6 ms·

The difference is that even if the difficulty adjusts, there will be dormant ASICs waiting to be used. If the price lowers enough and enough ASICs are out on th

by hudon 8y ago

The difference is that even if the difficulty adjusts, there will be dormant ASICs waiting to be used. If the price lowers enough and enough ASICs are out on the bench, it’ll at one point becoming economically beneficial to turn them all on and attack the network rather than having them collect dust and depreciate.

mikeyouse 8y ago
If they’re dormant, by definition they’re already unprofitable to operate. If the price decreases further, only the most efficient miners will remain, not the least efficient of them.
- hudon 8y ago
  Unprofitable to operate in friendly conditions* If you can flip a switch and 10x the hashrate of a network, all under your control, and you don’t care about killing the chain in your attack, it may be a perfect exit for you if you no longer want to play the mining game. There’s actually a mining pool doing something like this on smaller PoW bitcoins https://sharkpool.cash https://sharkpool.cash (not associated, just think it’s interesting)
  - dbldogdareudang 8y ago
    Great. Self-aggrandizing tech-cultists utilized collective effort for creating shit tons of already outdated hardware to increase ephemeral “value numbers” that only exists in a database (net worth). The tech world has jumped the shark. It’s now producing fart pipes and spinner rims to justify investment, rather than truly useful invention.
  - pedrocr 8y ago
    How do you cash out on this kind of attack if by your own actions you're crashing the value of the coin?
    - hudon 8y ago
      Short it.
      - dlubarov 8y ago
        Or double spend. E.g. you could send coins to an exchange, cash out, then mine off an old block to get your coins back.
        hudon 8y ago
        Very true. I still believe this happened in Bitcoin in 2013... When Pieter Wuille and Luke DashJr decided to abandon the v0.8 fork and told the miners to hop on v0.7, they could have easily sold v0.8 coins...
  - kss238 8y ago
    Any large miner will be profitable mining long before they have more dormant hashing power to 51% bitcoin.
    - amluto 8y ago
      Can you explain why this is the case, especially when the value of BTC is declining? The capital costs (ASICs and the power hookups) are sunk costs, and if it stops being profitable to opwerate all the ASICs honestly, or even to operate any of them if you don't have the lowest cost per hash on the network, then it may be quite valuable to attack the network and barely valuable at all to continue mining normally.
      - Isinlor 8y ago
        Quite likely an attack on BitCoin would send the price trough the floor before you would be able to cash out.
  - deleted 8y ago
    [deleted]
- btown 8y ago
  I've speculated before that the Chinese government may use this to sow confusion in the event of an altercation, "hot" or otherwise, with the West - in which case, the profitability of a miner is moot, only the ability to spin up a majority of the network.
  - tlrobinson 8y ago
    Instead of “strategic oil reserves” countries will need “strategic Bitcoin miner reserves”.
marcosdumay 8y ago
Didn't think about it. That's a relevant threat to every coin that can use the Bitcoin ASICs. And probably will even happen to others before hitting BTC itself.
- klipt 8y ago
  Cost of 51% attacks on various coins: https://www.crypto51.app/ https://www.crypto51.app/
stale2002 8y ago
People vastly overestimate the profitability of attacking a crypto network. There are tons and tons of much smaller coins, that can be attacked for very cheap, and yet attacks are still very rare. IMO, this is because double spends just aren't a very good idea. If you tried to steal money from an exchange, everyone would know it was you doing the attack, and then they wouldn't accept your money in the future, or maybe you'd just go to jail instead. Also, the network is not static. If there is lots of hashpower sitting unused, maybe that hashpower would turn in to defend against an attack. More people have something to lose from a successful attack, and thus could be motivated to defend when an attack happens.
- hudon 8y ago
  Haha, then “PoW is for security” is a myth. If you are correct (which is arguable), then you don’t need PoW, you just need an elected federation of validators. And validators won’t attack because of the counter-incentives you describe. So either PoW has a security hole related to dormant ASICs or it’s useless. Either way it’s not a good look.
  - stale2002 8y ago
    Dormant POW could be as much of a benefit as it is a drawback. If someone owns 10s of millions of dollars worth of miners that are temporarily turned off, do you think this entity would want an attack to succeed? No. They'd want to protect their future investment in mining equipment. They might just turn that hashpower back in, if an attack was in progress, and take a temporary loss to fight off a temporary attack. Even the threat of a big player coming in to prevent an attack would make the risk of attacking way to high. We saw this happen recently when someone tried to attack the Bitcoin Cash network. Defending miners temporarily turned on their hashpower to stop any attacks. And it worked.
    - Nursie 8y ago
      > If someone owns 10s of millions of dollars worth of miners that are temporarily turned off, do you think this entity would want an attack to succeed? Well that depends on how much they're holding and how deep they are in the hole at the given time. > No. They'd want to protect their future investment in mining equipment. Unless they were in financial trouble and an attack would get them some cash, fast. The sort of financial trouble that can happen when a company invests, say, millions and millions of dollars into now-unprofitable hardware.
stcredzero 8y ago
Couldn't the protocol be extended, such that the hash algorithm could be switched periodically, in such a way that ASICs would no longer be profitable to produce?
- dlubarov 8y ago
  That's essentially the approach Monero has taken. From [1], > In sum, we strongly believe that it's beneficial to preserve our ASIC resistance. Therefore, we will perform an emergency hard fork to curb any potential threat from ASICs if needed. Furthermore, in order to maintain its goal of decentralization and to provide a deterrent for ASIC development and to protect against unknown or undetectable ASIC development, the Monero team proposes modifying the Cryptonight PoW hash every scheduled fork, twice a year. [1] https://ww.getmonero.org/2018/02/11/PoW-change-and-key-reuse.html https://ww.getmonero.org/2018/02/11/PoW-change-and-key-reuse...
- Phlarp 8y ago
  In theory yes, the algorithm could be changed or even moved away from proof of work and towards proof of stake (I think ETH is doing this?) In practice bitcoin is somewhat resistant to large changes or forks, most anyone who would consider any type of alteration to the existing implementation forked off with bitcoin cash for a relatively minor change (block size). That self selection has left a staunchly "traditionalist" majority in the remaining bitcoin community.
celticninja 8y ago
Getting those ASICs from where they are unused to where someone can use them to attack the network is not a simple task. The only way this becomes possible is if the current owner of the hardware decides to attack the network. Even to buy the hardware will require a large capital input, let's at you can buy $1m worth of hardware and ship it to your location within 7 days (shipping and setup), you then need to run it (electricity cost) and hope that you can recoup costs plus profit by double spending. The only option to double spend and profit is to double spend on an exchange and withdraw fiat currency before the exchange realises, the speed at which fiat transfers work this is highly unlikely.
qubex 8y ago
Otherwise known as the “latent surplus capacity ratchet”.

