Mining

Video: Coordinating Bitcoin Upgrades With Poolin’s Alejandro De La Torre

24/11/2020 by Idelto Editor

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The guest for this episode of Bitcoin In Asia is Alejandro De La Torre, vice president at Poolin. De La Torre and Poolin have launched taprootactivation.com to improve on the communication and transparency of the Taproot activation process. Bitcoin Magazine’s Aaron van Wirdum covered the initiative here, and in this Interview, De La Torre and host John Riggins explored additional context around it.

De La Torre has been in the Bitcoin data and mining space since 2014 when he founded SendChat, later acquired by wallet and data service Blocktrail, where he led business development until the company was acquired by Bitmain. Inside of Bitmain, De La Torre co-founded BTC.com and led its European office during the SegWit upgrade process. Now, back with former BTC.com colleagues at Poolin, De La Torre leads its global business development initiatives.

Poolin operates out of Beijing and is currently the second-largest pool in terms of Bitcoin hash power. Their services have expanded over the past year to include facilitating additional financial services products for their miner customers, and they have partnered with BlockFi and Three Arrows Capital, among others, for those expanded services.

In addition to discussing taprootactivation.com, De La Torre talked about lessons learned during the SegWit and blocksize debates, Bitcoin upgrade activations and the changing competitive landscape in the Bitcoin mining pool business.

The post Video: Coordinating Bitcoin Upgrades With Poolin’s Alejandro De La Torre appeared first on Bitcoin Magazine.

HASHR8 Assesses The World Of Bitcoin Mining With Launch Of Index Reports

24/11/2020 by Idelto Editor

Bitcoin mining-focused media company HASHR8 has launched the first report in its “Bitcoin Mining Index,” a planned series on the world’s prominent mining regions that offers detail on how the practice is taking shape and where opportunity lies around the globe.

“Bitcoin mining is truly a global game,” Whit Gibbs, CEO of HASHR8, told Bitcoin Magazine. “Each country has its own unique pros and cons for mining. We are focused on country-level distinction because much of this information is opaque, including regulations, business practices, climate and of course, electricity prices.”

The series has launched with HASHR8’s report on Russia which, like the forthcoming reports about more regions around the world, dives into the electricity costs, energy mix, regulatory environment and capital expenditure that comes with mining bitcoin in the country.

“Russia ranks among the leading hash rate contributors worldwide,” according to a release from HASHR8 on its first report, which demonstrates the types of insight that will be offered for more regions throughout the index. “A federal law introduced in Russia this year legitimized Bitcoin mining as an official economic activity and clarified how Bitcoin miners must operate within the region. Russia’s Siberian region offers extremely competitive electricity rates to Bitcoin miners with rates equivalent to $0.02 to $0.025 per kWh commonly secured.”

The index is meant to help Bitcoin miners decide where to establish operations. While a vast majority of the network’s hash rate is concentrated in China, decentralization of the industry is an ongoing trend. And it’s more than likely that many of those within the Bitcoin community are curious about these regional specifics, even if they don’t necessarily plan to establish mining operations of their own.

“Is a region politically-stable? Are there favorable policies toward bitcoin and cryptocurrency? Is power sustainable throughout the year? What assurances are there that millions of dollars of mining equipment won’t disappear overnight or be subject to government seizures?” asks the release. “HASHR8’s Bitcoin Mining Index explores the many questions and concerns Bitcoin miners have when considering their new facility location, and presents the actionable insights necessary to inform proper decisions.”

“The State of Bitcoin Mining in Russia” is available on HASHR8’s website now. The company expects to release subsequent reports based on how extensive the mining industry is in each region that it hopes to cover.

The post HASHR8 Assesses The World Of Bitcoin Mining With Launch Of Index Reports appeared first on Bitcoin Magazine.

OCC’s Brian Brooks Says China Owns Bitcoin but Crypto World Disagrees: Chinese Crackdown Pushes Miners Away

19/11/2020 by Idelto Editor

Bitcoiners on social media have panned remarks by acting U.S. currency comptroller Brian Brooks that bitcoin is owned by China due to the country’s disproportionate share of the crypto’s mining power. The bitcoiners argue that the disproportionate number of miners stationed in China only means the corresponding block rewards will reflect this imbalance. They add that no country owns bitcoin.

