Blockchain network utilization is worrying, and miners can earn tens of millions of dollars by mining empty blocks

Blockchain research firm Diar recently pointed out in a report that miners of Bitcoin and other cryptocurrencies have earned tens of millions of dollars without processing any transactions.

Miners of major PoW blockchains, including Bitcoin, Ethereum, Litecoin, and Dash, have earned more than $18 billion in total mining revenue. Bitcoin Cash (BCH) miners have earned less than $1 billion since the fork. In contrast, Zcash miners have earned more and have one of the lowest block utilization rates in the report.

(The mining revenue of mainstream blockchain has exceeded 21 billion US dollars. Image source: Diar)

Bitcoin and Ethereum have the largest transaction volumes

Since August 2017, BCH miners have processed more than 3,300 empty blocks, which has resulted in an average profit of $5 million per month for major cryptocurrency networks, including Zcash and Decred.

Bitcoin and Ethereum, the most used PoW blockchains, have the fewest empty blocks. Although Ethereum miners easily received $67 million in rewards for empty blocks in 2017, it is still the blockchain with the fewest empty blocks.

(The number of Ethereum empty blocks is decreasing, image source: Diar)

This is an interesting question. Diar seems to be trying to convey the view that miners “do nothing” in this report. However, miners invest a lot of resources in securing the network, regardless of whether a block contains transactions or not.

Litecoin has the most empty blocks

The Litecoin (LTC) network has the most empty blocks due to low network utilization and relatively fast block times. Normally, Litecoin's block time is two minutes, and the actual block time will be adjusted based on changes in mining difficulty. However, Litecoin miners often mine very "lightweight" blocks.

For example, block 1586699, which was mined on Tuesday, contained only three transactions and the amount was less than 1 LTC. However, the block contained a reward of 25 LTC, which means that miners processed less than $50 in transactions but received more than $1,000 in rewards. Ten blocks later, an empty block appeared on the Litecoin network, and miners received more than $1,000 in revenue without processing transactions.

Regardless, the blockchain must operate 24/7. But should the rewards included in empty blocks be the same as those in normal blocks? Most cryptocurrencies have a limited supply, which means that with each new block, there are fewer coins that can be mined. Currently, the fees do not cover the cost of mining, and there is no evidence that they can. No one knows what will happen after the block reward is used up.

Sustainable mining becomes a problem

To this end, Monero has adopted a Tail Emission strategy, that is, by May 31, 2022, each block in the network will contain the same reward, and it will always be the same. Will this lead to inflation? Yes, but it is also a way of incentive to ensure stable mining.

Bitcoin, BCH, and Litecoin all halve at fixed times. This includes an economic view that the fewer new coins are produced, the more limited the supply, and miners are the main sellers of these new coins. Does this mean that miners can raise prices? Not necessarily. In the short history of Bitcoin, there have been many times when mining was unprofitable. The cost of mining is determined by multiple factors, including location, equipment, and energy costs.

In summary, the sustainability of mining has become an important issue for the long-term development of cryptocurrency.