According to Decrypt Media, a number of mining pools have found an apparently legitimate, albeit morally sketchy means of amassing mining fees without confirming transactions. The practise, called ‘Spy Mining’ operates on the premise that mining is fundamentally centred on hashing blocks – whether or not said blocks contain any transaction data whatsoever.

How Spy Mining Works

The foundational principle of spy mining is that blocks in a blockchain do not all hold the same amount of information. While bitcoin blocks have a data limit of one megabyte, and bitcoin cash blocks have a limit of 32 megabytes, blocks are not required to hold this much data to be verified and added to the blockchain.

In order for a block to be verified, a miner closes it by deciphering its hash, which is a code generated from all the data in that block. This code is important for the creation of another block. A new hash is circulated to all registered miners who then begin working on the hash when this is done

While it is impossible to produce a hash in the absence of data in a block, it is however possible to use a hash to produce a new block before transactions are ever carried out. Spy mining occurs when miners receive these hashes by signing up to a mining pool, receiving a hash, and mine it for themselves, creating new additions to the blockchain that are genuine and legitimate, but do not offer any real value to the network by confirming transactions as would normally be the case..

Benefitting to the Detriment of Others

According to data from Decrypt Media, Etherdig, an Ethereum mining pool, has made more than $850,000 over the last three months “without validating a single transaction.” Coinfi, a cryptocurrency market research company, also out found that F2Pool, another mining pool, estimated to be the third largest in the network, is also mining empty blocks. BitMEX also claims that that 1.8 percent of blocks created by Antpool – one of the world’s biggest mining pools owned by Chinese behemoth Bitmain – were empty.

This situation has polarised different stakeholders, with some arguing that since blocks mined in this way are not technically invalid, it is therefore a legitimate profit-maximising activity. Others claim that empty blocks are harmful to the network because they increase congestion by confirming no transactions while still raising mining difficulty, the net result of which may be increased centralisation in the hands of a few mining pools.

Regardless of differing opinions, what does seem certain is that spy mining gives entities with access to large amounts of computing power even more of an advantage than before. To correct this and to combat the growing power of Etheredig and other spy mining pools, Decrypt Media has suggested that Ethereum should take a cue from Bitcoin’s 2016 code changes that made it more difficult for miners to spy on each other.