Propagation Delay and Mining Centralization: Modeling Stale Rates

The intricacies of Bitcoin mining economics reveal a scenario far more complex than mere average revenue statistics might suggest. The significant portion of revenue that miners generate, often cited at impressive figures like $91 million, is substantially eroded by operational costs, predominantly power consumption. This fact underscores the reality that mining operates on razor-thin margins, where even a minor fluctuation in revenue—such as a 0.05% decrease—can lead to a disproportionate reduction in profits, potentially as high as 5%. Such volatility highlights the precarious balance miners must maintain between operational costs and revenue to sustain profitability.

In discussions among Bitcoin developers, the idea of introducing a new protocol message termed “STALEHEADER” has been proposed. This concept aims to enhance the efficiency of relaying headers that are near the best chain tip, addressing a specific technical need within the Bitcoin network's operation. The adoption of this proposal could represent a significant improvement in the network's functionality, streamlining processes and potentially impacting miners' strategies and the overall health of the blockchain. This recent dialogue among developers underscores the constant evolution and technical refinement underway in the Bitcoin ecosystem, aimed at optimizing both its robustness and efficiency.