5 ms·

Bitcoin mining the hard way: the algorithms, protocols, and bytes

144 points by lelf 13y ago

joveian 13y ago
Thanks, I was just trying to explain bitcoint recently but didn't know enough of the details so I'll pass that along. I find the linked hashchain rate chart and the 1000x increase over the past year to be really interesting when considering that bitcoin relies on 50% of that being honest. The difference in processing power used in hashing now vs. about a month ago would be enough to own the system a month ago.
- nwh 13y ago
  The introduction of new hardware (~difficulty) will level off fairly soon, we're reaching efficiency limits in what people can produce. I don't think we are at the technical limit, just at the limit of what the current companies involved are capable of. Eligius controls a large portion (~20%) of the hashrate, it's somewhat reassuring that they are known to be acting in good faith (geddit?).
  - yetfeo 13y ago
    GHash.io and BTC Guild own >50% between them though: http://blockorigin.pfoe.be/top.php http://blockorigin.pfoe.be/top.php Eligius have some mining rules which one could regard as not acting in good faith (rejecting gambling site transactions, etc) depending on your point of view. This can prevent some from using them and limits their hashrate somewhat. If you look at the top pools list compared to 6 months ago that landscape has changed quite a bit. The pools outside of the top 5 have less market share and there are less pools. Mining power is slowly centralizing: https://web.archive.org/web/20130215040845/http://blockorigin.pfoe.be/top.php https://web.archive.org/web/20130215040845/http://blockorigi...
    - nwh 13y ago
      You're not wrong that there's less pools, I think it's just somewhat due to a lot of miners not understanding how pools work. There's an unfortunate misconception that the size of the pool impacts your income, so they gravitate to the largest pool. Ghash.io is almost certainly evil (attacking sites by double spending in the past), but there's not much we can do about it unfortunately. Hopefully p2pool can eventually become larger and more significant, then the issue goes away somewhat.
      - thekiwi99 13y ago
        Can you provide a source for Ghash.io double spending? I've not heard about that before, and it seems unlikely.
        hendzen 13y ago
        https://bitcointalk.org/index.php?topic=327767.0 https://bitcointalk.org/index.php?topic=327767.0
        nwh 13y ago
        Critically in this thread they do acknowledge the double spends happened.
gus_massa 13y ago
Previous Discussion: https://news.ycombinator.com/item?id=7162153 https://news.ycombinator.com/item?id=7162153 (216 points, 22 days ago, 26 comments)
- deleted 13y ago
  [deleted]
- kens 13y ago
  That's my previous article on generating transactions manually. The current article continues where that left off, discussing mining. I wanted the titles to show the articles are related, but I think I've caused confusion. If someone has a better title suggestion, please let me know. (Genuine request, not sarcasm.)
  - gus_massa 13y ago
    Interesting article as always. No problem with the title. I just made a mistake. I like to have more articles with a technical discussion of the mining process. Most people just listen to the "lottery" part of mining and don't hear the chaining and transaction recording part. So they soon propose a new mining algorithm that is more "usefull" or doesn't require so much energy.
plg 13y ago
Ironically, the most cost efficient way of acquiring BTC today may well be to go out into the world and earn dollars (e.g. a job) and then use them to purchase BTC from an exchange.
- wmf 13y ago
  People forget that this was intended all along. Mining exists to secure Bitcoin; Bitcoin does not exist to serve miners. Back when people used gold coins very few of them were miners either.
- vertex-four 13y ago
  No, the most cost efficient is likely to go out into the world and earn BTC (e.g. a job). It's just that it's a bit difficult to find people who have BTC to pay you with at the moment.
  - deleted 13y ago
    [deleted]
    - vertex-four 13y ago
      No, it is not, in most countries. As bitcoins are considered a good, it is generally considered barter. A contractor can accept whatever they want in return for their services, and there's specific taxation rules set out for it, at least in the UK.[0] An employment arrangement, however, might require that a reasonable currency (either the legal tender of the country, or whatever the court decides is reasonable in countries which do not have a legal tender) is offered. Certain laws might allow the employee to opt in to being paid in Bitcoin anyway; BitPay supports this in the US via their Payroll API[1], and I have yet to hear of any legal challenges to it. [0] http://www.hmrc.gov.uk/vat/managing/special-situations/samples.htm#4 http://www.hmrc.gov.uk/vat/managing/special-situations/sampl... [1] https://bitpay.com/bitcoin-payroll-api https://bitpay.com/bitcoin-payroll-api
verroq 13y ago
I have written a proxy pool server (https://github.com/dogestreet/proxypool https://github.com/dogestreet/proxypool) in Haskell if anybody wants to check it out. It's a Stratum to Stratum protocol proxy, it lets you create a mining pool that mines into another mining pool. (Disclaimer, only P2Pool upstreams work for now, I'm trying to get it to work with stratum-mining).
- verroq 13y ago
  Just an update, it now works for all upstreams. As long as they are not using a buggy version of cgminer - v3.7.2
durkie 13y ago
one thing i've never been clear on: what happens after the last bitcoin is mined? it seems like if there isn't a reward of BTC for mining the block (and you're just relying on transaction fees), then mining will become a lot less lucrative/interesting to folks. so do lots of people then drop of out of the mining game, and then difficulty decreases until mining is easy enough to be worth the transaction fees? do transaction fees go up?
- zwily 13y ago
  The reward just keeps halving, so it only approaches 0 (well, until we run out of digits of course). And by the time that happens, transaction fees will probably already be more valuable than the reward.
bamos 13y ago
I don't know much about Bitcoins, but is there a large risk of tainted workers in a pool that are reverse engineered and have knowledge of the part of the algorithm they're helping with? Then, if they detect they mined a coin, they disconnect from the pool, don't report the result, and take all the profit. I couldn't find anything with a quick search, but would be interested to read more about (client-side)? security vulnerabilities of pooled mining.
- kens 13y ago
  I mentioned that in the article. A miner can't "steal" a block they solved for a pool. The miners are working on a block that pays the reward to the pool. If the miner successfully mines a block and bypasses the pool, the address in the block is still the pool's address, so that's still where the 25 bitcoins go. If the miner tries to change the address, the hash changes and the block is no longer valid, so the miner can't submit the tampered block. There is a theoretical attack where the miner throws away a successful block, so nobody gets the reward and the pool suffers. But it's a whole lot of work just to annoy people and this solution-witholding attack isn't viewed as a real problem: http://bitcoin.stackexchange.com/questions/1338/how-is-block-solution-withholding-a-threat-to-mining-pools http://bitcoin.stackexchange.com/questions/1338/how-is-block...

