How Much Power Do Bitcoin Miners Really Have? - Bittr Academy

Bitcoin miners are an essential part of the network, ensuring transactions are processed and blocks are added to the blockchain. However, their role is often misunderstood. While miners play a vital role, their influence over Bitcoin’s rules and operations is more limited than many think.

What do Miners Do?

Bitcoin miners validate and secure transactions by adding them to the blockchain. Using specialised hardware, they’re guessing Nonces to find new blocks, which are then linked to the existing chain. Each block includes a record of recent transactions and earns the miner a reward in newly minted Bitcoin and transaction fees.

But miners aren’t the sole players in the Bitcoin ecosystem. They work alongside nodes—independent computers that verify the blockchain’s rules and transaction history.

Do Miners control Bitcoin’s Rules?

Miners cannot change Bitcoin’s rules. All nodes in the network run the same Bitcoin software, which enforces the protocol’s rules. If miners attempted to alter these rules, such as increasing their rewards, they would effectively fork themselves off from the rest of the network. This would leave them mining on a version of Bitcoin that no one uses or values.

Two key factors discourage miners from trying to rewrite the rules:

Difficulty Adjustment Bitcoin’s algorithm adjusts the mining difficulty every two weeks to ensure blocks are mined roughly every 10 minutes. If a significant number of miners leave the main network to create their own rules, the difficulty on the original chain will adjust, making it easier for new or remaining miners to join and maintain its integrity.
Aligned Incentives Miners depend on Bitcoin’s success for their profitability. Any actions that undermine the network’s credibility, such as creating instability or distrust, would reduce the value of Bitcoin and harm their own business. For miners, it’s better to play by the rules than to risk destabilising the system.

An Example of a Difficulty Adjustment

Can Miners influence Network Operations?

Although miners can’t change Bitcoin’s rules, they can affect the network in smaller ways. Here’s how their actions might disrupt operations—and why these disruptions are limited:

Mining Empty Blocks

Miners could theoretically mine blocks without transactions, only collecting the block reward. While this might delay transaction confirmations, it’s unlikely to become widespread since transaction fees provide additional revenue. There is no incentive to not earn this extra Money. There were already periods of High Fees where the revenue from Fees was higher than the Block Reward.

Setting high Transaction Fees

Miners could enforce higher minimum fees by excluding transactions that don’t meet their threshold. However, this creates an opportunity for other miners to step in, process lower-fee transactions, and earn more.

Censoring Transactions

If a miner refuses to include certain transactions, other miners can still process them. Bitcoin’s decentralized nature ensures that no single miner or group can completely block legitimate transactions. However, we can see some centralisation of Bitcoin Mining where only a few Mining Pools have a remarkable hash rate.

Attempting Double-Spends

A double-spend occurs when a miner tries to reverse a confirmed transaction to spend the same funds twice. To achieve this, they would need to control over 51% of the network’s hash power. Even if successful, such an attack would erode trust in Bitcoin, making it financially unviable for the attacker.

Have Miners ever tried to change Bitcoin?

In 2017, miners resisted a proposed upgrade called SegWit, which aimed to improve Bitcoin’s scalability. They feared it would reduce transaction fees, impacting their profits. However, users and businesses pushed the upgrade through by signaling support via their nodes. Miners eventually conceded, realizing that opposing the majority could harm their long-term interests.

This incident demonstrates that while miners can delay changes, they cannot dictate Bitcoin’s rules.

What keeps Miners in check?

Bitcoin’s design prevents miners from gaining excessive control. Here’s how:

Economic Incentive Miners’ incentives are tied to Bitcoin’s success, discouraging behavior that would harm the network or its reputation.
Decentralized Governance Decisions about Bitcoin’s rules require consensus among users, developers, and businesses—not just miners. This distributed decision-making ensures no single group can dominate.
Network Resilience The difficulty adjustment, combined with the global distribution of miners and nodes, makes it nearly impossible for one group to monopolize mining or disrupt the blockchain.

Final Thoughts

Miners don’t Control Bitcoin’s Rules: Changes to Bitcoin’s protocol require agreement across the network, including developers, businesses, and users.
Miners’ Actions are self-regulating: Attempts to disrupt the network, such as censoring transactions or raising fees, create market opportunities for other miners to step in.