PoW Mechanism Punishes Miners with Lower Hash Power – Says Ethereum Co-Founder Vitalik Buterin – Coinpedia – Fintech & Cryptocurreny News Media

Many analysts and experts pass comments on Proof-of-Work and Proof-of-Stake mechanisms about their mining profitability. Recently, the ethereum ethereum Blockchain NetworkTechnology Followers : 0 View profile Co-Founder Vitalik Buterin argued that the PoW mechanism is currently punishing miners with lower hash power. 

PoW Hash Power Declines  

The merge from PoW to the PoS mechanism will greatly impact miners as the hash power of Proof-of-Work (PoW) continues to decline. Although the PoS promises better energy efficiency and better output, the Proof-of-Stake consensus mechanism and Proof-of-Work consensus mechanism have become the main topic for experts and analysts for a long time. 

Some PoW proponents have started to outline flaws in the PoS mechanism. Vitalik Buterin recently gave a counterargument to these statements about PoS. Udi Wertheimer, a popular bitcoin org bitcoin org Event OrganiserTechnologyPayment solution Followers : 0 View profile  atheist and former blockchain.com blockchain.com Crypto trading and Information Followers : 0 View profile research lead at Colu, Udi Wertheimer, pointed out some issues about the PoS mechanism through Twitter. According to Wertheimer, PoS does not provide rewards to stakers; instead, PoS forces users to stake. Wertheimer argued that PoS’s reward to stakers is a way of punishment.

The Co-Founder of Ethereum, vitalik buterin vitalik buterin co-founder at ethereum, Bitcoin Magazine Vitalik Buterin is a professional programmer and writer who is famous as the Co-Founder of Ethereum. Buterin along with Gavin Wood, Charles Hoskinson, Joseph Lubin, and Anthony Di launched Ethereum in 2014. He co-created Ethereum when he understood that he could construct a new, possibly enhanced version by iterating on the Bitcoin blockchain. 
 
He has been involved in the Bitcoin community since 2011, writing and co-founding articles for Bitcoin magazine. Vitalik linked Bitcoin to a calculator and a future blockchain to a smartphone and used the same method of improving the system’s strength by making it more general purpose to blockchain network space.   
 
He was honored with the Thiel Fellowship Award in 2014 for bringing his innovative scientific and technical projects to reality, won the World Technology Network prize, Fortune 40 under 40 lists, and appeared on the Under 30 list of Forbes at the age of 23. EntrepreneurDeveloper/ProgrammerAuthor Followers : 0 View profile , joined the discussion and gave a harsh reply to these accusations made on PoS by Wertheimer. If Wertheimer’s assertion is considered for all consensus mechanisms, then PoW punishes miners whose percentage of hash power is lower than the supply of the asset. Buterin said, “And PoW penalizes anyone who has a smaller percentage of hash power than their percentage of the coin supply. (Actually, it penalizes much more than that because profit < revenue, but you get the point).”

Not Much Profit In PoW

However, Buterin’s counter arguments are correct, as miners encounter several issues in the PoW mechanism. Generally, there is significantly less profit for miners as their hash power is meager compared to the ratio of asset supply. This is because of the daily increasing competition in the mining industry, as miners are lured by mining profits, and when they enter the crypto mining market, the difficulty soars.

Additionally, the cost of mining rigs and electricity has touched high in some countries, resulting in less profit in mining than ever before, and some PoW miners have started giving up their mining business. Buterin made the arguments to counter Wertheimer’s assertion.

Wertheimer’s point was about the network’s non-stakers who get diluted when more tokens are circulated into the network to reward stakers, significantly building an inflationary trend of the token.