2025/11/15 by Goffard, Pierre-Olivier, Albrecher, Hansjoerg, Fouque, Jean-Pierre
Computer Science · #Big Data and Digital Economy #Blockchain Technology Applications and Security #Cryptography and Security (cs.CR) #FOS: Computer and information sciences #FOS: Mathematics #Mobile Crowdsensing and Crowdsourcing #Optimization and Control (math.OC) #Probability (math.PR)
paper · doi:10.48550/arxiv.2511.13777
openalex publication_date 2025/11/15 · openalex created_date 2025/11/20 · openalex updated_date 2026/07/28
Mining blocks in a blockchain using the Proof-of-Work consensus protocol involves significant risk, as network participants face continuous operational costs while earning infrequent capital gains upon successfully mining a block. A common risk mitigation strategy is to join a mining pool, which combines the computing resources of multiple miners to provide a more stable income. This article examines a Pay-per-Share (PPS) reward system, where the pool manager can adjust both the share difficulty and the management fee. Using a simplified wealth model for miners, we explore how miners should allocate their computing resources among different mining pools, considering the trade-off between risk transfer to the manager and management fees.