by hudon 8y ago

mikeyouse 8y ago

If they’re dormant, by definition they’re already unprofitable to operate. If the price decreases further, only the most efficient miners will remain, not the least efficient of them.

hudon 8y ago
Unprofitable to operate in friendly conditions* If you can flip a switch and 10x the hashrate of a network, all under your control, and you don’t care about killing the chain in your attack, it may be a perfect exit for you if you no longer want to play the mining game. There’s actually a mining pool doing something like this on smaller PoW bitcoins https://sharkpool.cash https://sharkpool.cash (not associated, just think it’s interesting)
- dbldogdareudang 8y ago
  Great. Self-aggrandizing tech-cultists utilized collective effort for creating shit tons of already outdated hardware to increase ephemeral “value numbers” that only exists in a database (net worth). The tech world has jumped the shark. It’s now producing fart pipes and spinner rims to justify investment, rather than truly useful invention.
- pedrocr 8y ago
  How do you cash out on this kind of attack if by your own actions you're crashing the value of the coin?
  - hudon 8y ago
    Short it.
    - dlubarov 8y ago
      Or double spend. E.g. you could send coins to an exchange, cash out, then mine off an old block to get your coins back.
      - hudon 8y ago
        Very true. I still believe this happened in Bitcoin in 2013... When Pieter Wuille and Luke DashJr decided to abandon the v0.8 fork and told the miners to hop on v0.7, they could have easily sold v0.8 coins...
- kss238 8y ago
  Any large miner will be profitable mining long before they have more dormant hashing power to 51% bitcoin.
  - amluto 8y ago
    Can you explain why this is the case, especially when the value of BTC is declining? The capital costs (ASICs and the power hookups) are sunk costs, and if it stops being profitable to opwerate all the ASICs honestly, or even to operate any of them if you don't have the lowest cost per hash on the network, then it may be quite valuable to attack the network and barely valuable at all to continue mining normally.
    - Isinlor 8y ago
      Quite likely an attack on BitCoin would send the price trough the floor before you would be able to cash out.
- deleted 8y ago
  [deleted]
btown 8y ago
I've speculated before that the Chinese government may use this to sow confusion in the event of an altercation, "hot" or otherwise, with the West - in which case, the profitability of a miner is moot, only the ability to spin up a majority of the network.
- tlrobinson 8y ago
  Instead of “strategic oil reserves” countries will need “strategic Bitcoin miner reserves”.

