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Bitcoin Math The Almighty Buck

Bitcoin Security Endangered By Powerful Mining Pool 281

Posted by timothy
from the cornering-the-market dept.
An anonymous reader writes Ars Technica reports that for the first time in Bitcoin's five-year history, a single entity has repeatedly provided more than half of the total computational power required to mine new digital coins, in some cases for sustained periods of time. It's an event that, if it persists, signals the end of crypto currency's decentralized structure."
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Bitcoin Security Endangered By Powerful Mining Pool

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  • by Anonymous Coward on Sunday June 15, 2014 @11:46PM (#47243695)

    But all the early-adopters / ponzi-schemers kept insisting that it was impossible.

    Told. You. So.

    • by billstewart (78916) on Sunday June 15, 2014 @11:57PM (#47243731) Journal

      Mining pools and custom hardware do make it possible for a large enough group to get over 50%, especially as the need for mining hardware crowds CPU and GPU miners out of the game. We'll see whether they decide it's more useful to stay over 50% and cheat, stay over 50% and not cheat, or split the pool into two or more pieces to keep the value of their Bitcoins higher than they would be if the market abandons Bitcoin because of perceptions of cheating.

      • What happens if (Score:5, Interesting)

        by goombah99 (560566) on Monday June 16, 2014 @12:16AM (#47243817)

        I wonder what happens if someone with more than enough CPU power to get 99% of the mining jumps in one night. What kind of Damage could they do in a short interval before people notice? What if their goals were not to steal bitcoins but rather to snatch all the coins from, say, Kim Jong Un, or Al Queda. E.g. for example the NSA or Samsung or Saudi arabia. They would not care about the loss of value in their stolen coins, the point is to deprive an adversaries use of them.

        Does the Amazon or Azure networks have enough rentable time to pull this off?

        • Re:What happens if (Score:4, Interesting)

          by goombah99 (560566) on Monday June 16, 2014 @12:20AM (#47243827)

          Also if the bit coin miners get concentrated into just a few, what happens if these 3 were to get DDOSed? if the big miners are off line then would the next largest miner have a window of time where they controlled more than 50% of the mine? Would they be able to pull off some shenanigans in that time?

          • Re:What happens if (Score:5, Informative)

            by sFurbo (1361249) on Monday June 16, 2014 @01:35AM (#47244023)
            The difficulty is updated every 2016 blocks, or roughly every two weeks [bitcoin.it]. If the amount resources spent on mining was suddenly reduced extensively, the mining would just go much slower until the next update, so no one would be able to take advantage of that (although it could be problematic for bitcoin, if e.g. the update went from 10 minutes to 100 minutes). After the next difficulty update, the difficulty would be low, but if the mining pools were back up, you would not be able to control bitcoin. Even if the update rate goes to 1 minute, this will only persist for 201,6 minutes, or a few hours.

            All of this is assuming that no other response was done in the two weeks after the DDOS.
          • by lgw (121541) on Monday June 16, 2014 @01:54AM (#47244079) Journal

            If someone rents 1,000,000 Amazon severs to mine bitcoins, would you pick a DDOS fight with that. Even with special purpose HW, it's unlikely to be a small pipe.

            • by fuzzyfuzzyfungus (1223518) on Monday June 16, 2014 @04:32AM (#47244357) Journal

              If someone rents 1,000,000 Amazon severs to mine bitcoins, would you pick a DDOS fight with that. Even with special purpose HW, it's unlikely to be a small pipe.

              One potential complication is that 'mining' isn't particularly bandwidth intensive (not quite zero, and more miners require more bandwidth, to cover updating all of them when it a block is found and you need to get new work units immediately since you now know that all the other candidates are incorrect; but overall quite minimal); but it is computationally demanding and very much rewards specialized hardware.

              Most of the hardware you can easily rent in places with ample bandwidth will be aimed at customers who want to do web services. Comparatively anemic CPUs; plenty of storage and RAM, nice fat connection; maybe some offerings with faster CPUs or GPU compute units if the vendor has been dabbling with those sorts of customers.

              I definitely wouldn't pick a bandwidth fight with such a thing, unless I had some delightfully clever amplification attack up my sleeve; but even at Amazon prices you would be burning insane amounts of money to get a hashrate that would even make you worth paying attention to.

