Creating new cryptocurrency requires large amounts of computing power, which is used to solve cryptographic puzzles in what is known as proof-of-work mining. When two computers attempt to solve the same puzzle, the first to find the solution creates a new block and claims the right to create a predetermined amount of new coins, while the losers get nothing. Paolo Barucca and colleagues show that this system favors miners who have expensive specialized hardware, which can outperform off-the-shelf computers, leading to a consolidation of power in the industry. Today, just three mining pools produce over 50% of new Bitcoin blocks. When two miners complete a puzzle nearly simultaneously, each miner produces a valid block. This situation is known as a "fork." Whichever miner can propagate the block to the network first will see their block built upon in the future, while the loser's block becomes an orphaned block, on which few or no additional blocks will be built. The computation used to mine on top of an orphaned block still requires significant energy—an inefficiency that increases cryptocurrency's environmental impact. The authors model the fork rate in a network of heterogeneous miners as a function of the number of miners, their hash rate distribution, and block propagation times within the network. Using their model, the authors can quantify the power wasted in mining blocks on top of orphaned blocks. According to the authors, this wasted energy has drastically increased over the past decade, peaking at around 16,000 MW in 2025, equivalent to half of the power generated in the United Kingdom.
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