2023/09/05 by Axel Cortés‐Cubero, Cortes-Cubero, Axel, Juan P. Madrigal-Cianci +5
Computer Science · Economics, Econometrics and Finance · Engineering · #Blockchain Technology Applications and Security #Cryptography and Security (cs.CR) #Extraction and Separation Processes #FOS: Computer and information sciences #Natural Resources and Economic Development
paper · pdf · doi:10.48550/arxiv.2309.02297
openalex publication_date 2023/09/05 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
The rewards a blockchain miner earns vary with time. Most of the time is spent mining without receiving any rewards, and only occasionally the miner wins a block and earns a reward. Mining pools smoothen the stochastic flow of rewards, and in the ideal case, provide a steady flow of rewards over time. Smooth block rewards allow miners to choose an optimal mining power growth strategy that will result in a higher reward yield for a given investment. We quantify the economic advantage for a given miner of having smooth rewards, and use this to define a maximum percentage of rewards that a miner should be willing to pay for the mining pool services.