# kaal:claim:3808873-008

**Claim.** Proof of Work block rewards structurally reintroduce centralization: the economic nature of mining rewards incentivizes degrees of centralization through collective action of nodes that share rewards as a group, that is, mining pools.

**Type.** mechanism  **Support.** argued

**Holds when.**

- Proof of Work consensus with block rewards
- Bitcoin in the early 2020s

**Source quote.**

> The economic nature of these rewards incentivizes degrees of centralization in collective action of nodes that share in the mining rewards as a group, so called mining pools.

**From.** Wulf A. Kaal, *Decentralization Neutralizers* (2021), II. Degrees of Decentralization, page 8

**Cite as.** Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873

**Verify.** sha256 of source PDF `f11493915e6b8c266d421510b5546816e33defb5650aac9d09b20d78549da727` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202021%20-%20Decentralization%20Neutralizers.pdf

**Failure mode.** Reward Driven Mining Pool Centralization  (family: recentralization-drift)

**Topics.** consensus-and-security, decentralization

**Keywords.** proof-of-work, mining-pools, consensus, centralization

**Related claims.**

- restates: https://wulfkaal.github.io/claims/3227933-019
- restates: https://wulfkaal.github.io/claims/3227967-032

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