Oddbean

On Ocean Mining Pool, Inscriptions and Luke ——————————————— There's been a pretty big flare up in the Bitcoin community about Ocean Mining's two recent blocks. Namely, that they didn't include certain transactions designed to use the block space for something other than its monetary transactional uses. Indeed, many influencers, especially those that are pro-BRC20 and Ordinals, are condemning this course of action as censorship. In a sense, this is exactly what all pools do. They create a block template for everyone else to mine. In that sense, each miner to a pool is really renting the pool hash rate and the pool does the work of using that hash rate to create blocks, whatever they may be. But it's a bit disingenuous to complain specifically about Ocean, since lots of pools have made blocks that didn't create the optimal profit-driven block. Not every pool makes the maximal amount of fees for a block, whether because they have bad software, certain policies or just because the block was found before a block template could be constructed. The optimum is an ideal and though the modern economic assumption of idealized homo economicus would create these blocks each time, we don't have a steady-state mining economy so not everyone mines the theoretic optimum. In a sense, the analysis of pools and the block templates these critics make is flawed because they assume some optimized economy. Given ideal conditions, of course, there is an optimal set of transactions you accept to increase fees. Over a long enough time period, those should result in more profit which get spread over the participants which should make the pool more popular, making those that don't perform the optimum lose profit and eventually bankrupt. But that's a very narrow analysis based purely on monetary incentives. We don't live in under ideal conditions and situations change all the time. Basic things, like getting a block template ready quickly after a block is found is an optimization that's difficult and still not completely solved. But there's also the opinions of the miners themselves. Are they all strictly profit driven? Think about normal businesses. Why do they offer fair trade coffee? From a purely monetary perspective, fair trade coffee doesn't make any sense. They're more expensive for the same good. From a profit-maximizing analysis that MBAs are so fond of, the non-fair trade coffee would put the fair trade coffee out of business. But yet, in the real world, they do not because people care more than just the good itself, but what it took to make the good. In other words, the homo economicus analysis of economic situations rarely is the optimum for the real world. There are other considerations other than profit that go into any business. And that's really at the heart of what's being argued here. Luke believes that inscriptions are a waste of block space, a public nuisance and that even if his pool participants have to take a loss, that it's worthwhile because of the public good that it does. In other words, he sees these inscriptions as *immoral* and that the price he's willing to pay is fees that he would otherwise have gotten. People are acting like this is some sort of affront to market forces or game theory and that the only consideration he should have is like that of homo economicus, whether he makes more profit or less. But this is a very fiat/Keynesian way of looking at the whole picture. People are more than just profit-maximalization machines and mining pool participants are no different. Indeed, that's the impression I got from the Ocean Mining Pool summit I went to a few weeks ago. They are that response to the many mining pools that are doing unethical things like not paying out their participants for fees that come in off band. The calculation that Luke has made is that being moral, that is not polluting blocks, is worth the 1% loss in fees. Given what I know about Luke, even a 90% loss in fees is unlikely to sway him. Morals have a place in any ecosystem because they, too, have value. A mining pool that doesn't burdens nodes with extra data that they have to persist has positive communal value. A mining pool that does the opposite has detrimental communal value. And from Luke's perspective, not burdening nodes is important enough that he chooses not to include them in his block templates. This moral reasoning is not something that is welcomed by a lot of people and it's hard to miss that many of the critics are creating ordinals, BRC-20 and so on. They want to run this centralized scheme over Bitcoin and make money. In other words, they have a strong economic interest in getting their transactions included and shout censorship whenever they're not. But we must be careful, because this is not the same as, say, the OFAC prohibition list. And this is where things become a little harder to explain because most people have no sense of the difference between centralized rules being enforced under threat of violence and bottom-up moral behavior slowly adopted. But what Luke is doing is very much bottom up. He's specifically doing something out of moral conviction. Whether you agree with him or not, you can understand why he's doing it, particularly the moral reasoning. This is different than a centralized mandate with threats of violence against those that don't comply. I believe that what Luke is doing is a good thing. He's showing his convictions and reasoning about why inscriptions are bad through these templates. The participants are free to move if they disagree. I suspect, though, that there are many that agree with him and they'll vote with their hash rate. For homo economicus, something like fair trade coffee does not make sense. Yet people gladly pay a little more for it because they believe that it ultimately helps those people produce and live a better life. I believe what Luke and Ocean are doing is similar. They're offering less-bloated blocks even at the cost of some fees.