TY - GEN
T1 - Equilibrium of Blockchain Miners with Dynamic Asset Allocation
AU - Yamamoto, Go
AU - Laszka, Aron
AU - Kojima, Fuhito
N1 - Publisher Copyright:
© 2020 IEEE.
PY - 2020/9
Y1 - 2020/9
N2 - We model and analyze blockchain miners who seek to maximize the compound return of their mining businesses. The analysis of the optimal strategies finds a new equilibrium point among the miners and the mining pools, which predicts the market share of each miner or mining pool. The cost of mining determines the share of each miner or mining pool at equilibrium. We conclude that neither miners nor mining pools who seek to maximize their compound return will have a financial incentive to occupy more than 50% of the hash rate if the cost of mining is at the same level for all. However, if there is an outstandingly cost-efficient miner, then the market share of this miner may exceed 50% in the equilibrium, which can threaten the viability of the entire ecosystem.
AB - We model and analyze blockchain miners who seek to maximize the compound return of their mining businesses. The analysis of the optimal strategies finds a new equilibrium point among the miners and the mining pools, which predicts the market share of each miner or mining pool. The cost of mining determines the share of each miner or mining pool at equilibrium. We conclude that neither miners nor mining pools who seek to maximize their compound return will have a financial incentive to occupy more than 50% of the hash rate if the cost of mining is at the same level for all. However, if there is an outstandingly cost-efficient miner, then the market share of this miner may exceed 50% in the equilibrium, which can threaten the viability of the entire ecosystem.
UR - http://www.scopus.com/inward/record.url?scp=85095578690&partnerID=8YFLogxK
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U2 - 10.1109/BRAINS49436.2020.9223284
DO - 10.1109/BRAINS49436.2020.9223284
M3 - Conference contribution
AN - SCOPUS:85095578690
T3 - 2020 2nd Conference on Blockchain Research and Applications for Innovative Networks and Services, BRAINS 2020
SP - 227
EP - 231
BT - 2020 2nd Conference on Blockchain Research and Applications for Innovative Networks and Services, BRAINS 2020
PB - Institute of Electrical and Electronics Engineers Inc.
T2 - 2nd Conference on Blockchain Research and Applications for Innovative Networks and Services, BRAINS 2020
Y2 - 28 September 2020 through 30 September 2020
ER -