Measuring Miner Decentralization in Proof-of-Work Blockchains. (arXiv:2203.16058v1 [cs.CR])

Proof of work cryptocurrencies began with the promise of a more egalitarian
future with a decentralized monetary system with no powerful entities in
charge. While this vision is far from realized, these cryptocurrencies are
still touted to be much more decentralized than traditional centralized
systems. While it is well understood that cryptocurrencies are centralized, it
is still unclear what the underlying causes are. This work aims to address this
gap and examines some of the forces behind mining centralization.

The internals of cryptocurrency mining is very opaque and difficult to study
since it traditionally requires forming relationships with miners, who are
typically reticent to share internal information about their competitive
advantages. This work takes a different approach by combining large-scale
statistical techniques with publicly available blockchain data in order to
answer previously intractable questions. The crux of our analysis technique is
based on the simple observation that some miners can utilize their hashpower
more efficiently due to their position in the network. By teasing out that
effect, we de-bias the mining power distribution to get a more accurate
estimate. Using that de-biased mining power distribution, we can answer
questions about the network position of miners in each cryptocurrency network.
Finally, during the course of this study, we observed some unusual mining
behaviors which we highlight.