Proof-of-Work Cryptocurrencies: Does Mining Technology Undermine Decentralization?

• 成果类型: Article
• 署名作者: Capponi, Agostino; Olafsson, Sveinn; Alsabah, Humoud
• 署名单位: Columbia University; Stevens Institute of Technology; Kuwait University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.4840
• 发表日期: 2023
• 页码: 6455-6481
• 关键词: finance; management; research and development; Industrial Organization; firm objectives; organization and behavior

摘要

Does the proof-of-work consensus protocol serve its intended purpose of supporting decentralized cryptocurrency mining? To address this question, we develop a game-theoretical model in which miners first invest in hardware to improve the efficiency of their operations and then compete for mining rewards in a rent-seeking game. We show that centralization grows with heterogeneity in mining costs, but hardware capacity constraints prevent the most efficient miners from monopolizing the mining process. Investment leads to a more decentralized network unless larger miners have a significant comparative advantage in acquiring new hardware. Our model generates empirically supported implications: (i) mining centralization is countercyclical with respect to mining reward, and (ii) a change in mining reward leads to a less-than-proportional change in hash rates.