144 points by lelf 13y ago

Thanks, I was just trying to explain bitcoint recently but didn't know enough of the details so I'll pass that along. I find the linked hashchain rate chart and the 1000x increase over the past year to be really interesting when considering that bitcoin relies on 50% of that being honest. The difference in processing power used in hashing now vs. about a month ago would be enough to own the system a month ago.

nwh 13y ago
The introduction of new hardware (~difficulty) will level off fairly soon, we're reaching efficiency limits in what people can produce. I don't think we are at the technical limit, just at the limit of what the current companies involved are capable of. Eligius controls a large portion (~20%) of the hashrate, it's somewhat reassuring that they are known to be acting in good faith (geddit?).
- yetfeo 13y ago
  GHash.io and BTC Guild own >50% between them though: http://blockorigin.pfoe.be/top.php http://blockorigin.pfoe.be/top.php Eligius have some mining rules which one could regard as not acting in good faith (rejecting gambling site transactions, etc) depending on your point of view. This can prevent some from using them and limits their hashrate somewhat. If you look at the top pools list compared to 6 months ago that landscape has changed quite a bit. The pools outside of the top 5 have less market share and there are less pools. Mining power is slowly centralizing: https://web.archive.org/web/20130215040845/http://blockorigin.pfoe.be/top.php https://web.archive.org/web/20130215040845/http://blockorigi...
  - nwh 13y ago
    You're not wrong that there's less pools, I think it's just somewhat due to a lot of miners not understanding how pools work. There's an unfortunate misconception that the size of the pool impacts your income, so they gravitate to the largest pool. Ghash.io is almost certainly evil (attacking sites by double spending in the past), but there's not much we can do about it unfortunately. Hopefully p2pool can eventually become larger and more significant, then the issue goes away somewhat.
    - thekiwi99 13y ago
      Can you provide a source for Ghash.io double spending? I've not heard about that before, and it seems unlikely.
      - hendzen 13y ago
        https://bitcointalk.org/index.php?topic=327767.0 https://bitcointalk.org/index.php?topic=327767.0
        nwh 13y ago
        Critically in this thread they do acknowledge the double spends happened.

