MtRed Bitcoin mining pool will be shutting down(bitcointalk.org)
bitcointalk.org
MtRed Bitcoin mining pool will be shutting down
https://bitcointalk.org/index.php?topic=15929.msg1793833#msg1793833
7 comments
BTCguild got the lion's share of ASIC miners (so far, anyway). There's actually been some worry since that pool is approaching 51% of the network's power! That means with a malicious server, the admins could (theoretically, not saying they would) take over the entire network. They have taken some steps to reduce the number of miners in the guild, and have pledged to raise their fees if their control goes over 40%, to force miners to other pools. https://bitcointalk.org/index.php?topic=168108.0
(The way they could take over the network is by crafting a new blockchain, forging fake transactions or even claiming that they own all bitcoins. If they solve blocks faster than the rest of the network, soon their malicious chain would become longer and therefore accepted by all clients! Clients always trust the longest chain because it takes the most work to make, so you would have to control most of the mining power to fake anything for long.)
(The way they could take over the network is by crafting a new blockchain, forging fake transactions or even claiming that they own all bitcoins. If they solve blocks faster than the rest of the network, soon their malicious chain would become longer and therefore accepted by all clients! Clients always trust the longest chain because it takes the most work to make, so you would have to control most of the mining power to fake anything for long.)
> The way they could take over the network is by crafting a new blockchain, forging fake transactions or even claiming that they own all bitcoins. If they solve blocks faster than the rest of the network, soon their malicious chain would become longer and therefore accepted by all clients! Clients always trust the longest chain because it takes the most work to make, so you would have to control most of the mining power to fake anything for long.
This is incorrect. Having 51% or more of the computing power of the network doesn't allow you to replace the whole blockchain (there are checkpoints, and it gets more difficult as you want to replace a bigger part of it). You also can't forge new transactions, since transactions need to be signed by the sender.
Basically the only practical attack (assuming no serious bugs in the clients) is a double spend: they could pay out of their own wallet a sum X to a third party, the third party checks that the transaction has Y confirmations (remember, as Y grows, it gets more difficult to pull this off), they receive whatever they've bough from the third party, and then they start pushing a different and longer block not including the transaction.
This is incorrect. Having 51% or more of the computing power of the network doesn't allow you to replace the whole blockchain (there are checkpoints, and it gets more difficult as you want to replace a bigger part of it). You also can't forge new transactions, since transactions need to be signed by the sender.
Basically the only practical attack (assuming no serious bugs in the clients) is a double spend: they could pay out of their own wallet a sum X to a third party, the third party checks that the transaction has Y confirmations (remember, as Y grows, it gets more difficult to pull this off), they receive whatever they've bough from the third party, and then they start pushing a different and longer block not including the transaction.
So say they did all of the malicious things you've stated, is that illegal?
What is ASICs? Google is giving me tennis shoes.
It's basically a computer with specialized hardware whose sole purpose is to mine Bitcoins, see http://www.butterflylabs.com/ for an example
Application Specific Integrated Circuit
in the bitcoin context they chips created for the specific purpose of hashing, allowing you to mine for bitcoins quickly and effficiently.
in the bitcoin context they chips created for the specific purpose of hashing, allowing you to mine for bitcoins quickly and effficiently.
An ASIC is an application-specific integrated circuit. Basically, dedicated hardware like this: http://www.butterflylabs.com/
Here's an explanation:
http://cryptojunky.com/blog/2013/02/17/bitcoin-asic-roundup/
http://cryptojunky.com/blog/2013/02/17/bitcoin-asic-roundup/
ASIC is an implementation of a circuit. They will be the fastest implementation of the logic, however they are the most expensive implementation of that logic by far.
Unlike FPGAs once logic is implemented in an ASIC the implementation is set in stone, so if there is a bug in the hardware fixing it will require producing an additional run and incur the expensive cost again.
The high cost is why FPGAs are popular for both prototyping and production units when possible as it is much cheaper for smaller quantities.
ASIC having exactly the logic necessary to target a task is why they are the most efficient at the task compared to general purpose hardware.
https://en.wikipedia.org/wiki/Application-specific_integrate...
Unlike FPGAs once logic is implemented in an ASIC the implementation is set in stone, so if there is a bug in the hardware fixing it will require producing an additional run and incur the expensive cost again.
