Bitcoin mining centralized that anyone could mine bitcoins themselves – wemake magical Internet money out of nothing (but electricity and hardware). The mining difficulty is adjusted automatically every 14 days the block rate at about one every ten minutes, and was very low indeed. Mining do works by calculating one particular function over and over, as absolutely fast as possible. As far back as 2009, people had realised that graphics cards would be efficient 128 – a graphics processing unit (GPU) to run simple calculations to compute pixels, same processing was compute Bitcoin hashes eight hundred times as fast as a general CPU. By 2010, this had become mining method. These were consumer graphics cards, so mining was still accessible to anyone with hundred dollars, and quite feasible out ahead while was on the upward slope of bubble.
Bitcoin mining was fully industrialized in 2013 with application-specific integrated circuits (ASICs). These were the FPGAs but manufactured as custom silicon chips, and were efficient again. bitcoin miners now sponsor ASICs own use – since 2013, we can’t compete without designing our own mining chips. Webuy ASIC mining rigs – in May 2017, the Bitmain AntMiner S9 was $1161 for 13.5 terahash/sec at 1323 watts – but rapidly become obsolete, and weunlikely to be turn a profit unless weor free electricity. (I know one mined through to 2014, keeping eye on electricity and hardware costs, and stopped when home mining was viable even with ASICs. He came out hundred dollars ahead and with it while there was fun to be had. not story, however.)
From 2014 onward, the mining network was based almost entirely in China, running ASICs on subsidized local electricity. (There has long been speculation that much of to evade currency controls – buy electricity in yuan, sell bitcoins for dollars.) On 30 June 2017, Bitcoin network hash rate was 5.5 exahashes per second – that’s 5.5×10 18 , or three million times the hash rate GPU era as of early 2011. Everything about mining is more standardized in bulk. By of 2016, 75% of the Bitcoin hash rate was being generated in one building, using 140 megawatts– or over half the estimated power all of Google’s data centers worldwide at the time.
There occasional calls to re-democratize mining by changing the hash function; another cryptocurrency deliberately chose hash functions that wouldn’t be efficient on a graphics card or an ASIC. But always the case that any function, particularly one hash, more efficient on hardware specialized that function than on more general-purpose hardware. to program a hash function into an FPGA for mining base an ASIC . If the Bitcoin hash were , new ASICs would follow with only manufacturing .
Hash-Power for fun and profit
Bitcoin relies on distributed consensus: the blockchain is what a majority of mining capacity says . The consensus model relies on the very fact that wecan’t outdo all miners casually – so it’s not “secured by math,” but secured by economics, balanced between multiple players. Unfortunately, every force Bitcoin ecosystem tends to centralize. Mining advantages from economies of scale, so it’s progressed from mining on our PC to graphics cards, to programmable chips (FPGAs), to ASICs.
Nakamoto’s original Bitcoin assumes a peer-to-peer network that anyone can join. In practice, the miners operate their own centralized communication pool, previously the Bitcoin Relay Network and now called the Fast Internet Bitcoin Relay Engine (FIBRE), as it’s more efficient.
(This came being point of failure in January 2016, BRN was from lack of funding, decentralized peer-to-peer network handle the traffic.)
As of March 2017, three pools controlled over 50% pools over 75% of the hash rate, with individual pool at 21.3%. Tno reason that multiple pools couldn’t have owner. Themining pool owners already meet and operate as a cartel. If we control 50% of mining power, weperform a “51% attack,” which allows us the longest blockchain, then be taken by of the network as canonical. Wedouble-spend confirmed transactions, or reject any new transaction we don’t approve of. Wereject other miners’ blocks. We can’t send someone else’s bitcoins, but westop the owner from spending them.
Even if we50%, westill mount similar attacks with a better-than-average chance of success. From 25% of the hash rate upward, a selfish miner can mount 51%-style attacks and expect a greater profit than otherwise.
This isn’t hypothetical – mining pool GHash.io went over 50% of the hash rate several times in June and July 2014. 138 GHash doing this was particularly problematic pool had double-spent against a gambling site earlier that year. They blamed a rogue employee. Bitcoin decentralizes things not be decentralized, then centralizes them anyway but wastefully.