Bitcoin’s Layer 0.51 : A quick proposal to reduce the hashrate
Abstract: At the outset of some predetermined time epoch, miners run a quick hashing competition to signal their interest in joining a decentralized cartel. After majority participation is signaled, miners will spend the next several months only mining on top of blocks by members of the cartel. The result would be a reduction is hashrate as the process would exclude a number of miners from participating.
Slightly more detailed: Pick a date, or perhaps a block height — say for example 720,000. Establish some-sort of Layer0.51-daemon that allows participants to communicate on the same network. When block 720,000 is mined, every miner who is interested in joining the cartel will immediately start mining on top of this block. Now instead of publishing blocks whose hash beats the Bitcoin difficulty, they publish blocks (to the Layer0.51) whose hash beats the Bitcoin difficulty/1000. This means that if 60% of miners (by hashrate) are participating, roughly 600 such blocks should be produced in ten minutes.
So take a ten minute window, and if 600 such blocks which are published within that window, the addresses of the producers of these first 600 blocks are compiled together. Perhaps a quick consensus round on the Layer0.51 among the producers will (details left to reader) will allow the subset of miners to know who is in the pool.
Then for the next 20,000 blocks, these miners only mine on top of blocks by others in the pool. Suppose this involves 70% of the miners, then the other 30% will have no choice but to drop out. The difficulty level will correct, and the 70% will be claiming 100% of the rewards. So it’s in their interest to do so.
At block 740,000 repeat. Or not.
Possible tweaks. The number 600 might not be optimal as it depends on the power law distribution of the hashrate. 500 might work, or perhaps even lower. This could be tweaked in subsequent rounds, as sort of a “Layer 0.51 difficulty adjustment”
This doesn’t exclude anybody from pooling with someone on the cartel. It may be possible to complicate the consensus so that there is an upper bound of blocks produced that depends on the number of blocks produced during the ten minute period. For example, take the number of blocks produced in the short period, multiple by 60, and this is the maximum number of blocks the cartel will honor of the next 20,000. (Note 600*60=36,000>20,000). This could also make the competition round a little more competitive. It may create other problems, so might need further tweaking.
Of course, this doesn’t drive the hashrate to zero, but it would show that miner collusion is possible and profitable. Once this is accepted there may be other arrangement which result in the hashrate dropping to near zero.