[ryebit]

I'm not an expert at the mechanism design, but yeah, that's my understanding. The network's goal is to have a block every X seconds; and the difficulty periodically adjusts if blocks come in too fast / too slow (due to hashpower coming on/off line).

(Ethereum & Bitcoin both add some other year-decade timeframe factors to the difficulty, but don't think it affects this basic principle, which acts on week-to-minute timeframes).

I view it as a race to the margins. Anyone who can do it cheaper, or benefit from economy of scale, will get a larger slice of the pie, but at smaller margins... creating a cycle of consolidation.

I think original assumption was that folks running PoW at home on their GPUs would be able to compete, but due to efficiencies of specialized hardware and regional differences in electricity costs, that's just not the case.

---

Others might disagree, but my personal opinion is that this isn't a sustainable way to maintain decentralization, since it seems to obviously trend towards a few large "just turning a profit" players.

There might be some ways to adjust mining incentives to make it work, but this fundmental issue is why I think Proof of Stake has a much more viable future, as it sidesteps this (and the environmental) issues.