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Cryptocurrencies and associated blockchain decentralized ledger technologies have gained importance as a new asset class. They fueled an emerging crypto economy that has become a major driver of technology development and investment decisions globally. Supercomputers, which do the heavy lifting for artificial intelligence, science, and engineering, are increasingly safeguarding digital money.
Decentralized trust
In traditional banking, the validity of a transaction is based on the creation of a single registration system. A bank is trusted to approve a transaction. Cryptocurrencies achieve the same goal in the opposite way. All transactions are transmitted to all available computers, the more the better and decentralized consent is used to validate and approve a transaction. For this consent to be reliable, those who participate in the validation of transactions have an incentive to act honestly and are penalized for misconduct. This carrot-and-stick approach eliminates the need for a central arbiter and allows for new ways to govern currency in a decentralized manner.
Proof of work
The two most robust consensus algorithms based on security and value are Proof-of-Work (PoW) followed by Proof-of-Stake.
In PoW, the proverbial “carrot” for validators is made up of transaction fees and new coins that are assigned (mined) to each transaction block. The “stick” is the computationally expensive puzzle that must be solved before a participant can validate transactions. Since the longest chain of transaction blocks is the official record, an would-be hijacker must do better than tamper with a single block of transactions. In order to have a chance to advance an invalid transaction, the disbeliever must consistently solve this puzzle before everyone else for several blocks. This is almost impossible and extremely expensive. It is more cost effective to pursue the carrot as an honest player than to risk facing the club.
PoW algorithms tend to be more secure, but they are so computationally intensive that they are required supercomputing resource levels.
CryptoSupers
Unlike traditional supercomputers engaged in scientific or analytical applications, CryptoSuper excels in cryptographic computations, particularly in some variations of cryptographic hashing functions. While the metric for traditional supercomputers is Petaflops or Exaflops (floating point operations per second), the figure of merit for CryptoSuper is Petahashes per second or Exahashes per second.
Traditional supercomputers extend their capabilities by grouping multiple systems into a massively parallel resource typically within a single data center. CryptoSupers also bundles disparate assets to increase their chances of winning block rewards.
The CryptoSuper 500 list
Supercomputers represent an important capability, both nationally and globally, so it makes sense to follow them and analyze their evolution. Now in its fourth edition, the CryptoSuper 500 list has been modeled on existing efforts to chart the most powerful supercomputers for science, engineering and AI (TOP500), the most energy efficient supercomputers (Green500) , the most performing systems for graphical analysis (Graph500), and already exist and provide the most powerful systems in terms of input / output and storage (IO500). In many ways, CryptoSuper 500 and similar lists are a barometer of important national capabilities and provide in-depth insight into government and industry policies.
CryptoSuper 500 is released roughly as the TOP500 list. Like some of these lists, it does not yet include 500 entries. Maybe someday it will reach 500 or more players, but for now we focus on the top 50.
The fourth edition of CryptoSuper 500
Industry data shows that there are now over 5,500 cryptocurrencies in varying degrees of circulation and usage. Many of them don’t use Proof-of-Work to get consent, the computationally intensive approach we prefer and that qualifies them for inclusion on the CryptoSuper 500 list.
This is the first list after a Bitcoin “halving” in May, an event that takes place every four years or so and cuts bulk rewards by a factor of two. It makes Bitcoin mining more challenging and puts upward pressure on transaction fees. As expected, this edition of CryptoSuper 500 shows that Bitcoin’s halving has impacted the aggregate annual economic value of cryptocurrency production. That metric now stands at around $ 5 billion, down about a third. If bitcoin prices rise, as the long-term trend has shown so far, it is reasonable to expect a recovery. The cost of electricity and transaction costs will also play a critical role in that recovery.
China has the largest share of the top 50 supercomputer-class cryptocurrency mining pools.
The annual economic value (AEV) of the top 5 pools on the current list compared to the last list (published in November 2019) are as follows:
- F2Pool, a global pool, with an AEV of $ 832 million compared to $ 1.05 billion in November 2019
- Poolin in the United States and China with an AEV of $ 614 million compared to $ 896 million previously
- Antpool is headquartered in China with an ESA of $ 492 million compared to $ 768 million on the previous list
- BTC.com, which is now a global pool but started in China with an expected AEV of $ 442 million compared to $ 1.12 billion previously
- China-based SparkPool with an AEV of $ 370 million. SparkPool came in at # 10 with $ 234 million on the previous list
The eight coins mined with PoW protocols, and of significant value, included in this analysis are:
- Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Bitcoin SV, Monero, Ethereum Classic and Zcash
The original Bitcoin continues to be the leader among all cryptocurrencies. There are over a million mining rigs worldwide for Bitcoin alone, adding up to a total of over 105 Exahash per second of cryptographic supercomputing power currently.
Stephen Perrenod and Shahin Khan are partners of OrionX, a consulting firm in the technology sector.
Please note that OrionX is not endorsing any particular product, company or organization with this itemis.
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