              If anything, I'd consider the reverse strategy: much of the world's crazy-ASIC capacity is probably on relatively narrow pipes because that's all they need. Don't bother trying to rent enough to out-compute them, use the rentals in high-bandwidth areas to knock as many ASIC clusters that aren't your collaborators as possible offline.

        • by gweihir (88907)

          Amazon and Azure are far too expensive, unless a state-actor is willing to invest a few billions.

          • by dbIII (701233)

            unless a state-actor

            Wouldn't they just use distributed malware?

            • Malware is handy because it makes Ghashes/watt much less relevant (though, with the portion of today's computing power that is in battery powered or thermally constrained devices, you have to be careful that your compute malware doesn't cause even the most idiotic of users to notice that their laptop now scalds their flesh and lasts 45 minutes on a full charge and bring it in for repair, an uptick that vendors would probably notice relatively quickly and get actually-competent security consultants involved
              • I'm pretty sure state-actors with an interest, for whatever reason, in bitcoin will have there own hardware and wont need to rely on infected machines. Countries like the USA, China, Israel, UK,... all have there systems.

          • Amazon and Azure are far too expensive, unless a state-actor is willing to invest a few billions.

            Unless either is somehow hiding unbelievable losses from overbuying capacity they can't sell, they'd likely get even more expensive if anyone actually had a serious try: power isn't free, so there is presumably a price for EC2 spot instances so low that they won't even fire up the server; but depreciation isn't free, so both Amazon and Microsoft presumably work rather hard to keep their supply close to the available demand and have most of the churn at a given time be give-and-take between cost-sensitive; b

          • Amazon and Azure are far too expensive, unless a state-actor is willing to invest a few billions.

            A state actor of sufficient size wouldn't need to rent space; they could just harness their existing resources in a pool. How much power could the US, for example, tap if every PC they control began harvesting Bitcoins? They have the network, admin rights to add programs, programming skill to develop the required programming, and would not care if the added electrical cost outweigh the value created since making money is not the goal. As an added bonus, some of the supercomputers could be added to the mi

            • by reanjr (588767)

              You really think the federal government has the programming skill to pull off something like that? An organization run on software from the 80s?

              • You really think the federal government has the programming skill to pull off something like that? An organization run on software from the 80s?

                Yes, primarily because if the decide they want to do it they have the money to do it. In addition, while there is a lot of old legacy systems running mundane tasks there are some very sophisticated computing technology and skills that can be tasked to work on the problem. This wouldn't be a run of the mill operation but rather something run out of an intelligence agency where a team could be dedicated to such a task. I am not saying they would do it; but they certainly have the capability and capacity to p

              • The NSA doesn't have any red tape or legacy junk holding them on '80s software...

        • Re:What happens if (Score:5, Informative)

          by N3x)( (1722680) on Monday June 16, 2014 @04:16AM (#47244329)
          Well the thing is, getting 51% doesn't mean you can steal any coins. It means you get to control who can and cannot spend their coins. Also you would be able to do "double spends" of coins in certain situations. Getting 51% means you control the transfer service not the coins themselves. Also it would be really really expensive and once you stop the network will start working as normal again.
        • by pantaril (1624521)

          I wonder what happens if someone with more than enough CPU power to get 99% of the mining jumps in one night. What kind of Damage could they do in a short interval before people notice? What if their goals were not to steal bitcoins but rather to snatch all the coins from, say, Kim Jong Un, or Al Queda. E.g. for example the NSA or Samsung or Saudi arabia. They would not care about the loss of value in their stolen coins, the point is to deprive an adversaries use of them.

          First it is highly improbable that someone with 99% of current hashing power would suddenly emerge out of the blue. He would need pretty big and completely secret hardware factory for making ASIC mining chips.
          Second you can't steal third-party bitcoins even with 51% attack because you don't have control of the private keys necessary to sign the transaction. Only thing you can do is try to double-spend your own bitcoins - craft one fake transactions which sends your coins to merchant than overwrite it with a

          • by postbigbang (761081) on Monday June 16, 2014 @06:06AM (#47244569)

            There are still botnets, yes running on ancient XP machines with CPUs best measured in furlongs per fortnight, with zillions of captured kernels that might, for that brief moment, create hashing power of the kind that the world has never known. Dimming the planetary grid, perhaps even the very sun itself, t even phashes would be spewed higher than a volcano, and for that brief moment, a new zillionaire would be annointed.