Controlling Internet 2.0

According to Brooks, who has been tapped as the substantive director of the Office of the Comptroller of Currency (OCC), bitcoin miners in China possess more than 50% of the mining capacity. In comments made during a video interview, the pro-crypto Brooks suggests the U.S. is losing the internet 2.0 leadership race to the Asian country. In a short video shared by a Twitter user on November 17, the currency comptroller asks:

As a country, we now face a geostrategic competitiveness issue, which is: Do we in the United States want to own the internet 2.0 in the same way we owned internet 1.0.

However, just like many others, Twitter user ‘Clashicly’ pushes back against Brooks’ assertion. He says “the only risk is CCP firewalls (that) cause a non-contentious fork and a reorg of a minor fork which forces confirmed [transactions] back in mempool.”

The user adds that “this has the greatest risk to exchanges if CCP pools are many times those outside the firewall and exchanges allow deposits after 6 confirms, which could be thrown back in the mempool and double-spent.”

Other users think Brooks is attempting to draw the U.S. government’s attention to the importance of controlling bitcoin’s hashrate.

Still, others like Twitter user rabbit, appear to support Brooks’ comment by reminding other users that “currently >65% of the hash power is located in China.” The user adds:

Supposedly, BTC was created to be decentralized, but mining rewards create an economy of scale in which the first miner will grow his market share into (a) monopoly (>51%)

Impact of a Chinese crackdown on Exchanges

Interestingly, reports coming from China suggest the country is clamping down on cryptocurrency exchanges and mining-related businesses. According to one report, as a consequence of this crackdown, “Chinese miners are facing a major problem in paying electricity bills.”

The report adds that “74% of miners surveyed said the payment of electricity bills has been greatly affected.” Many believe this crackdown will accelerate the migration of miners from China to countries like Kazakhstan and the U.S., therefore undercutting Brooks’ assertions.

Do you agree with Brian Brooks’ remarks that China owns bitcoin? Tell us what you think in the comments section below.

The post OCC’s Brian Brooks Says China Owns Bitcoin but Crypto World Disagrees: Chinese Crackdown Pushes Miners Away appeared first on Bitcoin News.

Poolin Launches Initiative To Activate Taproot, Encouraging Other Mining Pools To Join

16/11/2020 by Idelto Editor

Top 2 Bitcoin mining pool Poolin wants Taproot, and hopes other pools do too.

Poolin, the Chinese mining pool that currently controls around 13 percent of all hash power on the Bitcoin network, is preparing for Taproot, the proposed protocol upgrade for which the code is included in the upcoming Bitcoin Core 0.21.0 release. Bitcoin’s second-largest mining pool (only topped by F2Pool, which controls around 17 percent of hash power) today launched a webpage to help inform mining pools on Taproot, and lets them indicate how they would prefer the backwards compatible upgrade to be activated.

“We’re excited to see Taproot get close to deployment, and as one of the biggest mining pools on the Bitcoin network we want to be constructive in the soft fork activation process that will help make Taproot a reality,” Poolin VP Alejandro De La Torre told Bitcoin Magazine.

Taproot

Taproot, as implemented in Bitcoin Core, is actually a combination of three upgrades rolled into one.

First, it would introduce the Schnorr signature algorithm, which is considered by many cryptographers to be the best in the field. Besides a strong level of correctness, no malleability and relatively fast verifiability, Schnorr signatures allow for math to be performed with them. Among other things, this allows for a new type of smart contracts on Bitcoin.

Smart contract flexibility would be further expanded through a trick called MAST, which allows for coins to be spent in various ways, without ever needing to reveal the options that ultimately aren’t chosen. Moreover, if all parties to a smart contract agree on the outcome of the contract, Taproot lets them cooperate to make the settlement-transaction indistinguishable from regular transactions, benefiting user privacy.

Third, Taproot will include an updated version of Bitcoin’s programming language, called Tapscript.

Poolin, founded by former Bitmain (and more specifically, BTC.com) employees, was the first Bitcoin mining pool to publicly indicate support for the Taproot upgrade by including a custom string of data in all of the blocks they mine.

