An Empirical Analysis of Pool Hopping Behavior in the Bitcoin Blockchain
Natkamon Tovanich, Nicolas Soulié, Nicolas Heulot, Petra Isenberg
Abstract
We provide an empirical analysis of pool hopping behavior among 15 mining pools throughout Bitcoin's history. Mining pools have emerged as major players to ensure that the Bitcoin system stays secure, valid, and stable. Individual miners join mining pools to benefit from a more predictable income. Many questions remain open regarding how mining pools have evolved throughout Bitcoin's history and when and why miners join or leave mining pools. We propose a heuristic algorithm to extract the payout flow from mining pools and detect the pools' migration of miners. Our results showed that payout schemes and pool fees influence miners' decisions to join, change, or exit from a mining pool, thus affecting the dynamics of mining pool market shares. Our analysis provides evidence that mining activity becomes an industry as miners' decisions follow classical economic rationale.