gus_massa 13y ago

Previous Discussion: https://news.ycombinator.com/item?id=7162153 https://news.ycombinator.com/item?id=7162153 (216 points, 22 days ago, 26 comments)

deleted 13y ago
[deleted]
kens 13y ago
That's my previous article on generating transactions manually. The current article continues where that left off, discussing mining. I wanted the titles to show the articles are related, but I think I've caused confusion. If someone has a better title suggestion, please let me know. (Genuine request, not sarcasm.)
- gus_massa 13y ago
  Interesting article as always. No problem with the title. I just made a mistake. I like to have more articles with a technical discussion of the mining process. Most people just listen to the "lottery" part of mining and don't hear the chaining and transaction recording part. So they soon propose a new mining algorithm that is more "usefull" or doesn't require so much energy.

plg 13y ago

Ironically, the most cost efficient way of acquiring BTC today may well be to go out into the world and earn dollars (e.g. a job) and then use them to purchase BTC from an exchange.

wmf 13y ago
People forget that this was intended all along. Mining exists to secure Bitcoin; Bitcoin does not exist to serve miners. Back when people used gold coins very few of them were miners either.
vertex-four 13y ago
No, the most cost efficient is likely to go out into the world and earn BTC (e.g. a job). It's just that it's a bit difficult to find people who have BTC to pay you with at the moment.
- deleted 13y ago
  [deleted]
  - vertex-four 13y ago
    No, it is not, in most countries. As bitcoins are considered a good, it is generally considered barter. A contractor can accept whatever they want in return for their services, and there's specific taxation rules set out for it, at least in the UK.[0] An employment arrangement, however, might require that a reasonable currency (either the legal tender of the country, or whatever the court decides is reasonable in countries which do not have a legal tender) is offered. Certain laws might allow the employee to opt in to being paid in Bitcoin anyway; BitPay supports this in the US via their Payroll API[1], and I have yet to hear of any legal challenges to it. [0] http://www.hmrc.gov.uk/vat/managing/special-situations/samples.htm#4 http://www.hmrc.gov.uk/vat/managing/special-situations/sampl... [1] https://bitpay.com/bitcoin-payroll-api https://bitpay.com/bitcoin-payroll-api

verroq 13y ago

I have written a proxy pool server (https://github.com/dogestreet/proxypool https://github.com/dogestreet/proxypool) in Haskell if anybody wants to check it out. It's a Stratum to Stratum protocol proxy, it lets you create a mining pool that mines into another mining pool. (Disclaimer, only P2Pool upstreams work for now, I'm trying to get it to work with stratum-mining).

verroq 13y ago
Just an update, it now works for all upstreams. As long as they are not using a buggy version of cgminer - v3.7.2

durkie 13y ago

one thing i've never been clear on: what happens after the last bitcoin is mined? it seems like if there isn't a reward of BTC for mining the block (and you're just relying on transaction fees), then mining will become a lot less lucrative/interesting to folks. so do lots of people then drop of out of the mining game, and then difficulty decreases until mining is easy enough to be worth the transaction fees? do transaction fees go up?

zwily 13y ago
The reward just keeps halving, so it only approaches 0 (well, until we run out of digits of course). And by the time that happens, transaction fees will probably already be more valuable than the reward.

bamos 13y ago

I don't know much about Bitcoins, but is there a large risk of tainted workers in a pool that are reverse engineered and have knowledge of the part of the algorithm they're helping with? Then, if they detect they mined a coin, they disconnect from the pool, don't report the result, and take all the profit. I couldn't find anything with a quick search, but would be interested to read more about (client-side)? security vulnerabilities of pooled mining.

kens 13y ago
I mentioned that in the article. A miner can't "steal" a block they solved for a pool. The miners are working on a block that pays the reward to the pool. If the miner successfully mines a block and bypasses the pool, the address in the block is still the pool's address, so that's still where the 25 bitcoins go. If the miner tries to change the address, the hash changes and the block is no longer valid, so the miner can't submit the tampered block. There is a theoretical attack where the miner throws away a successful block, so nobody gets the reward and the pool suffers. But it's a whole lot of work just to annoy people and this solution-witholding attack isn't viewed as a real problem: http://bitcoin.stackexchange.com/questions/1338/how-is-block-solution-withholding-a-threat-to-mining-pools http://bitcoin.stackexchange.com/questions/1338/how-is-block...