“Taproot will unlock a new range of possibilities for Bitcoin, improving privacy and expanding smart contract possibilities,” De La Torre said. “We think the Taproot upgrade will benefit Bitcoin and, therefore, also benefit Bitcoin miners.”

Taproot Activation

The Taproot code will be included in the upcoming Bitcoin Core release, currently the (de facto) reference implementation for the Bitcoin protocol. However, this release will not include activation logic just yet; this is expected to be included in an upcoming Bitcoin Core release. As a backwards-compatible soft fork upgrade, Taproot activation is presumed to happen smoothly if a (large) majority of miners enforce the upgrade. Previous soft forks were activated through BIP 9, which triggered enforcement of the new protocol rules when 95 percent of all hash power on the network signaled support for the upgrade.

Largely due to the long, painful and messy activation process for Bitcoin’s last consensus protocol upgrade — SegWit, in 2017 — Bitcoin developers have been discussing whether BIP 9 is still the best way to activate soft forks. Some now prefer BIP 8, which (if so configured) would not just enforce the new rules when a (large) majority of miners signal supports for the upgrade, but would also activate the upgrade at a specific future date or block height, known as a user activated soft fork (UASF).

Some smaller changes to the upgrade mechanism are also being discussed. Some argue that the hash power threshold could be lower than 95 percent, for example, and there is also debate on the preferred duration before the upgrade should be enforced automatically (if at all). Specific proposals also include a combination of these ideas, which could perhaps even involve a special Bitcoin Core software fork to get the job done (like the BIP 148 client which — according to many — nudged miners to activate SegWit in 2017).

Poolin CEO Kevin Pan told Bitcoin Magazine that his team prefers Taproot to be activated through BIP 9 — though not outright rejecting BIP 8 with forced activation.

“Unlike during the SegWit activation process, there is no heated debate around Taproot, and BIP 9 has also been used successfully before SegWit,” he said. “We therefore prefer the old school way, BIP 9. But the community could still have a user activated soft fork.”

Pan does prefer the activation to happen through Bitcoin Core, and believes that the 95 percent threshold is “fine.” If BIP 8 with forced activation is chosen instead, he thinks one year is a good amount of time before the new rules are enforced. But whichever solution is chosen, the Poolin CEO believes Bitcoin Core developers will make the right choice: “I think the devs are doing great.”

Taproot Activation Website

To encourage other mining pools (as well independent miners) to help activate Taproot as well, Poolin today launched taprootactivation.com, a webpage dedicated to Taproot activation. Besides information for miners about the proposed Taproot upgrade and the activation mechanisms and parameters under consideration, the open-source website also lets miners indicate their preference.

“We want to avoid the issues we saw around SegWit activation, I don’t think anyone wants to relive that,” De La Torre explained. “I think miners play a crucial role in soft fork activation, in this case for Taproot. A website like this could help inform a better process. We are a large mining pool, with much hash power, so we’ve decided to take that initiative upon ourselves.”

Although Poolin has a preference for the BIP 9 activation process, the webpage is not intended to advocate this activation mechanism in particular. Nor would the preference that miners indicate on the website be in any way binding, of course: developers choose which activation logic they implement in their code, and Bitcoin users decide if they want to run that code.

“Still, we hope that an overview of miners’ preferences could help inform the discussion around Taproot activation,” said De La Torre.

Bitcoin Magazine recently sent out an email to all mining pools that controlled at least 1 percent of hash power on the Bitcoin network, inquiring about Taproot and activation preferences. At the time of publication of this article, the only other mining pool that responded was Slush Pool, whose cofounder Jan Čapek said will support Taproot, and doesn’t expect it to be as heated a topic as SegWit. Čapek indicated a preference for BIP 8 as the activation mechanism with a 90 percent hash power activation threshold and forced activation after one year.

Over the next days and weeks, De La Torre will also be reaching out to Bitcoin mining pools to poll where they stand on Taproot and the different activation mechanisms, and will update the website accordingly.

Full disclosure: the author of this article offered some minimal support editing the text on taprootactivation.com.

The post Poolin Launches Initiative To Activate Taproot, Encouraging Other Mining Pools To Join appeared first on Bitcoin Magazine.