            And at the end, we'd just have more hash. Pass me the ketchup bottle, please.

        • by wbr1 (2538558)
          You could not use your ownership of the pool to steal coins. The work done validates transactions. You could double spend, or deny transactions, but to my knowledge not forge them. But I am a crypto currency newb so I may be wrong.

          However the cost to even attempt it would be exceedingly prohibitive.

        • by reanjr (588767)

          The BTC network power went past the point where the only entity with the resources to take control like that is the US government. Maybe not even them anymore. But it would be such a vast investment in hardware, the bill for such an endeavor to the American taxpayer would be difficult to get past congress.

          • by reanjr (588767)

            That said, it would be relatively easier for the NSA to just take control of Gigahash or some other 51% group to disrupt the network.

        • Maybe I should take up my research into quantum computers and quantum cryptography again :-). When I was still working in that field, I didn't think it might give me some money/power someday.I wonder how difficult the bitcoin cryptography is for a quantum algorithm...

        • It doesn't work that way. To snatch someone's coins you have to break their private key and produce a transaction signed by it.

          You could refuse to include some transactions, or you could spend your own coins twice on two different forks of the block chain. I don't think there are any other ways to game the system.

        • If this was possible, a likely target would be the FBI's auction of Silk Road Bitcoins:

          http://online.wsj.com/articles... [wsj.com]

        • Re:What happens if (Score:4, Informative)

          by jdavidb (449077) on Monday June 16, 2014 @11:33AM (#47246899) Homepage Journal

          There are a whole host of reasons why what you are saying is impossible. First off, no matter how much CPU power you accumulated, you wouldn't be able to rival the hashes per second being put out by the custom hardware. If you rooted and botnetted every CPU on earth you would still only be a fraction of the hashes per second of the Bitcoin network. CPUs for Bitcoin mining were obsoleted by GPUs long ago, and both CPUs and GPUs are now way-obsoleted by ASIC.

          Also, even if you were able to control a majority of the hash power on the Bitcoin network, you would still not be able to spend somebody else's Bitcoin. To do that you would have to crack the private key for the account containing the Bitcoin. Doing that is a totally different math problem from what Bitcoin mining hardware is doing, and there are a lot of visuals out there illustrating that it would likely take longer than the projected life of the universe to crack these keys using currently available methods. If you had a majority of hashpower on the network, you could alter the blockchain, which is the ledger showing in what order transactions occurred. This would allow you to double-spend your own Bitcoin and cheat somebody, but would not allow you to spend somebody else's.

      • by westlake (615356)

        Mining pools and custom hardware do make it possible for a large enough group to get over 50%
        We'll see whether they decide it's more useful to stay over 50% and cheat, stay over 50% and not cheat, or split the pool into two or more pieces to keep the value of their Bitcoins higher than they would be if the market abandons Bitcoin because of perceptions of cheating.

        do you need a large group or simply raw computational horsepower?

        and if they --- whoever "they" are ---- don't give a damn about the value of their holdings and are simply out to topple the inverted pyramid the geek has created, what then?

        • by gl4ss (559668)

          raw computational horsepower would mean that you would have a large group.

          but at this point, it would be in the interests of some of the bigger contributors to this pool to put their machines on some other pool.

    • by gweihir (88907)

      Indeed. However, they are killing their own revenue-stream this way, unless people stay stupid. Well, judging from earlier ponzi-schemes, people will stay stupid until all their money is gone...

    • by ArsonSmith (13997) on Monday June 16, 2014 @01:08AM (#47243949) Journal

      This is it? I kept away from Bitcoin and the literally millions of dollars I could have made and this is the big fizzle that I was warned about. Fuck you! Fuck you and your fear mongering.

      • millions of dollars I could have made

        Hindsight is always 20/20, you made a decision based on a risk judgement because nobody can predict the future, we all have to wait for it to happen. Also what did you do with the money you didn't put into mining, I doubt you hide it under the mattress?

