The chief scientist of blockchain research and development company nChain, Craig Wright, has written up an analysis of orphan blocks and determined that although miners complain about them, they increase the health of the Bitcoin mining network by incentivizing miners to invest in increased connectivity.
A block is a collection of the most recent transactions on the Bitcoin network collected together and cryptographically hashed. An orphan block is a duplicate block that has the same block number as another block, but is rejected when the main chain chooses the other block. Orphan blocks occur naturally when miners find blocks at similar times, but can also be caused by an attacker with a large amount of hash power attempting to reverse transactions with a 51% double spend attack.
Orphan blocks are a rare occurrence; only two have occurred since the beginning of 2018. Regardless, miners still complain about orphan blocks, especially when they experience them first hand. They successfully solve a block, receive the block reward, only to have it yanked away minutes later when the main chain has chosen another block. This results in a loss of the block reward of BTC 12.5 Bitcoins currently worth USD 80,000, enough of a loss to frustrate miners.
As Craig Wright points out, there is no true loss of mining reward due to orphan blocks on average. There are always 2016 blocks every two weeks and, therefore 2016 block rewards, regardless of how many orphan blocks occur.
Orphan blocks actually increase the health of the Bitcoin network since they give miners a good incentive to have proper connectivity infrastructure. A natural orphan block occurs due to a lack of efficient network communication combined with two pools finding blocks within a minute of each other. Both pools broadcast their block, but the pool with better connectivity will win since its block will propagate across the network faster.
Therefore, orphan blocks should not be viewed as a flaw in Bitcoin’s protocol, rather they are a benefit since they encourage connectivity of the mining network, increasing the speed, efficiency, and security of the Bitcoin network.
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