- If the Bitcoin is disturbing the finances, then the powerful computer chips known as ASICs are disturbing the cryptocurrency mining. Its mere existence turned the security of the Bitcoin block chain, which in the early days of the network could be performed at home by average users, in a massive industry that consumes huge amounts of electricity and generates ridiculous benefits for hardware manufacturers. .
Now, these specialized chips, called application-specific integrated circuits (ASICs), are arriving for other block chains. On March 15, the multi-billion dollar Chinese company Bitmain tweeted that it was accepting orders for the Antminer X3, a $ 12,000 ASIC that would only serve one thing: Mining Monero and other digital coins secured with the same algorithm. Only two weeks later, on April 3, Bitmain announced the Antminer E3, an 800 dollar chip made specifically for Ethereum mining. ASICs such as E3 and X3 are controversial in the cryptocurrency community. Although both are more efficient in mining compared to graphics cards and CPUs, they are also much more expensive, scarce, and can be said to be a driving force behind the centralization of computing power (and the financial rewards of mining) in cryptocurrency networks.
Given how this changed the landscape of Bitcoin mining – which led to the rise of giants such as Bitmain in China and BitFury in the US – Monero and Ethereum were designed to be “ASIC resistant”.
Now, the release of ASIC X3 and E3 miners has sparked an ongoing debate within the cryptosphere about how to address what many see as an existential threat to the integrity of the Monero and Ethereum networks.
“I will do everything in my power to help the community prevent the proliferation of ASICs that lead to centralization in the Monero network,” wrote Riccardo Spagni , one of Monero’s main developers, on GitHub in mid-February in response to rumors about a possible Monero ASIC.
On April 6, Monero modified its mining algorithm “to curb any potential threat from ASIC and preserve the resistance of ASIC.” That same day, the core developers of Ethereum met to discuss whether they should change the Ethereum algorithm and finally decided not to do so at the moment, to the annoyance of the Ethereum community.
Like Spagni, many developers fear that ASICs will lead to the centralization of their cryptocurrencies and undermine their biggest selling point: security. If ASICs make mining inaccessible to most people while concentrating computing power in the hands of a few large mining operations, it could be said that this makes networks more vulnerable to manipulation or censorship by governments or companies that own the majority of ASICs.
At the same time, other developers in the world of crypto currencies say that fears of centralization are exaggerated and that ASICs actually improve the security of a cryptocurrency network making them harder to master with the power of raw computing.
Clearly, Bitmain overcame the technical and economic challenges that made Ethereum and Monero resistant to ASIC. The question for the developers of Monero and Ethereum, then, is what are the consequences of introducing ASICs to a cryptocurrency network and what, if anything, should be done about it? Here is everything you need to know to get up to date on “the good, the bad and the ugly” when it comes to ASIC mining.
What is an ASIC?
ASICs have been around for decades and can be found in many common devices such as your cell phone, but their adoption as cryptocurrency miners only happened in recent years. The first Bitcoin ASICs were sold in 2013, and since then the ASIC miners have been developed for a number of other currencies, such as Litecoin and Dash .
It is difficult to make a direct comparison between CPUs, GPUs and ASICs, since technically CPUs and GPUs can be considered a type of ASIC. The main difference between ASICs and CPUs and mining GPUs is that mining ASICs do not have all the extra features that make CPUs and GPUs so versatile. You can not run an operating system or play a video game in a Bitcoin ASIC because the chip is designed to do only one thing: mine Bitcoin. Therefore, the efficiency of an ASIC miner is obtained because all their computing resources can be optimized for a single well-defined task.
” Mining ” is the colloquial term for a resource-intensive computing process that basically involves guessing a number that results in a desired solution when connected to a hashing algorithm. This value “solves” a block of Bitcoin transaction data, and the block is added to the block chain. A miner receives a reward in cryptocurrency for this work, and these hash-based algorithms are called work test algorithms (PoW).
Most of the major cryptocurrencies use a unique PoW algorithm. For example, Bitcoin uses a hash algorithm called SHA-256 , Monero uses CryptoNight, and Ethereum’s PoW algorithm is called Ethash . There are many different reasons for choosing a PoW algorithm instead, but as far as ASICs are concerned, it is mainly reduced to memory requirements. Unlike Bitcoin, Litecoin, or its innumerable derivatives that have been surpassed by ASICs, Ethereum and Monero are considered ” hard of memory “, which means that they require a decent amount of RAM to execute their hash algorithms.
CPUs and graphics cards are chips that can be used for a wide range of different tasks. What these types of chips lack raw efficiency, they compensate with their ability to execute processes that require that much data be stored in the memory of a computer. RAM slows ASICs, so algorithms that make a lot of use of it generally avoid the influx of specialized chips. These algorithms are called “ASIC resistant”. General-purpose chips that are suitable for slowing down RAM, such as GPUs and CPUS, can be used to undermine this type of algorithm.
