Is it wrong to optimize and improve the efficiency of mining machines? Bitcoin hardware manufacturers seem to be speechless

Greg Maxwell, CTO of Blockstream and a contributing developer of Bitcoin Core, posted an email on the Bitcoin development mailing list yesterday that detonated the entire community. The content of the email showed that an unnamed Bitcoin mining hardware manufacturer was exploiting a vulnerability in the Bitcoin PoW implementation to gain a 30% mining efficiency advantage over other miners.

In addition, this can also explain why some miners want to block the Segregated Witness (SegWit) solution proposed by the Bitcoin Core development team. Many people suspect that the hardware manufacturer mentioned in the email is Bitmain, whose CEO Jihan Wu is a staunch opponent of SegWit. A person familiar with the matter has confirmed to Bitcoin Magazine that this is indeed the case; however, the source wishes to remain anonymous.

ASICBOOST

ASICBOOST is a patented technology developed by former CoinTerra CTO Tim Hanke and Rootstock Chief Scientist Sergio Damián Lerner. This technology exploits a "vulnerability" in the Bitcoin PoW system described by Maxwell, and the inventors of ASICBOOST call it "a clever new way to handle work items." By implementing ASICBOOST, professional ASIC mining chips can increase mining efficiency by up to 30%.

Maxwell wrote that ASIC mining rigs from a “significant manufacturer” were reverse engineered to secretly use the ASICBOOST feature, which was not disclosed. Maxwell estimated that this could increase revenues by up to $100 million per year for a mining company that controls 50% of the network’s hashrate.

Maxwell said that while ASICBOOST technology could bring huge profits to Bitmain, it would have an adverse impact on the entire Bitcoin mining ecosystem.

“This could have a dramatic centralizing effect by robbing other miners of their mining yields. Revenue gained from using this optimization covertly could be abused to distort the Bitcoin ecosystem in order to maintain an advantage.”

Bitmain

Maxwell did not specify which Bitcoin mining hardware manufacturer it was in the email, but a source confirmed to Bitcoin Magazine that it was Bitmain. Given that there are only a few ASIC manufacturers on the market, there aren’t many candidates.

Bitmain may also hold a patent for ASICBOOST technology in China, but the details of the patent were not clear when the technology was released. Ben Davenport, CTO of BitGo, believes that this patent is related to ASICBOOST.

Perhaps more importantly, the incompatibility between the covert use of ASICBOOST and SegWit appears to be unexpected.

According to Maxwell, if SegWit is activated, it will no longer be possible to conceal the secret mining using ASICBOOST technology. Over the past six months, Bitmain has been a staunch opponent of SegWit in the Bitcoin ecosystem.

As Maxwell points out:

“This incompatibility could well explain the inexplicable behavior of some parties in the mining ecosystem, so I have started looking for evidence to support my view.”

The use of ASICBOOST also explains why the blocks mined by Bitmain’s main mining pool, AntPool, were relatively smaller than other mining pools by about 100KB in February.

An unnamed person familiar with the matter told Bitcoin Magazine that this technique makes it easier to get away with mining pools when they produce empty or nearly empty blocks.

In addition, Maxwell's email also claimed that the best way to secretly implement ASICBOOST is "incompatible with almost all methods of expanding Bitcoin's transaction capacity", with the exception of "extension blocks". Recently, Bitmain CEO Jihan Wu expressed support for a new expansion proposal centered around the concept of extension blocks via Twitter.

Former BTCC COO Liao Yongquan recently accused Bitmain of funding the extension block proposal, but Wu Jihan denied this.

Solution

ASICBOOST has been discussed on the Bitcoin development list before. Because patents are enforced by the state, some Bitcoin developers, such as Core developer Peter Todd, have worried that the technology could affect competition through non-market factors. However, others believe that hardware optimization behavior should not be punished, and no consensus solution has been reached so far.

Currently, Maxwell proposed two solutions on the mailing list to counter the covert use of ASICBOOST:

The first is to activate SegWit. Although Maxwell’s email does not mention it, miners may be “forced” to signal support for SegWit due to a “user activated soft fork (UASF)”, so SegWit does not necessarily require miners’ support to activate.

The second option is described as a WTXID commitment that makes the ASICBOOST shielding method impossible in the absence of SegWit.

As of press time, Bitmain has not responded to this matter.