Just two lines of poorly written code were enough for a hacker to famously syphon 3.6 million ether from The DAO in 2016, worth $50 million at the time. Ironically, the area of exploited code contained a note from DAO developers encouraging users to, “be nice.” Clearly, this positive message wasn’t enough of a deterrent to stop said hacker doing exactly the opposite.
Now, it is mining pools which are profiting without doing any work—but this time, they’re playing by the rules. Data from crypto intelligence platform CoinFi and analytics platform Alethio suggests Ethereum has succumbed to a process called “spy mining” or “SPV mining” which was prevalent in Bitcoin from 2015-2016.
The Ethereum network creates around 5,800 blocks per day, in order to validate the current 540,000 daily transactions taking place. In return, miners receive, on average, three ETH ($687) in mining rewards per block. The majority of rewards come from mining the block, but a small amount is earned from users, via transaction fees.
You can see CoinFi’s research into the empty blocks here.
Miners compete to create the next block by performing a computational race. Typically, miners have to wait until a block has been broadcast before they can start this race but sometimes pools find a block and start mining on it privately. By spying on such mining pools,
“From early September, some miners have started consistently mining empty blocks. The average block time of these blocks is 15
A wider issue for Ethereum
Another mining pool, F2Pool has also been mining empty blocks. It is currently the third largest mining pool in the network with 12.5 per cent of the network hash rate and is mining empty blocks at a much higher rate than
However, the majority of F2Pool’s blocks do contain transactions so it is contributing to the network. While
The increasing use of spy mining is a potential problem for Ethereum. Empty blocks are being propagated at a 15 per cent faster rate which means spy miners are rewarded with an up to 15 per cent increase in revenue. If mining pools all jump on the bandwagon, blocks picking up transactions may get fewer and far between. This means transactions would take longer and gas fees could rise. It could also drive legitimate miners to other coins, reducing the security of the network.
An answer in the past
The good news is, we’ve seen these empty blocks before. The Bitcoin network had some 100,000 empty blocks mined over two years that saw miners reap the rewards for what other people sowed. The solution came in the form of a small upgrade to the network’s core code, which made it tougher for miners to eavesdrop on their competitors.
But that solution came at a time when Bitcoin was small, and developers were happy to work together. Subsequently, the Bitcoin and Bitcoin Cash communities have developed a love of in-fighting where mining pools appear to have a large say in the matter.
Ethereum meanwhile has a different, albeit more high-class problem: Its developer community, some 250,000 strong according to
The main issue is not selfish mining but spy mining. While F2Pool is mining a mix of transaction-filled blocks and empty ones,
Please note: This article has been edited as miners do not wait for transactions before they start mining.
Update: Etherdig stopped mining empty blocks using the address mentioned on October 5.