This Paper Explains Why Bitcoin Miners Lose Money

A paper published by researchers from the New York University Polytechnic School of Engineering provides insight into the world of bitcoin mining and reveals the reason why many bitcoin miners struggle to break even.

The authors, Luqin Wang and Yong Liu, collected data on the bitcoin blockchain from 2009/01/03 (the creation date of the genesis block) to 2014/03/11, which included 290,089 blocks and 34,646,076 transactions.

Changes in mining over the years

They found that earlier on, miners had an evenly distributed hashrate. However, as time went on, a number of miners – mining pools – went on to amass a very large hashrate.

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