How Do Hashrate Rental Markets Affect the Profitability of Legitimate Miners on Small Coins?

Hashrate rental markets introduce volatility and competition, negatively impacting the profitability of legitimate miners. During rental spikes, the difficulty of mining increases dramatically, reducing the legitimate miners' share of block rewards.

Furthermore, successful 51% attacks can lead to a coin's devaluation, making the block rewards less valuable. This instability discourages long-term, honest mining participation.

Miners might also choose to rent out their own hashrate for a guaranteed fee rather than mine a volatile coin.