marcosdumay 8y ago

Didn't think about it. That's a relevant threat to every coin that can use the Bitcoin ASICs. And probably will even happen to others before hitting BTC itself.

klipt 8y ago
Cost of 51% attacks on various coins: https://www.crypto51.app/ https://www.crypto51.app/

stale2002 8y ago

People vastly overestimate the profitability of attacking a crypto network. There are tons and tons of much smaller coins, that can be attacked for very cheap, and yet attacks are still very rare. IMO, this is because double spends just aren't a very good idea. If you tried to steal money from an exchange, everyone would know it was you doing the attack, and then they wouldn't accept your money in the future, or maybe you'd just go to jail instead. Also, the network is not static. If there is lots of hashpower sitting unused, maybe that hashpower would turn in to defend against an attack. More people have something to lose from a successful attack, and thus could be motivated to defend when an attack happens.

hudon 8y ago
Haha, then “PoW is for security” is a myth. If you are correct (which is arguable), then you don’t need PoW, you just need an elected federation of validators. And validators won’t attack because of the counter-incentives you describe. So either PoW has a security hole related to dormant ASICs or it’s useless. Either way it’s not a good look.
- stale2002 8y ago
  Dormant POW could be as much of a benefit as it is a drawback. If someone owns 10s of millions of dollars worth of miners that are temporarily turned off, do you think this entity would want an attack to succeed? No. They'd want to protect their future investment in mining equipment. They might just turn that hashpower back in, if an attack was in progress, and take a temporary loss to fight off a temporary attack. Even the threat of a big player coming in to prevent an attack would make the risk of attacking way to high. We saw this happen recently when someone tried to attack the Bitcoin Cash network. Defending miners temporarily turned on their hashpower to stop any attacks. And it worked.
  - Nursie 8y ago
    > If someone owns 10s of millions of dollars worth of miners that are temporarily turned off, do you think this entity would want an attack to succeed? Well that depends on how much they're holding and how deep they are in the hole at the given time. > No. They'd want to protect their future investment in mining equipment. Unless they were in financial trouble and an attack would get them some cash, fast. The sort of financial trouble that can happen when a company invests, say, millions and millions of dollars into now-unprofitable hardware.

stcredzero 8y ago

Couldn't the protocol be extended, such that the hash algorithm could be switched periodically, in such a way that ASICs would no longer be profitable to produce?

dlubarov 8y ago
That's essentially the approach Monero has taken. From [1], > In sum, we strongly believe that it's beneficial to preserve our ASIC resistance. Therefore, we will perform an emergency hard fork to curb any potential threat from ASICs if needed. Furthermore, in order to maintain its goal of decentralization and to provide a deterrent for ASIC development and to protect against unknown or undetectable ASIC development, the Monero team proposes modifying the Cryptonight PoW hash every scheduled fork, twice a year. [1] https://ww.getmonero.org/2018/02/11/PoW-change-and-key-reuse.html https://ww.getmonero.org/2018/02/11/PoW-change-and-key-reuse...
Phlarp 8y ago
In theory yes, the algorithm could be changed or even moved away from proof of work and towards proof of stake (I think ETH is doing this?) In practice bitcoin is somewhat resistant to large changes or forks, most anyone who would consider any type of alteration to the existing implementation forked off with bitcoin cash for a relatively minor change (block size). That self selection has left a staunchly "traditionalist" majority in the remaining bitcoin community.

celticninja 8y ago

Getting those ASICs from where they are unused to where someone can use them to attack the network is not a simple task. The only way this becomes possible is if the current owner of the hardware decides to attack the network. Even to buy the hardware will require a large capital input, let's at you can buy $1m worth of hardware and ship it to your location within 7 days (shipping and setup), you then need to run it (electricity cost) and hope that you can recoup costs plus profit by double spending. The only option to double spend and profit is to double spend on an exchange and withdraw fiat currency before the exchange realises, the speed at which fiat transfers work this is highly unlikely.

qubex 8y ago

Otherwise known as the “latent surplus capacity ratchet”.