        • For me, reading about Bitcoin when I first did, the money I would have invested in Bitcoin was spent in one transaction at a bar. For that investment (£20) at the purchase price of the time (20p per Bitcoin), I would currently own £35k worth of Bitcoin. 1750x return on investment.

          Ah well. That's life :)
    • by pantaril (1624521)

      But all the early-adopters / ponzi-schemers kept insisting that it was impossible.

      No one except trolls like you claims that 51% attack is impossible, on the contrary, the danger of it is explicitly mentioned even in the original bitcoin white paper. Maybe you should read it before spreading misinformations:

      Proof-of-work is essentially one-CPU-one-vote. The majority
      decision is represented by the longest chain, which has the greatest proof-of-work effort invested
      in it. If a majority of CPU power is controlled by honest nodes, the honest chain will grow the
      fastest and outpace any competing

  • Better than First Post!

    And if this were Bitcoin, instead of Slashdot, I'd get to block the rest of you! Bwahahah! But it's not, so you'll probably crowd me out here soon enough.

  • One would assume that the thousands of other miners, if it was really that important to them, could easily step up their collective games and provide more hashing power than ghash can, even if ghash is actually claiming their entire rented-out customer base as their own (a rough equivalence of this would be if, say, Hertz was claimed to control more than half the roads because the cars on it are Hertz rent-a-cars).

    • by mpthompson (457482) on Monday June 16, 2014 @12:17AM (#47243819)

      I believe the issue isn't so much whether one group can counteract another. Rather, it is something happening that the promoters of Bitcoin claim should not happen. It doesn't instill confidence in a crypto currency when what you say is impossible (or extremely improbable) is proven to be false and your only backup is relying on parties to "play fair".

      • I guess I don't see how this was even considered improbable. The amount of coin you dig is based on the amount of power ($$$) you put into it. What was ever in place to keep a very rich person or group of less rich people from stepping in and doing this?

      • your only backup is relying on parties to "play fair".

        Yes, I always found it odd that libertarians and the flower power people don't get along with each other.

      • by pantaril (1624521)

        I believe the issue isn't so much whether one group can counteract another. Rather, it is something happening that the promoters of Bitcoin claim should not happen. It doesn't instill confidence in a crypto currency when what you say is impossible (or extremely improbable) is proven to be false and your only backup is relying on parties to "play fair".

        I see that only bitcoin haters are incorrectly claiming that bitcoin promoters say that 51% attack is impossible. But that is simply untrue. The 51% attack is clearly described in the original whitepaper by Satoshi Nakamoto in the proof-of-work section and it is well understood by bitcoin enthusiasts. How are we saying that 51% is impossible when we describe it in our core specification?

      • by Fr33z0r (621949)

        it is something happening that the promoters of Bitcoin claim should not happen

        "The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes."
        - Bitcoin Whitepaper, Page 1

    • by Rich0 (548339) on Monday June 16, 2014 @06:35AM (#47244633) Homepage

      One would assume that the thousands of other miners, if it was really that important to them, could easily step up their collective games and provide more hashing power than ghash can...

      I wouldn't assume this at all. Back when everybody was mining with CPUs then a popular appeal might get people to donate a ton of unused CPU capacity to beating a big miner.

      However, today mining is done with ASICs which are many orders of magnitude faster than any CPU you can buy. An Intel CPU might mine 10-20 Mhash/s, and and ASIC stats are measured in high GH/s to the low TH/s. So, you'd need 100,000 CPUs dedicated to mining to equal a single ASIC unit.

      The current hash rate is 100 PH/s having doubled in the last two months, or the equivalent of 10 billion Intel CPUs. Are there even 10 billion modern Intel CPUs in existence? You'd probably need $100M to just buy that many ASICs (if I didn't miscount my zeros), which gives you a sense of the scale of Bitcoin mining today. That mining collective operates about $50M worth of hardware, though I guess controlling an entire currency for a $50M investment isn't bad.

      It is a bit like saying that if it was really important people could team up in neighborhoods and produce cars, and the collective might of the entire US population could outproduce the big 3 car manufacturers. The problem is that an optimized robot-assisted assembly line can churn out a LOT of cars, and building one by hand in a garage takes a very long time even setting aside the logistics nightmare which isn't much better when you're making one car vs a million of them. 10k workers in a factory could very well produce more cars than the entire rest of the population working at home combined.