In the last month, Bitmain launched the first ASICs capable of overcoming the memory hardness of Monero and Ethereum.
Criticism against the ASICS
In 2014, almost a year before the launch of Ethereum, Vitalik Buterin visited a “small and discreet building in Shenzhen, China” where he found a small stack of Bitcoin ASICs waiting to be sent to the third floor. In a blog post, Buterin said that on the floor below he found stacks of ASICs that represented a quarter of the computing power that was added to the Litecoin network every day.
Buterin marveled at how this small factory in China was producing this new computing power every day on its own. It was the centralization of hardware in action. The question for Buterin was whether the centralization of ASIC production was really a bad thing for a cryptocurrency network. After all, the production of GPUs and CPUs is also highly centralized, with a handful of companies like Nvidia, AMD and Intel dominating the market.
“With the ASIC miners, things are still not that bad at the moment,” Buterin wrote in the 2014 blog. “Although ASICs are only produced in a small number of factories, they are still controlled by thousands of people throughout the world. world. Soon, however, that may change. Within a month, what if the manufacturers realize that it does not make economic sense for them to sell their ASICs when instead they can simply keep all their devices in a central warehouse and earn all of them? income?”.
Today, as in 2014, there are a handful of companies that manufacture cryptocurrency ASICs, although a Chinese company called Bitmain has established itself as a clear leader in this field. The Antminers of Bitmain have basically become synonymous with Bitcoin mining, but the company not only manufactures these chips to sell, as predicted Buterin, but also many of its units reserved for its own mining operations. BitFury, an American company, follows a similar business model.
When Motherboard spoke with Bitmain’s marketing director, Nishant Sharma, by e-mail, he noted that the company did not reveal how many ASICs it is producing as a political issue. In addition, he said he did not know how many ASICs Monero and Ethereum plan to keep for themselves in their own mining operations.
At the time of writing this article, the two mining groups of Bitmain represent approximately 40 percent of the total computing power of the Bitcoin network . The control of much of the Bitcoin network means that Bitmain also has a great influence on the ecosystem. During Bitcoin’s bonanza of bifurcations last year, Bitmain played an important role in the decision to fork Bitcoin in two versions: Bitcoin Core and Bitcoin Cash. There is also the risk of a theoretical “51 percent attack,” when a single miner can hold Bitcoin’s hash power hostage and wreak havoc on the network while in command.
Reliance on a single company for most of the hardware that protects the block chain also poses security risks. For example, in April 2017, anonymous researchers found a firmware vulnerability in Bitmain Antminer called Antbleed , which was cataloged as a “death switch” ASIC. This vulnerability allowed Bitmain, a government or other bad actors to remotely prevent Bitmain’s ASICs from undermining the network, which could paralyze Bitcoin. Bitmain denied that it was malicious and issued a patch for the vulnerability a few days after being discovered.
The proliferation of ASICs in a network also gradually expels the miners who run GPUs or CPUs, increasing the financial barrier of entry. As the participation of these less efficient miners in the computational power of the network is reduced, it eventually reaches a point where the cost of electricity needed for the operations of these miners is greater than what they are earning from mining. . These miners are forced to use the savings to buy an ASIC and continue mining, or change to a different cryptocurrency.
Jimmy Song , one of Bitcoin’s main developers, told Motherboard that he does not see the centralization of ASIC production as a big problem.
“It’s just a problem in the short term, since Bitmain has most of the mining manufacturing capacity,” Song said in a Twitter message. “In the long term there are many players who are looking at the margins that Bitmain is making in advance waiting to enter. I know at least four startups that are trying to dethrone Bitmain and there are also bigger players like Intel, Samsung and Nvidia that have to consider this because the margins are very large. ”
Given the dominance of Bitmain in the mining industry and the corporate practices that are not very transparent, Spagni and many in the community of Monero maintain their reservations regarding the company. But even beyond the concerns of Bitmain and the monopoly, the trend towards centralization in ASICS ‘own manufacturing has disturbed the community.
The supporters of the ASICs speak
When Motherboard asked Bitmain’s spokesperson, Sharma, about fears that ASICs would lead to centralization, he said that “this has not necessarily worked in practice.”
“We are very aware of this perception and we take it seriously given our leadership position,” Sharma said in an email. “That’s why (when it comes to smaller cryptographic networks) we have modulated our sales of mining equipment to make sure that no customer receives too much from a new batch.”
However, even if the miners do not want to believe in Bitmain’s claims, other researchers argue that there are objective security advantages in allowing ASICs in a cryptocurrency network.
