Cryptocurrency Miners Have Made Over $330 Million Mining Empty Blocks

Cryptocurrency miners have, across the most popular proof-of-work (PoW) blockchains, made over $300 million mining empty blocks, not securing their network. The problem has been slowly decreasing, however.

According to blockchain research firm Diar, revenues coming from empty blocks were a “negligible portion of total revenues,” but have surpassed the $300 million mark.  In total, miners have made over $21 billion since the start of each blockchain, with Bitcoin accounting for over half of that amount.

The report reads:

Despite a year-on-year decline in the number of empty blocks being solved for Bitcoin, miners have now exceeded $100Mn in revenue since 2012 providing no real value to the network

Per Diar’s report, the number of empty blocks being mined across the cryptocurrency space has halved since 2016, and dropped by almost 20% last year, compared to 2017. In total, Litecoin has rewarded miners with $125 million for solving empty blocks, while Ethereum rewarded them with $113 million, and Bitcoin with little over $100 million.

Ethereum miners, the report adds, earned over $67 million from empty blocks in 2017, when the prices of most cryptocurrencies surged to new all-time highs. This, per Diar, is “by far the greatest reward for a full year across all blockchains.” Since then, ETH has seen a 95% drop in empty blocks mined.

Mining less empty blocks has been helping the Bitcoin network’s fees get lower, as “more blocks are finding transactions.” Compared to Bitcoin, BCH has seen an additional 3,335 empty blocks since August of 2017 – when it forked off the Bitcoin blockchain – despite having less transaction volume.

The report adds the figures should be alarming, as miners have essentially been earning the equivalent of $5 million per month for doing nothing.

The value that is being rewarded for empty blocks should strike alarm bells as revenues across major networks have earned miners for Proof-of-Nothing with $335Mn - the equivalent of $5Mn per month.

PoW-based blockchains reward miners with a specific amount of cryptocurrency per mined block, along with the fees from the transactions included in said block. Diar notes that while the fees today are a small incentive for miners, as rewards drop because of halving events, they will matter in the future.

Fees on the Bitcoin blockchain notably hit an all-time high in December of 2017, when BTC itself got close to the $20,000 mark. Since then, they’ve been dropping because of a decrease in empty blocks, SegWit adoption, transaction batching, and increased Lightning Network adoption.

Burn Satoshi's Bitcoin, Suggests Paxful CEO in Thought Experiment

John Moore
  • Paxful CEO Ray Youssef proposes 'burning' the stash of Bitcoin alleged to belong to Satoshi Nakamoto
  • Bitcoin creator said to hold up to 980,000BTC in dormant wallets, theoretically worth US$10 billion
  • Without complete consensus on the move,  burning the coins would cause another Bitcoin fork

One member of the global cryptocurrency community has come up with what can best be described as a scorched earth policy for settling the debate over who is Satoshi Nakamoto once and for all. 

With the spotlights of Bitcoin watchers firmly on the latest questionable claim to be the creator of cryptocurrency as we know it, Ray Youssef - CEO and co-founder of crypto marketplace and wallet service, Paxful - in a now-deleted Tweet - took to Twitter to propose a Bitcoin soft fork that would 'burn' the BTC its  pseudonymous developer is thought to hold in wallets that have never been active.

His suggestion was ignored by a group of crypto-luminaries who he tagged for support, and apparently rounded on by commenters. 

Blockchain analysis undertaken in 2013 by Security Researcher and Bitcoin Blogger, Sergio Demain Lerner , alleged that Nakamoto may have amassed something like 980,000 bitcoin as a lone miner in the early days of its existence. When the BitMEX exchange team revisited Lerner's work a year ago, they reduced this estimate to 700,000 - but didn't rule out the possibility that the figure could be much higher.

Thus, the cryptocurrency the creator fo bitcoin likely accumulated between Jan and August 2009 (or late-Jan 2010, depending on whose opinion you listen to) could, theoretically, be worth something in the region of $10 billion at the current market rate.

A more realistic assessment of their value, however, centers on the idea  that - as they are sitting in the most closely watched wallets on the crypto scene - any attempt to move or sell them would cause massive upheaval in the global cryptocurrency markets, crash the BTC price and gut their value before a significant amount could even make it to a hot wallet somewhere. 

This scenario has been a sword of Damocles threatening Bitcoin since the Satoshi's Stash theories first appeared amid early interest in the concept, explaining the appeal of simply removing control of the coins from their owner - especially to someone with a vested interest in Bitcoin's value. However, Youssef's suggestion that such a measure would 'smoke out' Nakamoto's real life persona, was obviously considered to be ethically outrageous by some and a logistical nightmare by almost everyone. 

It's not that it isn't technically possible. It is. However, unless it had the consensus of the entire Bitcoin network (saying it wouldn't is a pretty safe bet), the fork would create two blockchains and a 'Schroedinger's Nakamoto' - where Satoshi was very rich on one, but not on the other. 

Let it not be forgotten that a similar schism led to a fork in the Ethereum blockchain following The DAO hack a few years back, a split that we have to thank for the existence of Ethereum Classic, which stuck with the pre-DAO blockchain. Let it also not be forgotten that recent Bitcoin forks have not worked out so well for most of the parties involved. Let it also not be forgotten that Nakamoto is considered with almost deity like reverence by some crypto-evangelists. All in all, it seems Youssef is now regretting making the suggestion

So, while Youssef's suggestion could well have been a way to get the real Satoshi Nakamoto to please stand up, it would likely have done much more damage than good.