Miners earn millions by “doing nothing”

The latest issue of Diar points out that Bitcoin miners and other crypto miners have made tens of millions of dollars without processing a single transaction. The major proof-of-work blockchains, Bitcoin, Ether, Litecoin, and Dash, have earned in excess of $18 billion. Bitcoin Cash miners have earned just under $1 billion since the fork. Zcash miners have actually earned more than Bitcoin Cash miners, and Zcash is one of the most under-utilized networks studied.

In total, Bitcoin Cash miners have processed over 3300 empty blocks since August 2017. In total, an average of about $5 million is earned across all major networks (which include Zcash and Decred) monthly. Bitcoin and Ethereum, being the most popular proof-of-work blockchains, have the fewest empty blocks. Diar reports that Ethereum has the fewest empty blocks overall, although in 2017 it paid out $65 million in rewards for empty blocks.

The issue presents an interesting dynamic. The tone of the Diar article suggests that miners are “doing nothing.” However, whether there are transactions or not, miners are investing resources in securing the network. A dearth of transactions increases their reward by far less than gaining the block reward. Bitcoin, Bitcoin Cash, and Litecoin continue the “halving” schedule forever. The economic view is that less emission of new coins creates a more limited supply, as miners are chief among the sellers of new coins. Does this mean that the market will pay the price they ask? It’s hard to tell. Several times in Bitcoin’s history it has become unprofitable to mine. The cost of mining a block varies based on many factors, including region, equipment, and power cost. Leaving aside the environmental implications of mining, the question of sustainability is very real in the long-term view of cryptocurrencies.

Cryptocurrency Miners are Making Millions for Doing Absolutely Nothing, CCN, Feb 27