Exploring miner evolution in bitcoin network

Abstract

In recent years, Bitcoin, a peer-to-peer network based crypto digital currency, has attracted a lot of attentions from the media, the academia, and the general public. A user in Bitcoin network can create Bitcoins by packing and verifying new transactions in the network using their computation power. Driven by the price surge of Bitcoin, users are increasingly investing on expensive specialized hardware for Bitcoin mining. To obtain steady payouts, users also pool their computation resources to conduct pool mining. In this paper, we study the evolution of Bitcoin miners by analyzing the complete transaction blockchain. We characterize how the productivity, computation power and transaction activity of miners evolve over time.We also conduct an in-depth study on the largest mining pool F2Pool.We show how it grows over time and how computation power is distributed among its miners. Finally, we build a simple economic model to explain the evolution of Bitcoin miners.