Capex (hardware/space) + Opex (internet/electricity) = ROI

In order to get more consistent payouts, we mine to a mining pool, which pays us for our shares of work. Since a mining pool condenses a lot of hashrate, the frequency is higher. There are various schemes on top of that (pay per share, etc..), but that is the simple explanation.

This is the 'centralization' argument to mining, except that miners can change to another pool near instantly. If a pool starts to misbehave, then miners will dump them immediately. There is precedent for this, ghash.io.

There are a lot of upfront costs (hardware/space), but once you've paid for those and you have cheap enough electricity, then the rest is profit.

Disclosure: I am a large scale ETH (gpu) miner.

This makes sense, thank you.

Each Bitcoin block pays out more than a quarter of a million dollars to the miner that discovers it. Every day, more than 140 blocks are typically mined. "Infrequent" is relative, but if a miner manages to mine one block once per month (roughly once every 4000 blocks), its revenue will be in excess of $3 million per year.

Many mining companies make much more than that, because Bitcoin is more centralized than it should be.

I'd like to hear how you think it is centralized. I address the common point above, but maybe you have other ideas.

Centralization is a continuum, not a binary condition. I don't think that Bitcoin is centralized in absolute terms—it's just more centralized than it should be—which is a normative opinion I have, not a statement of fact.

Bitcoin would be less centralized if ordinary people could mine it successfully with their home computers, rather than needing to buy specialized hardware. As it stands, mining activity is performed almost entirely by people and entities able and willing to spend the money to buy mining rigs. Not a bad thing per se, but it results in fewer people mining than I might prefer.

I think your explanation is a good one.

Thanks for the clarification because it sounded like a more definitive statement than a normative opinion.

Join some of the FB mining groups... you'd be surprised at how many 'normal' people have bitcoin miners. They aren't at the scale of the commercial places, but it is happening. Especially once China shut down, the markets were flooded with boxes.

This is also why I prefer GPU based mining. More accessible (gpus are everywhere) and it is actually the older hardware that is more ROI profitable. It isn't a hardware race like it is with bitcoin. The risk is lower too... if you burn out a $100 card, it is a lot less of an impact than a several thousand $ card.

The interesting thing to watch is what what coin (or technology) will pop up next as the top GPU PoW. There can only be one.