Introduction
In Bitcoin and other Proof-of-Work (PoW) cryptocurrencies, mining rewards consist of two components: the block reward and transaction fees. Mining an empty block—one that contains no transactions other than the coinbase reward—means forgoing transaction fees. Why would any mining pool intentionally choose to give up these fees by producing empty blocks?
Understanding Proof-of-Work Mining
Proof-of-Work is the consensus mechanism used by many major cryptocurrencies, including Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), and Litecoin (LTC). The mining process follows a specific set of steps.
Miners aim to find a nonce (a random number) such that the hash of the block header is below a certain target value. This target is a large number, often starting with many leading zeros. Finding a valid nonce requires significant computational effort.
When a mining pool successfully mines a block—say, at height 500,000—it broadcasts this block to the network. Other miners then begin working on the next block (height 500,001). To do this, they assemble a new block containing a block header and a body filled with transactions. The block header includes a reference to the previous block’s hash and a nonce value that miners adjust repeatedly.
Miners perform hashing operations on this new block. If the resulting hash is below the target, the block is considered mined. Since this process is computationally intensive, mining pools distribute nonce ranges across multiple machines to parallelize the work.
Why Mine Empty Blocks?
When a new block (e.g., block 500,000) is broadcast, other mining pools must verify its validity before building on top of it. This verification process involves checking all transactions and ensuring the block follows consensus rules. Depending on block size and hardware, verification can take several seconds.
Additionally, receiving the full block body (which contains all transactions) over the network introduces latency. While the block header (only 80 bytes) propagates quickly, the body—which can be up to several megabytes—takes longer to transmit.
During this verification and propagation period, miners face a dilemma: if they wait to receive and validate the entire block, their mining hardware sits idle, consuming electricity without contributing to revenue. To avoid this downtime, some mining pools adopt a strategy of immediately building an empty block on top of the new block’s header as soon as they receive it.
This empty block contains only the coinbase transaction, omitting all other transactions. By doing so, miners can resume hashing almost immediately (often in less than 0.5 seconds) instead of waiting 10 seconds or more for full validation. If they find a valid nonce during this window, they earn the block reward—even though they miss out on transaction fees.
Optimizing Mining Efficiency
Technologies like Bloom filters and compact blocks (e.g., Compact Block Relay in Bitcoin Core or Xthin in Bitcoin Unlimited) help reduce block propagation times. These methods allow nodes to efficiently identify which transactions are included in a new block and request any missing ones, speeding up the relay process.
However, these optimizations do not address the time required for full block validation. As a result, the economic incentive to mine empty blocks persists, especially when idle hardware represents significant operational costs.
To minimize empty block mining, some pools collaborate with exchanges or other entities to source non-broadcast transactions. For example, an exchange might directly submit withdrawal transactions to a partnered mining pool via private channels. Since these transactions haven’t been broadcast publicly, they won’t conflict with those already included in the latest block.
Another approach involves using consolidation transactions—combining many small UTXOs into larger ones—which optimize the UTXO set and aren’t time-sensitive. These can be safely included in blocks without risk of conflict.
👉 Explore advanced mining strategies
Frequently Asked Questions
What is an empty block?
An empty block contains only the coinbase transaction and no other transactions. Miners who produce such blocks receive the block reward but no transaction fees.
Why do miners produce empty blocks?
Miners mine empty blocks to avoid downtime when verifying newly broadcast blocks. By building on the new block immediately, they keep their hardware operational and maintain revenue from block rewards.
Does empty block mining harm the network?
While empty blocks do not include transactions, they do contribute to network security by extending the blockchain. However, frequent empty blocks can reduce network throughput and increase transaction confirmation times.
How can empty block mining be reduced?
Improvements in block propagation (e.g., compact blocks) and private transaction channels between exchanges and miners can help reduce the prevalence of empty blocks.
Do all cryptocurrencies experience empty block mining?
Empty block mining is most common in Proof-of-Work chains with slow block validation or propagation times. Networks with faster block times or alternative consensus mechanisms may be less affected.
Is empty block mining profitable?
Mining empty blocks can be profitable when the cost of idle hardware exceeds the potential transaction fees from including transactions. However, over the long term, including transactions is generally more profitable.
Conclusion
Proof-of-Work mining is primarily driven by economic incentives. Criticisms of empty block mining often stem from a misunderstanding of these incentives. While empty blocks are not ideal, they are a rational response to technical limitations in block propagation and validation.
As the industry develops better tools and techniques—such as improved relay protocols and private transaction channels—the frequency of empty blocks is likely to decrease. Miners will continue to optimize their operations for maximum profitability, which ultimately aligns with the health and security of the network.