  • by mpthompson (457482) on Monday June 16, 2014 @12:02AM (#47243759)

    But having a single entity in GHash's position, of holding 51 percent of the mining power, of being in a monopoly position, of being able to launch any of these attacks at will, completely violates the spirit and intent of Bitcoin as a currency.

    Given enough of an incentive, has there ever been in history a man-made system, technical, political or otherwise, that hasn't been undermined and exploited by those with the capability and power to do so?

    Probably best this happens to Bitcoin sooner rather than later. As fine as Bitcoin is, believing that technology alone can defeat human nature is a fools errand. We are betting off investing in creating more moral men and woman and a society that sustains them than technology that is supposed to be infallible against basic human nature.

    • by Beck_Neard (3612467) on Monday June 16, 2014 @12:14AM (#47243811)

      Not to mention that every time a bug or vulnerability has been found in some part of the bitcoin ecosystem (like in Mt.Gox's non-standard trading software), the vulnerability HAS been exploited. Every single time. If you really think that someone isn't going to use this power (or hasn't already), you're dead wrong. Even worse, they can double-trade coins in a way that no one would ever find out, even if they dropped back below 51%. A few smaller cryptocurrencies got completely destroyed by 51% attacks. I think the bitcoin community will be watching this development very closely.

      • by dbIII (701233)

        like in Mt.Gox's non-standard trading software

        Since they were the main players MTGOX were the standard.

      • Since these exploits are illegal, a _known_ group cannot perform them. And I'd say that if you have 51% of the bit coin mining capacity, you are a big group and can be identified.
      • by reanjr (588767)

        I don't understand your claim that no one would find out. If they double-spend, one recipient of that double spend is going to find out very quickly.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Not to mention the environmental damage is huge. They use a ton of electricity to basically do nothing... they're not curing cancer or anything. They're making up numbers.

      • by TapeCutter (624760) on Monday June 16, 2014 @03:17AM (#47244235) Journal
        I agree. The main problem with modern capitalism is that a particular economic activity does not have to make sense, nor does it have to contribute to the growth/maintenance of civilization, it just has to make a profit. OTOH the phrases "make sense" and "civilization" are both subjective terms.

        Bitcoins are just an obvious example. Here in Australia we ship millions of tons of bauxite several thousand km's from a mine bathed in sub-tropical desert sunshine all year round to the southern end, and turn it into aluminium. We spent billions on port infrastructure to do so. Why? - Because the southern state's government build a brown coal generator specifically for the smelter and sold the electricity to the smelter for virtually zero profit. It beggars belief that it was (supposedly) more "economical" to do this than it was to build a solar smelter right next to the "fly in, fly out" mine located in the middle of the fucking desert.

        To the right wing nutters that may misinterpret the above, I'm not advocating we throw away capitalism. I agree that no matter what the game is, people will adapt to the rules of the game guided by self interest, but without rules there is no game. We need to step back and rethink the rules in light of the object of the game.
        • by Rockoon (1252108) on Monday June 16, 2014 @05:55AM (#47244545)

          To the right wing nutters that may misinterpret the above, I'm not advocating we throw away capitalism

          Clearly, since your example begins with government having a power plant built and then selling its capacity at cost.

          This sort of thing is highly unlikely in real capitalism where the owner of the power plant would want to justify this particular use of the money over other particular uses. It is only through force of government, with specific government action, that your example exists at all.

          But yes, the Statist might try to pass off your example as an "anti-capitalism" thing.

      • by pantaril (1624521)

        Not to mention the environmental damage is huge. They use a ton of electricity to basically do nothing...

        They don't do nothing. They try to secure (so far quite successfully) the first and biggest distributed cryptocurrency and payment network.

    • " We are betting off investing in creating more moral men and woman and a society that sustains them"

      Been trying that for millenia. Success is limited.

    • by raymorris (2726007) on Monday June 16, 2014 @02:11AM (#47244093)

      > We are betting off investing in creating more moral men and woman

      Attempts to do that have a not been as successful as we'd like. Religions, for example, have that as a primary goal. Unfortunately, religions are run by the same selfish, power-hungry humans who run all of our other systems.

