each analyzed pool a small number of actors (≤ 20) receives over 50% of all BTC payouts.
However, if you have a more updated and better version, I will read it.

Quote from: Cricktor on January 21, 2024, 01:58:31 PM

Quote from: alfredaino on January 20, 2024, 05:02:53 PM

This confirms that mining is very centralised and controlled by a few institutional investors acting in their own interests and not those of the other participants. Is there a chance to know who are the investors of Foundry, AntPool, F2Pool and ViaBTC?

How do you come to that conclusion regarding your institutional investors?

Hashpower concentrates into pools. According to your cited paper there are not many miners with a great percentage of hashpower that point their hashpower to large mining pools. Agreed on that and this development isn't actually too surprising and I personally don't see much of an issue here. It's economy in a very competetive playground.

According to both articles, some miners, about 50-60 or <=20 per pool, control more than 50% of the network hashing power, thus controlling the PoW consensus. Who do you think own these miners? They need hundreds of millions of dollars of investment.

Quote from: Cricktor on January 21, 2024, 01:58:31 PM

Quote from: alfredaino on January 20, 2024, 05:02:53 PM

In theory everyone can join the network, but in practice those who actually participate in the PoW consensus (51%) and produce blocks are less than 0.1% of the miners, i.e. those 50-60 miners reported in the research.

This is nonsense or paints an oversimplified picture. In practice anybody can join a mining pool and point his hashpower to it. You're probably excluded from certain larger pools that have a lower limit of required minimum hashpower, but that doesn't prevent you from finding some other pool that will accept your hashpower.

If there're 50-60 miners who provide a majority of hashpower to pools, then those big miners gain most of the coin rewards from pool payouts. That doesn't mean that all other participating miners don't get anything, see below for explanation.

Are you sure, you understand PoW mining? There's no such thing as PoW consensus (51%). Bitcoin mining PoW forces you do execute hashwork to find a blockheader hash that satisfies the required mining difficulty (your to be found blockheader hash needs to be lower than a certain hash value dictated by current difficulty). Finding such a blockheader hash is due to the used hash algorithm a completely random process. You can hit a valid blockheader hash within a few thousands or millions hashes (statistically very … very unlikely) or you need a ridiculously high number of hashes to hit it for which you need longer than some other miner who was luckier than you.
Again: it's a random process and with higher hashpower you gain statistical advantage.

Mining pools mitigate the risk of solo-mining. With "fair" pools you're paid statistically according to your provided hashpower compared to global hashpower within the granularity of the pool's payout scheme. Choose your mining pool wisely! I didn't want to go into pool payout schemes as it's probably not relevant to go into such details here and now.

Thanks for the explanation. As you pointed out, mining is a random process and the probability of being the first to mine a block is proportional to the hash power, i.e. if you have x% of the total hash power, in the long run you will mine x% of the blocks on average. Thus, miners who have at least 51% of the hash power on average control the PoW consensus and are rewarded by the network. Again, in theory everyone can participate, but in practice the chances of influencing the 51% decision and being rewarded are only statistically significant for those with a high hash rate and an investment of hundreds of millions of dollars.