S9 Resurrection: Higher Bitcoin Prices Allow Miners to Switch Outdated Mining Rigs Back On

14/11/2020 by Idelto Editor

With bitcoin prices hovering over a certain handle, a great number of old ASIC mining rigs manufactured years ago are starting to become profitable again. Reports indicate that in China, where the average electricity cost is around $0.06 per kilowatt-hour (kWh), miners are starting to leverage old miners manufactured by Canaan, Bitmain, and others. Chinese bitcoin miners dealing with electronic component price increases have found outdated rigs like the Antminer S9 (10-16 TH/s) are now reaping profits again.

The price of bitcoin (BTC) is making it easier for cryptocurrency miners worldwide to obtain a profit, especially after the recent mining difficulty drop that slid over 16% downwards.

Additionally, BTC prices jumped from a closing price of $11,548 on October 13, 2020, and 30 days later on November 12, the price closed at a high of $16,305 per coin increasing 41.19%. Regional reports from China show that the high BTC prices between $12k to $16k have invoked Chinese miners to start leveraging old miners again.

In addition to the S9 models profiting, older machines made by Canaan Creative, Bitfury, GMO, Bitfily, Whatsminer, Halong, Ebang, and Pantech profit at higher bitcoin prices too. At the time of publication, the two 2018 series Avalonminers (921 and 841) are profiting between $0.21 to $0.59 per day if the miner is paying around $0.06 per kilowatt-hour (kWh).

Financial columnist, Vincent He, recently discussed the Bitmain S9 series (10-16 TH/s) and notes that the mining rig is pulling in profits for Chinese miners today. “The price increase of electronic components at the end of the year led to the improvement of S9’s cost performance,” the author noted on November 11.

Old mining rigs are not just pulling in a profit these days with BTC prices so high, the columnist notes. Vincent also says that numerous mining farms are located in desert regions where dust is high, and some are located in regions like Sichuan where humidity is higher than average.

These effects “shorten the life of the machines” and mining rigs like the “S9 has a better stability ratio because of its simple structure and relatively low computing power,” according to the report. Estimates say at one time, the S9 miner (13 TH/s) was so widely used, these four-year-old machines powered around 70% of the BTC hashrate.

Roughly 11 Antminer S9 models manufactured by Bitmain that are anywhere between 1-4 years old, show profits between $0.10 to $0.59 at $0.06 per kilowatt-hour (kWh) using exchange rates for BTC on Friday, November 13, 2020.

BTC prices have dropped on Friday, November 13, and are a touch lower than the closing price the day prior. But data from Asicminervalue.com indicates that a number of older mining rigs produced by Canaan, Bitmain, and others are profiting at an electricity rate of $0.06 per kWh. Every single Bitmain Antminer S9 with a hashrate between 10 to 16 terahash per second (TH/s) profits today.

A number of older generation miners are being sold for $100-$800 depending on the model and hashrate. Marketplaces like Ebay and Craigslist have an abundant amount of miners for sale from manufacturers like Canaan, Bitmain, Microbt, Ebang, and many others.

Similarly, three old Avalonminers created by Canaan are profiting as well, except for the Avalonminer 821 and 741 series. In addition to the popular S9s and Avalonminers, outdated mining rigs created by Bitfury, GMO, Bitfily, Whatsminer, Halong, Ebang, Pantech, and other ASICs also show profits.

The older mining rigs are also seeing increased prices on second-markets in the U.S. and in Europe on marketplaces like Ebay and Craigslist.

For example, a Whatsminer M3 with 11.5 TH/s is selling on Ebay for $500, while old-school Antminer S9s are selling for $100-$800 per unit. Not too long ago, when BTC prices were lower and the difficulty was higher, outdated ASICs sold for $50-$250 per unit with a terahash output between 10-16 TH/s.

Vincent’s report further notes that next-gen ASIC miners with an output of 70 to 100 TH/s have a greater number of computer boards than older models. The compact design of older mining rigs like the S9 series helps miners in China with warehouse space issues, as well as reducing power consumption the report details.

What do you think about older-generation ASICs like the Antminer S9 making a comeback? Let us know what you think about this subject in the comments section below.

The post S9 Resurrection: Higher Bitcoin Prices Allow Miners to Switch Outdated Mining Rigs Back On appeared first on Bitcoin News.