      Some of the founding fathers of the US wrote about attempting to create a system whereby the individual quest for money and power ends up benefiting the common good. Some native American tribes had such a system. In their tradition, every few years neighboring groups would gather to redistribute rankings - power and prestige. The ranking of each leader was determined by how much he gave away. A man of prestige would work a few years, carefully managing his capital to try to produce as much good stuff as he could in order to give away more than his neighbor, thereby retaining his title.

          Free and open source software is similar - one gains prestige by contributing a lot. Recruiters have computer programs thatlook for people with a lot of commits on Github and elsewhere. My own contribution to the Linux kernel gives me some cachet that helps with getting a good job, etc.

      Some US founders wanted to use that idea as much as possible, and they succeeded in one way. They reasoned that the President would want to keep his power, so he'd resist any attempt by the senate to increase their relative power. Similarly, the house would want to be powerful, so they wouldn't let senate or president roll over them. That worked pretty well for 200 years, then presidential power increased vis-a-vis Congress. Each house of Congress is still pretty powerful, though, so they do keep the president in check to some extent.

      Perhaps we could find more eways to make doing "right" also be the most profitable / prestigious. If someone controls a capital asset such as a large cargo ship, they'll WANT to do good thing X because the benefit to them is Y. What might X and Y be? Alternatively, people want (money/power/recognition/sex), in order to get what they want, they might need to do (something that benefits society). How can society benefit from people's attempt to get money, or power, or sex?

      Don't say it can't be done. For thousands of years societies traded sex for marriage. People wanted sex, society wanted stability, and it was decided that the society would expect you to get married before having sex. Most people complied.

      • by drinkypoo (153816)

        Attempts to do that have a not been as successful as we'd like. Religions, for example, have that as a primary goal.

        [citation needed]

        Unfortunately, religions are run by the same selfish, power-hungry humans who run all of our other systems.

        And they're also founded by them.

      • by Tom (822)

        Don't say it can't be done. For thousands of years societies traded sex for marriage. People wanted sex, society wanted stability, and it was decided that the society would expect you to get married before having sex. Most people complied.

        Still works that way, in a way.

        When the government dramatically raised university feeds in my country, several commentators were half-jokingly commenting that politicians voted yes mostly in order to ensure a steady stream of young student prostitutes.

        Money for sex usually also means money flowing from an older generation that had time to acquire it to a younger generation.

        Yeah, it's a bit sad.

  • by mysidia (191772) on Monday June 16, 2014 @12:03AM (#47243769)

    Not yet anyways.

    6 months ago GHash.IO promised [ghash.io] they would (1) Take steps to prevent accumulating 51% hashing power, including: not accepting new miners, and (2) They would not attempt an attack, and (3) They would provide cex.io users an option to use another mining pool (They have apparently not implemented (3) yet).

    A DDoS [cryptocoinsnews.com] against the pool was reported to occur yesterday, which adversely affected mining. At one point... their hashrate was reported to have dropped to 7%. Then BitFury pulled 1 PH/s out of their pool.

    • Oh they promised! Well, color me convinced.

    • by kasperd (592156)

      Take steps to prevent accumulating 51% hashing power, including: not accepting new miners

      Why is this even necessary? I was under the impression that a mining pool would not be able to pull off an attack without it being immediately visible to the miners in the pool. Doesn't that mean that having a pool with majority of the processing power isn't enough to pull of an attack, you also need all miners in the pool to conspire to perform the attack?

      • by mysidia (191772)

        you also need all miners in the pool to conspire to perform the attack?

        You need most miners to either conspire or to not notice. To avoid conspiring; they have to detect that an attack is occuring and pull their hashing power out.

        The pool essentially has control of what work the miners are being assigned, however.

        A 51% premining attack would look like this:

        (1) A miner in the pool discovers a block.
        (2) Instead of the pool broadcasting the solution, it saves a copy of the solution, and starts distri

    • by davek (18465)

      Not yet anyways.

      6 months ago GHash.IO promised [ghash.io] they would
      (1) Take steps to prevent accumulating 51% hashing power, including: not accepting new miners, and
      (2) They would not attempt an attack, and (3) They would provide cex.io users an option to use another mining pool
      (They have apparently not implemented (3) yet).