Joseph Bonneau, assistant professor of computer science at New York University, presented an investigation at the conference on financial cryptography and data security in February that examined the cost of a hostile takeover of a blockchain. One of the blockchain attacks examined by Bonneau is known as ” rent attack, ” which involves renting enough computational power from a cloud computing service company, for example, to dominate a blockchain network. As Bonneau points out, this type of attack is only feasible in chains of blocks mined with basic hardware such as GPUs.
“For work test chains dominated by ASIC, such as Bitcoin, it is likely that the rental strategy is not possible,” Bonneau wrote. The reason for this, he argued, is that most of Bitcoin’s mining hardware is already accounted for and not available for rent.
“Among the work test systems, our analysis indicates a clear safety advantage for mining dominated by ASIC, since rental attacks are not possible and existing miners should have more incentives to resist bribery attempts,” he concluded. Bonneau
As far as Monero is concerned, there may also be a secondary security effect when adding ASICs to the network: The deactivation of networks of massive Monero mining bots. In recent months, ” cryptojacking ” – in which a website script furtively uses CPU cycles not used to mine Monero – has been on the rise. The ASIC miners would make this completely unproductive because they could increase the difficulty of the network to levels that even thousands of CPUs working together could not compete with.
Some even hold the opinion that centralization is inevitable, with or without ASIC. Software developer Philip Daian argued in a recent blog that economies of scale centralized in the mining space, exemplified by Bitmain, are destined to emerge. A number of factors, including unequal access to cheap electricity, cheap labor and secret agreements with regulators, will give some large mining companies a competitive advantage over smaller mining operations, regardless of whether the ASICs are involved or not. , argument. In the long term, this may result in the same centralization of resources that anti-ASIC bifurcations are designed to avoid in the first place, Daian wrote.
For example, nothing prevents a mining giant ASIC from reaching an agreement with a manufacturer of GPUs to develop specialized hardware. “Should we oppose them too, insisting only on basic hardware?” Daia asked rhetorically.
Ultimately, Sharma argued that ASICs “demonstrate the dedication and commitment of the mining community to a particular currency, a basis for which participants can have a long-term faith in the strength of a network,” said Sharma. . “While mining in the GPU or the CPU offers some flexibility in redirecting to different crypto currencies, these miners have a strong incentive to jump from one currency to another for their greatest short-term economic advantage.”
The future of the ASICS
The implementation of ASICs in a cryptocurrency network is a deeply divisive issue, and the consequences are still emerging. After all, Bitcoin has just received its first ASICs just a few years ago.
Spagni and the Monero developers have taken a hard line stance on the issue and are planning a hard bifurcation for Monero that will make the Bitmain ASICs unusable on the network. When Motherboard spoke with Sharma, he said that if this happened Bitmain would still send the ASICs, which can be used to extract other currencies using the CryptoNight algorithm. (There are only a handful of smaller coins that use this PoW algorithm, such as Electroneum).
Ethereum is taking a more neutral approach. During the weekly meeting of developers of the Ethereum Core, held on April 6, one of the points on the agenda was whether or not to look for a hard fork that would render the ASEMA Ethereum Bitmain unusable.
For now, Buterin suggested that no action be taken because the Antminer E3 only offers marginal increases in performance compared to high-end GPUs, so it will not make a big difference in terms of computational power in the network. In addition, Buterin was not even sure what changes would make the ASIC ineffective.
“At this moment I am inclined to do nothing,” Buterin said. “We just have no idea what specific protocol change would make a difference.”
Developers ethereum also noted during the meeting that it was probably better to concentrate time and energy in the transition network test system work (proof-of-work) system test participation (proof-of-Stake ), which would mean that no type of mining is done within the network at all. This change has been part of Ethereum’s development roadmap for years, and as it happens it is also the most effective way to block ASIC mining.
The problem, however, is that the deadline for the transition to the participation test is uncertain, although the developers of Ethereum see this happening in the near future.
“In the worst case, Bitmain will control a large part of the Ethereum network for a short period of time,” Buterin said.
He also noted that if Bitmain or any other company gained control of the majority of the Ethereum network and used it for an attack, the Ethereum developers could accelerate the rest of the protocol development and implement a new algorithm in a week just to protect the network as a last measure of protection. On the other hand, Buterin pointed out that companies like Bitmain have an incentive to strategically “minimize” their control over a network, since obvious majority control would encourage developers to change protocols and make their hardware useless, which is not It’s good for business.
So until a real attack occurs, Buterin and most of the other Ethereum developers agreed that no protocol change was the best course of action .
“People are very upset with the ASICs and it’s as if they were shouting, ‘Down with Bitmain, down with the ASICs,’ said Ethereum developer Hudson Jameson. “I do not know where that comes from, I think it could be a crossroads of the Bitcoin community. If this is something that the community wants and has a good reason, we can do it, but for now the consensus of the main developers is that we should not do anything at this time. “
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