Subject: Re: [Bitcoin-development] Block Size Increase Requirements

From: Jorge Timón <[email-masked]>
Date: Sun, 31 May 2015 16:46:58 +0200

On May 30, 2015 10:38 PM, "Gavin Andresen" <[email-masked]> wrote:
>
> Mining is a competitive business, the marginal miner will ALWAYS be going
out of business.
>
> That is completely independent of the block size, block subsidy, or
transaction fees.

No, the later determines who can be profitable.
Here's a thought experiment:

Subsidy is gone, all the block reward comes from fees.
Miner A has great connectivity and mines 20 MB blocks, with an average of
20 btc per block.
Miner B has a connectivity such that 2 MB blocks puts it on a reasonable
orphan rate, so it gets an average of 2 btc per block mined.
But the difficulty is the same for all and it can rise up to miner A
breaking even after energy costs.
Will miner B be profitable with this setup? The answer is no and miner B
will just go out of business. In that sense too, bigger blocks mean more
mining centralization.