      A DDoS [cryptocoinsnews.com] against the pool was reported to occur yesterday, which adversely affected mining.
      At one point... their hashrate was reported to have dropped to 7%.
      Then BitFury pulled 1 PH/s out of their pool.

      Excellent post. BTC haters gonna hate, and I don't understand why.

      Funny thing about pooled mining, it's run by the users. User's don't like it? They go away [coindesk.com].

  • by Animats (122034) on Monday June 16, 2014 @12:09AM (#47243785) Homepage

    Bitcoin stopped being a distributed system a long time ago. All the serious miners now have data-center sized installations of custom boards with custom ASICs. Some are liquid-cooled. The original idea was millions of end users running Bitcoin mining as a background job on their CPU. That's totally dead.

    • by GrandCow (229565) on Monday June 16, 2014 @12:38AM (#47243867)

      Bitcoin stopped being a distributed system a long time ago. All the serious miners now have data-center sized installations of custom boards with custom ASICs. Some are liquid-cooled. The original idea was millions of end users running Bitcoin mining as a background job on their CPU. That's totally dead.

      This is absolutely hilarious. Not because it's a fake post (I honestly don't know if it is or not), but just the fact that someone would even think that this is a good enough idea to post that 'serious' miners are actually doing this. This is the California gold rush all over again... the only people making a profit off of the mining are the people selling the ASIC's/shovels. Mining isn't profitable and hasn't been for quite some time. While it might be if you ignore the hardware cost and only think of the electricity cost, you're still BARELY making a SLIGHT profit. That's only in places that you have very cheap electricity (or can find a way to make someone else pay for the electricity). And once again, that doesn't even count the cost of hardware in the first place. Lets not forget that there are other idiots funneling money into even faster hardware which makes your very expensive highly specialized and unable to be repurposed board basically worthless in a few months time, once the electricity cost passes what you'll make back from mining.

      HINT: this is before you get your initial cost of hardware back out of the system. You will never make a net profit. Ever.

      The only money in bitcoin right now is in speculating, and even then it's a suckers game. Your profits are based entirely on someone else guessing wrong and losing money into the system that you might be lucky enough to cash out at the right time. You can do that easier and without a datacenters worth of hardware with penny stocks. Also penny stocks are LEGAL! You don't have to worry about some new law negating all of your money like you have to do every day with bitcoin.

      I'll just stop here because anyone that legit cares about bitcoin already had their opinion made before they even read a word of this comment.

      • Re: (Score:3, Interesting)

        by Anonymous Coward

        Ignorant, misinformed, and outspokenly opinionated? What an unusual combination!

        Some asshole on slashdot.org claims that you can't make money mining bitcoin so it must be true.

        That's why the network difficulty continues to get exponentially more difficult right? Cause there's just THAT MANY suckers burning up electricity at no profit?

        Here's what ACTUALLY happened: you tried to compete in an industry with high barriers to entry, while GROSSLY under-capitalized, with limited-zero competitive advantage. You fa

        • by gl4ss (559668)

          That's why the network difficulty continues to get exponentially more difficult right? Cause there's just THAT MANY suckers burning up electricity at no profit?

          in a word: Yes.

          or do you think the shovel makers are just stupid enough to not to plug the usb cable into their own computer?

          • by pla (258480)
            or do you think the shovel makers are just stupid enough to not to plug the usb cable into their own computer?

            A market exists for mowing lawns. Do you consider John Deere too stupid to fuel up their own products and make a profit like that? A market exists for corn chips. Do you view the farmers as too stupid to grind and bake their own corn and bypass the middle men?

            We don't see perfect vertical integration across all markets because sometimes, manufacturers want nothing to do with the end product.
        • by Anonymous Coward

          No. That's actually not what happened.

          What happened is exactly what people who understand cryptography said would happen. Bitcoin's cryptographic cost has gone up, number of miners has gone down, specialized pools have reached critical mass, and the TRUST IN THE CURRENCY (which is the only asset it ever had) is gone.

          So you can call everyone else losers for not investing enough capital. (Gotta spend money to make money, right? But with Bitcoin that's only true if you're an idiot.)

          Bitcoin is dead. The on

      • by Animats (122034)

        'serious' miners are actually doing this.