The high cost is why FPGAs are popular for both prototyping and production units when possible as it is much cheaper for smaller quantities.
ASIC having exactly the logic necessary to target a task is why they are the most efficient at the task compared to general purpose hardware.
https://en.wikipedia.org/wiki/Application-specific_integrate...
Wait until ASICS become widespread, and pools are once again needed.
If only there were a formal definition of "security" that we could work with...
Would anyone like to translate this? I'm reasonably familiar with bitcoin mechanics, but I couldn't understand what had occurred based on this post.
Normally, Bitcoin mining has fairly high variance - you only get paid when you find a block, and because blocks are relatively rare and found at random intervals your income varies a lot too. MtRed were what's known as a PPS pool, which meant they basically ate the variance and paid miners based on the amount of mining work they did.
The trouble is that running a PPS pool requires a huge buffer of your own funds to cover payouts during periods of bad luck, and if the buffer isn't big enough the pool will inevitably go bankrupt. It appears this has now happened to MtRed and it sounds like they only have enough funds to pay out half the money they already owe miners. (Technically, over a long enough period of time PPS pools will go bankrupt with 100% certainty no matter how big the pool buffer.)
The trouble is that running a PPS pool requires a huge buffer of your own funds to cover payouts during periods of bad luck, and if the buffer isn't big enough the pool will inevitably go bankrupt. It appears this has now happened to MtRed and it sounds like they only have enough funds to pay out half the money they already owe miners. (Technically, over a long enough period of time PPS pools will go bankrupt with 100% certainty no matter how big the pool buffer.)
As I've rapidly discovered, trying to calculate aggregate stats over the basis of Poisson arrivals... is a pain. To work out anything interesting, you end up studying piecewise-deterministic markov processes in more detail than you'd wish.
Would adding a fee allow them to continue?
What if they only paid out when a block was found?
What if they only paid out when a block was found?
Adding a fee might have helped if they'd done it from the start, but it's too late now. Sticking with PPS but only paying out when a block was found also wouldn't help; Eligius tried that and as soon as they hit a long period of negative luck everyone stopped mining there and the pool had to be restarted with a different payout method, screwing everyone who'd mined there previously in the process. (That issue with Eligius's payout method was actually predicted well before it actually happened.)
> What if they only paid out when a block was found?
Then the miners would have no impetus to help them and would instead mine for themselves
Then the miners would have no impetus to help them and would instead mine for themselves
I'm not sure this is true. For example, consider the following scenario at $200 USD per bitcoin: 5 people pooled mining capabilities, and mined a single bitcoin. They could then split that, and effectively pocket $40/ea (or 0.20 bitcoins each). If you mine solo, is it possible to mine a partial bitcoin, rather than increments of a whole bitcoin?
Right: mining produces whole bitcoins, and does it infrequently. That's why pools exist; people weren't willing to wait months to randomly win the bitcoin lottery. (Maybe that's a design flaw!)
Most pools pay proportions of their actual winnings, not their predicted ones.
A mining pool collects work from miners who are too small to mine on their own. In Bitcoin today, this is basically every miner (other than the bigtime dudes who already got ASICs). Time to complete a block is in the years for GPU miners. Put together hundreds of miners at varying rates and collect their work into a pool, now you can afford to pay small miners something even if their work would not approach a single block in the amount of time that you see them.
A negative buffer means they've been paying per share the going rate per share (however they've calculated that), and not some other way of calculating that avoids negative buffers (say, dynamically calculating the value of the shares based on how many buffers they touched and how much is in the buffer.)
They have missed their projections for too long and they are closing their doors to avoid paying out of pocket, rather than change to a scheme that does not depend so much on the pool's luck.
A negative buffer means they've been paying per share the going rate per share (however they've calculated that), and not some other way of calculating that avoids negative buffers (say, dynamically calculating the value of the shares based on how many buffers they touched and how much is in the buffer.)
They have missed their projections for too long and they are closing their doors to avoid paying out of pocket, rather than change to a scheme that does not depend so much on the pool's luck.
Question: At current electricity prices, what is the total cost of mining the complete 21 million bitcoins set?
In a perfectly efficient mining market the cost of mining is exactly the number of Bitcoins mined, minus some small profit margin.
All profitable miners would be using the most efficient hardware, in a location where electricity is cheapest.
