Bitcoin Mining

Abstract

Bitcoin is a peer-to-peer electronic currency without central bank controlling. Nowadays, increasing amount of people are engaged in the mining of Bitcoin for great profits. However, in the Bitcoin system, the more participants in the system, the greater computation power of the whole network and the less efficiency in the output of the coin, since large computational power of the whole Bitcoin system will lead to increased difficulty for a single miner to mine a new data block. At the same time, when more than 51% computing power is controlled by a single node, it could destroy the Bitcoin system. In order to reduce ineffective mining behaviors, one would wish to employ the optimal selection mechanism of different miners. This paper will mainly develop the model in which small miners (those who have relative smaller computational power in a block mining) join the major ones based on revenue, computational power cost, and other elements of the process comparing to the current model (when they work separately).