        They are. Here's the biggest Bitcoin mining operation in North America as of Dec. 2013. [komonews.com] (Annoying commercials, then skip ahead to 03:15). Generated $8 million/month at the time. Probably about $800K/month now; the difficulty has gone up 5x since then, and the price has dropped by half. It's in upstate Washington, where power is cheap and cooling is easy.

        • by Kaenneth (82978)

          I've lived in Washington 40 years, and I'm never heard of a town/county named 'upstate'.

    • However, the large mining groups also make large targets. A simple DDOS makes them small potatoes again. http://www.cryptocoinsnews.com... [cryptocoinsnews.com] A few of these and the big mining groups will start breaking up.
    • by pantaril (1624521) on Monday June 16, 2014 @05:14AM (#47244435)

      The original idea was millions of end users running Bitcoin mining as a background job on their CPU. That's totally dead.

      The author of the original idea bets to disagree:

      Long before the network gets anywhere near as large as that, it would be safe
      for users to use Simplified Payment Verification (section 8) to check for
      double spending, which only requires having the chain of block headers, or
      about 12KB per day. Only people trying to create new coins would need to run
      network nodes. At first, most users would run network nodes, but as the
      network grows beyond a certain point, it would be left more and more to
      specialists with server farms of specialized hardware. A server farm would
      only need to have one node on the network and the rest of the LAN connects with
      that one node.

      That is from Satoshi Nakamoto's post from 2008: http://www.mail-archive.com/cr... [mail-archive.com]

  • While the threat of a 51% attack may be blown out of proportion (a pool sells their cut of the coins that are mined and it is in their best interest that the coin remain as valuable as possible - attacking a coin would be counterproductive), some altcoin developers have stated that they will change their coin's proof-of-work algorithm if ASICs are developed for it. Vertcoin and Execoin's developers have both stated they'll do whatever it takes to keep ASICs out.

    Most of the speculation that fuels the pump-a

    • by gweihir (88907)

      At the very least, the scrypt-based coins offer a nice security-test of scrypt. And scrypt is ASIC resistant. The Password Hashing Competition may also yield a few more where ASICs do not offer any advantage. With those, the idea of a lot of individuals mining on their own systems may become reality again.

    • Again, this means having to trust some developers to actually do what they're promising. That's the complete opposite of crypto currencies' core tenet: that trusting any humans is not necessary since the technology means no one can feasibly gain any real control. That assumption has now been proven false. If so, then what is the remaining use of cryptcurrencies in favor of general fiat currencies?

    • While the threat of a 51% attack may be blown out of proportion (a pool sells their cut of the coins that are mined and it is in their best interest that the coin remain as valuable as possible - attacking a coin would be counterproductive)

      Why don't we just let ghash.io own the "official" copy of the ledger, and do away with mining entirely, then? After all, according to you, it would be against ghash.io's best interest to do anything to harm the value of bitcoin...

      • Because ghash is actually controlled by the NSA for tracking currency.

        Oh, dear...I may have said too much.

  • by Scot Seese (137975) on Monday June 16, 2014 @01:37AM (#47244031)

    .. It's just the guys on the 3rd shift at Fort Meade, retasking server farm cycles.

  • Stupidity (Score:2, Interesting)

    by Anonymous Coward

    It appears that people who provide half of the mining power are so stupid to choose the most popular pool among the alternatives.

  • by jbmartin6 (1232050) on Monday June 16, 2014 @07:49AM (#47244969)
    Researchers at Cornell say something, that doesn't mean it is true. See for example, https://blockchain.info/pools [blockchain.info]. It seems what they are saying is that there were a few specific periods of time where GHash was doing 51% of the work. Most of the time this isn't the case though.
  • Reported last week. Reprimanded, but not fired. Resulting bitcoins were about 10% fof the computer cost.
  • If my understanding is correct, the alternative crypto-currency peercoin does not have this problem. It probably has other issues, but once it starts operating in purely proof-of-stake mode then the 51% attack simply disappears. Is that correct?

  • by jpellino (202698) on Monday June 16, 2014 @10:31AM (#47246325)
    Should be the phrase in Latin on their icon coin image.

"Out of register space (ugh)" -- vi

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