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Reading: Bitcoin Miners, Economic Irrationality Can Be Fatal
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Your Crypto News Today > Mining > Bitcoin Miners, Economic Irrationality Can Be Fatal
Mining

Bitcoin Miners, Economic Irrationality Can Be Fatal

January 16, 2025 4 Min Read
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Bitcoin Miners, Economic Irrationality Can Be Fatal

Some miners at OCEAN have began making use of the Coin Age Precedence algorithm throughout block template building utilizing DATUM. Initially, Bitcoin Core initially chosen transactions to incorporate in blocks based mostly on what that they had seen first of their mempool. This logic was ultimately changed by prioritizing older cash, i.e. that had been sitting round unspent longer, over different cash. This was ultimately solely utilized to a small portion of the blockspace, after which ultimately completed away with solely across the time of Segwit. It’s nonetheless maintained in Bitcoin Knots.

I can solely speculate as to the motives of the miners doing this, however given OCEAN’s rhetoric I can guess that it has one thing to do with prioritizing “monetary” transactions over others. Even when not, even whether it is purely to assist small worth UTXO house owners, it’s nonetheless each bit as irrational.

You possibly can partition blockspace as a miner nonetheless you need, and prioritize ordering of transactions nonetheless you want inside these partitions, however it doesn’t change the truth that blockspace is a fungible good being valued on an open market. If standards aside from the feerate are used to resolve which transactions to incorporate, you’ll go away cash on the desk. The one state of affairs the place that will not be true is one the place these standards have been 1:1 an identical to deciding based mostly on feerate, which might be a meaningless standards.

Making a subsection of blockspace chosen for by different standards finally accomplishes two issues: 1) leaving cash on the desk as a miner, as definitionally any significant non-feerate standards leads to gathering much less charges, and a couple of) create a bucket of blockspace submitted to aggressive “price” pressures in accordance with no matter totally different standards is used, with none of that stress creating direct income will increase for miners utilizing this new standards.

The brand new subsection of blockspace doesn’t finally cut back price stress, it merely leaves them making much less cash and customers benefiting from this new transaction choice standards subjected to totally different aggressive pressures miners don’t instantly profit from.

You possibly can’t disguise from the fact that blockspace is a fungible good priced on the open market. You possibly can settle for that, or you may lose cash. The one different is to futilely attempt to censor courses of transactions you don’t like, and in the event you occur to succeed, you destroy a core property of Bitcoin within the course of.

Mining staying decentralized, broadly distributed with many small operators, is essential for Bitcoin’s censorship resistance. It’s a disgrace to see indicators like this of such smaller miners being economically irrational, provided that it has big implications for his or her success long run.

This text is a Take. Opinions expressed are solely the writer’s and don’t essentially mirror these of BTC Inc or Bitcoin Journal.

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