Although empty blocks can occur on the network, the incident on 31 January 2023 immediately raised concerns because it brought to mind the June 2022 empty block miner attack.

What Was the Situation in June 2022?

The Bitcoin SV network was adversely affected by a "majority" of hash power mining empty blocks in June 2022.

The network was experiencing a "majority miner" producing empty blocks, deliberately obfuscating their Coinbase string with a constantly changing string. However, they were often identified with the address: "1KPSTuJMCMRXrTWHfCwpiRZg1ALbJzh844," which is where they were sending their coinbase rewards. In addition to trying to remain anonymous while mining a global public ledger, the Bitcoin Association has observed an increase in malicious activity from this miner.

***A  51% attack (or majority attack) describes a scenario in which a malicious actor or organization gains control of more than half of the total hashing power on a blockchain network, thereby disrupting the network.

This miner has been mining BSV since 2020. In the months leading up to June 2022, they acted honestly and mined many blocks that contained fee-paying transactions. Unfortunately, the miner then reappeared on the network in June of 2022, mining empty blocks and engaging in other suspicious behavior. After monitoring their steady rise in hash rates and suspicious activity for several months, the Bitcoin Association concluded that their increased presence was causing network problems for honest miners and businesses that worked with BSV.

The hash rate for the "Empty Block Miner" is shown in black

According to the Bitcoin whitepaper, producing an empty block is not considered inherently dishonest behavior, but the miner failed to follow the instructions carefully. An assertion published by The Bitcoin Association outlined the miner's inherently dishonest behavior in refusing to collect transactions broadcast to nodes in blocks.

Furthermore, the miner ignored tens of millions of fee-paying transactions broadcasted by users and other nodes, in favor of producing empty blocks.

The Bitcoin Association reported in a statement released on 16 October 2022 that this miner's behavior was inherently dishonest and lacked consistency or transparency. As a result of their active attack on the network, innocent users, businesses, and honest miners were suffering economic hardships.

Distributed Denial-of-Service (DDoS) attacks were continuously coordinated against key network infrastructure and services, in addition to this disruptive behavior.

On top of this, transactions have been mishandled numerous times, and there have been targeted attempts to disrupt network pillars.

Despite repeated attempts to contact the miner in question over the past few months, The Bitcoin Association has not been able to reach them.

On the contrary, people within the BSV industry have said miners are entitled to mine empty blocks - they are simply doing so because of an economic decision that led them to believe that the block subsidy was sufficient compensation for their efforts. The fees are too cheap to justify including millions of transactions even in aggregate, so they wouldn't bother with the workload of validating millions.

How Did the Empty Block Occur on 31 January 2023?

A miner's incentive to mine a block as fast as possible often leads to them doing so before they receive any transactions to include in it. This results in an empty block.

The Bitcoin mempool, a space for analyzing the Bitcoin blockchain, offers this explanation:

"When a new block is found, mining pools send miners a block template with no transactions so they can start searching for the next block as soon as possible. They send a block template full of transactions right afterward, but a full block template is a bigger data transfer and takes slightly longer to reach miners."

A template was essentially a lucky find for the miners. This Bitcoin block at height 776,389 was added just seconds after its preceding block at height 776,488. In the end, block 776,388 earned an extra 0.086 $BTC, or 1,854 USD in fees, in addition to the block reward of 6.25 $BTC or 135,247 USD.

Despite having no transactions, an empty block still provides the miner with a block reward in bitcoin. In this case, block 776,389 received 6.25 $BTC without any transaction fees. As a result, Binance Pool was the winner, contributing 9% to the total hash rate.

Ranking of Bitcoin mining pools.

The critical point is that empty blocks do not pose a problem for the network. The mining of empty blocks produces the coin generation transaction, also called the Coinbase transaction, which maintains the Bitcoin price steadily towards 21 million bitcoins.

Data from BitInfoCharts indicates that 1%–2% of the network's blocks are empty. The stat is even more surprising today, given the rise of "ordinals" on Bitcoin, which allow pictures, data, and stamps to be permanently etched onto the blockchain.

Additionally, Bitcoin community members have been concerned about the rise in ordinals, and the first instances of pornography have been reported recently. There has been increased activity in the mempool, and block space has been in high demand as some JPEG enthusiasts seek to contribute their artwork to the Bitcoin blockchain.

Conclusion

Historically, miners have played a passive role in developing the Bitcoin network, according to The Bitcoin Association. Although miners are commonly referred to as 'proof-of-work,' most SHA256 miners strive to perform a minimal amount of work to benefit from the block subsidy. They accomplish this by directing the hash rate towards other SHA256 blockchains, and not actively participating in increasing the scalability of the blockchain.

For bitcoin to scale globally and compete with Visa and other payment processing networks, miners must be from competitive firms that strive to process an ever-increasing number of transactions on the network. Further pressure is exerted on miners to fulfill this mandate as the block subsidy continually decreases.

Satoshi Nakamoto explains in his statement via the cryptography mailing list, 'Bitcoin P2P e-cash paper' in 2008:

"The design supports letting users just be users. The more burden it is to run a node, the fewer nodes there will be. Those few nodes will be big server farms. At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware. A server farm would only need one node on the network, and the rest of the LAN connects with that one node."

Ultimately, nodes participate in the Bitcoin network voluntarily. Those that do, must follow the steps outlined in the Bitcoin whitepaper to be considered honest nodes. Nodes that fail to comply with this mandate are considered dishonest nodes, and the whitepaper explains how honest nodes can react to dishonest behavior, using the Nakamoto Consensus.

Sources: coingeek.com, blockchain.news, coingeek.com, www.bitcoinsv.com, cryptopotato.com, bitcoinassociation.net