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Dedicated Cost Principle

Dedicated Cost Principle: Only necessary costs by miners contribute to double-spend and censorship resistance. Unnecessary costs, like those from misconfigured machines, are wasteful and do not enhance security.

Energy Efficiency Theory: Suggests adding non-dedicated costs to mining, like the discovery of prime numbers, to make PoW more efficient, assuming these have marketable value. However, this theory is invalid as the same efficiency could be achieved by basic PoW with separate operations for marketable products.

Brewer Analogy: Just as brewers can sell their grain byproducts to farmers, improving efficiency by turning waste into value, miners could theoretically offset mining costs with marketable byproducts. But necessary net costs must still match the reward due to competition.

Byproduct Value: Costs dedicated to producing independently-marketable value can be offset by selling that byproduct, making them not truly a cost to the mining process.

Merged Mining: Often used to boost new coins' hash rates but fails to secure them as the hash rate isn't dedicated. The full cost of the hash rate can be recouped by selling it on one chain, allowing for censorship on others without cost.

**Cryptoeconomics by [Erik Voskuil](https://github.com/evoskuil).**

*The book can be found on [GitHub](https://github.com/libbitcoin/libbitcoin-system/wiki/Cryptoeconomics).*

The rest of the summarized chapters are at https://expatriotic.me/cryptoeconomics