Four participants debated the block size question and mining centralization at the State of Digital Money conference in Los Angeles. Paul Puey, who runs Airbitz, Tone Vays working in derivatives, Ryan
Four participants debated the block size question and mining centralization at the State of Digital Money conference in Los Angeles. Paul Puey, who runs Airbitz, Tone Vays working in derivatives, Ryan X. Charles leading Yours, and Bitcoin Core contributor Eric Lombrozo all brought different views to the question.
Puey began by saying the free market should set the block size. Vays disagreed. If the network's nodes controlled the limit instead of the code, he argued, large mining pools would push it up for themselves. "That scares me in [terms of] having a decentralized Bitcoin a lot," Vays said.
Charles rejected that reasoning. Mining's primary cost comes from hardware and electricity, not from maintaining a node. Increasing to 2MB changed nothing about mining competitiveness. "Increasing the block size to 2MB has absolutely nothing to do with mining centralization," he argued. Puey backed this up: node costs were negligible against equipment spending. "It's nothing; it's a rounding error," he said. Instead of block size, Puey pointed to financial incentives as the lever for decentralization. Mining needed to spread beyond China, where pools already held the bulk of the network's computing power.
Lombrozo offered another angle: block propagation speed. Larger blocks traveled across the network more slowly. Miners who received a block first had a head start on the next one. Those who got it late faced a disadvantage. "If you get a block a few seconds after everyone else already got the block, then everybody else has an advantage over you because they're already mining on that block," Lombrozo explained. "The bigger the block gets, the longer it takes to propagate across the network. This is just a matter of physics."
This timing advantage could push miners toward consolidation. Big operations might set up private networks to swap blocks among themselves before distributing to the wider network. They'd mine while others waited. This technique, called selfish mining, rewarded size and coordination. Developer Peter Todd had explored this problem in a 2015 presentation at Scaling Bitcoin Montreal. Since then, block propagation improvements had shipped.
Charles pointed out a counterbalance. Miners had incentive against blocks that were too large. They needed other miners to build on top of their blocks to collect the reward. "It is the case that miners want other miners to build on top of their block or they don't get the money," he said.
Lombrozo countered that the biggest miners ignored this pressure. "Unless they're the biggest miners and they mine on top of their own blocks and they don't care if they get orphaned by the other miners because they're so small compared to them," he said. Even seconds of advantage compounds into significant money across large operations.
Vays brought up geography. Bitcoin mining centers sit in remote areas like China's mountains where internet connectivity is poor. Charles acknowledged this but said it mattered less than the math suggested. Upgrading connectivity costs almost nothing compared to mining operations overall. "It's still true that actually getting a sufficiently fast Internet connection is a tiny fraction of the actual expense for [miners]. It's really like a non-issue I think." Miners who could afford mountain facilities could afford to bring in high-speed lines.
That was exactly Vays's point. The miners building the most efficient operations could absorb those connection upgrades. Smaller competitors couldn't. Bigger blocks penalized remote locations, driving consolidation.
Puey steered back to first principles. Higher block limits weren't the root driver. "We're not disagreeing that mining centralization is not a good thing. It's just, what's causing it?" he asked. Multiple forces shaped mining distribution, and the four never settled on which mattered most.