All profitable miners would be using the most efficient hardware, in a location where electricity is cheapest.
This depends on a lot of factors that change rapidly and are hard to predict. Essentially it will take until 2130 to mine all Bitcoins, regardless of how much electricity/computational power is thrown at it (there are some technical exceptions to this, but they are unlikely).
Current mining is probably using on the order of ~30-50 MW. At 10 cents kw/h (low estimate), that's ~$100k/day. It also grows with the price of Bitcoin, so it has been growing rapidly recently.
Current mining is probably using on the order of ~30-50 MW. At 10 cents kw/h (low estimate), that's ~$100k/day. It also grows with the price of Bitcoin, so it has been growing rapidly recently.
The difficulty of mining is dynamically adjusted based on the currently available mining capacity so that bitcoins are produced at a constant rate over time no matter what.
In other words, you could mine the full set of bitcoins for virtually no electricity whatsoever if you could convince the world to abandon bitcoin mining completely, then just let a single old, slow, cheap miner run in the corner for the next 100+ years. Or you could use as much electricity as you wanted on the project by throwing more and more computational resources at it.
In other words, you could mine the full set of bitcoins for virtually no electricity whatsoever if you could convince the world to abandon bitcoin mining completely, then just let a single old, slow, cheap miner run in the corner for the next 100+ years. Or you could use as much electricity as you wanted on the project by throwing more and more computational resources at it.
So if someone set off a series of EMPs across the planet leaving only a handful of computers functional, the difficulty would adjust downward to account for it?
Precisely.
Or convince everyone that it isn't profitable for the amount of electricity involved.
Sometimes electricity is essentially free. My home is heated by electricity (I live in California) - any watts that I spend mining bitcoins produces the same amount of heat as my electric heater, but has the advantageous side-effect of maybe making money.
(I don't actually do this because I don't have a desktop computer, and it's unclear if building one at this point will pay for itself before custom integrated circuits push the bitcoin difficulty so high that GPUs become worthless)
(I don't actually do this because I don't have a desktop computer, and it's unclear if building one at this point will pay for itself before custom integrated circuits push the bitcoin difficulty so high that GPUs become worthless)
Does your home have a heat pump? If so, your house heat pump is 3 to 4 times more efficient than the waste heat produced by your computer, and you are using 3 to 4 times more electricity compared to the same heat output from a heat pump.
Wait, Energy in = energy out. So what is the extra output that makes the computer so much less efficient? is it noise?
As the name implies, a heat pump moves heat around. When you heat your house with a heat pump, you're not (just) converting electricity into heat. The electricity is being used to move heat from outside your house into the house. You make the interior of the house warmer while making the exterior (very slightly) colder. It's exactly the same as an air conditioner or refrigerator, just pointed the other way.
Of course, energy has to be expended to move heat around, and there are inefficiencies. But with real-world equipment and common cold-but-not-too-cold temperatures, a single unit of electricity can be used to move several times as much heat as it would produce if you just converted it to heat directly.
A computer is as efficient as anything when it comes to converting electricity to heat. Heat pumps win because they're ultimately playing a different game.
Of course, energy has to be expended to move heat around, and there are inefficiencies. But with real-world equipment and common cold-but-not-too-cold temperatures, a single unit of electricity can be used to move several times as much heat as it would produce if you just converted it to heat directly.
A computer is as efficient as anything when it comes to converting electricity to heat. Heat pumps win because they're ultimately playing a different game.
No, I have radiant heat. I recognize that this isn't common in places that actually have weather.
When I lived in Santa Barbara we had a gas furnace. I'm surprised that, given the cost of electricity out there and the moderate temperatures which are nearly ideal for heat pump efficiency, that the financial incentive isn't there to convert even for moderate use.
But, thanks for clarifying.
But, thanks for clarifying.
I prefer my hypothetical.
In other words, what is the expected cost for the electricity to mine one Bitcoin?
In the average, general case, it is slightly less than the cost of one Bitcoin. Due to the recent volatility it has been a lot less, probably about half at the moment (expect this to increase though).
Hey, This is RR, To anyone curious, I will be on #mtred@freenode this evening answering questions.
bitcoin pool shutting down are there any implications in terms of network hashrate or the overall exchange rate ?
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It's sad to see, and a big worry for the future security of the blockchain.