The crypto community is preparing for a real revolution: the leading cryptocurrencies may abandon the Proof-of-Work (PoW) algorithm. The reason is the far-reaching gambling of the mining giant Bitmain, which is building its monopoly on the market by printing new ASICs for the best coins. This applies not only to users who prefer traditional GPU farms, but also to developers themselves, as the ecosystem becomes increasingly centralized and vulnerable to attack.
It seems that the series production of short-lived ASICs for new currencies has turned into an arms race between Bitmain and less fast rivals. Everyone wants to bite the last piece from the PoW algorithm, promising a quick return on investment and leaving no chance for traditional GPU farms. The first Antminers are exhausted before the start of sales and the users seem to receive the promised profit. If it were not for one thing – ASICs are rapidly becoming unprofitable and the increase in hashing rates leads to Blockchain centralization.
In the community, Bitmain earned the reputation of "greedy group" after using a huge hashrate in its own pool (Antpool.com) to block important votes in the Bitcoin network. The formation of the resistance itself began at the beginning of the year when Bitmain suddenly announced the launch of the production of Antminer A3 for the SiaCoin extraction, destroying 4 months of work of its old competitor Obelisk.
We are proud and happy to announce that we are launching Antminer A3, a new Antminer model to extract cryptocurrencies using the Blake hashing algorithm (2b).
The actual price and the purchase option will be available here https://t.co/mrymOaMy4i after 2.30pm (January 17th, GMT + 8). pic.twitter.com/Ye0cxNn95M
– BITMAIN (@BITMAINtech) 17 January 2018
At the time, David Warrick, the founder of SiaCoin and owner of Obelisk, did not respect his promise of soft fork and gave Bitmain the ability to fix the situation.
After many considerations and discussions, we have decided not to invalidate the A3 miners by soft-fork, unless Bitmain acts directly to damage the Sia project. We are incredibly excited about 2018 and we will be stronger. Full answer: https://t.co/I96X8Y6VMi
– Sia Tech (@SiaTechHQ) 25 January 2018
In reality, the situation has been corrected by itself. At the start of sales, Bitmain promised a daily profit of $ 460, which in only 10 days decreased 2 times, with only $ 10 up to now.
Image source: Whatom
Yellow card no. 1
The winter festival A3 was not yet sold when Bitmain announced a new model, which this time would have taken the most popular coin, Monero (XMR):
We are pleased to announce the brand new Antminer X3, to extract cryptocurrencies based on the CryptoNight hashing algorithm.
Two lots: shipping in June (https://t.co/VeidZrreK2) and shipping in May (https://t.co/RKtJe6Rm8D)
To prevent hoarding and enable …. (1/2) pic.twitter.com/PBKdXrwg9b
– BITMAIN (@BITMAINtech) March 15, 2018
Already tense, the state of affairs was further fueled by Baikal, who, following his rival, hastened to bite a piece of the Monero cake. The developers of the latter were less compliant than SiaTech and have kept their promise to drive a hard fork to resist ASIC extraction activities. However, Bitmain did not arrive and withdrew from responsibility for any problems with Monero, promptly placing the following disclaimer on his website:
"One of the major cryptocurrencies that uses the hash function of CryptoNight is going to change their PoW algorithm [sic]and, according to their public statement, it is intentionally for ASIC brick mining platforms including X3. When you buy it, you bet they're wrong. "
Although the ASIC miners support other currencies, for example, Bytecoin, Aeon and Dash, what about the promised $ 4,500 profit per month turned into a pumpkin?
Monthly return from April 26, according to Cryptocompare
Image source: Cryptocompare
Monthly yield starting from March 17th, according to Cryptocompare
Image source: Cryptocompare
Above all because many users are dissatisfied with the reduced profitability and unusable equipment that "get stuck every 30-40 minutes and restart the PC".
Yellow card no. 2?
The owners of Bitmain would not have been themselves if they had not desired a more delicious piece of crypt. On April 3, developers announced the release of the "most powerful and efficient Etic ASH in the world", now under the Ethash algorithm on which Ethereum and Ethereum Classic work.
We are pleased to announce the Antminer E3, the most powerful and efficient miner EtHash ASIC in the world.
Limit of a miner's order per user and not available in China.
Limited stock, order here now: https://t.co/Zfw3afjJHs# antminerE3 pic.twitter.com/SjHu2eUThp
– BITMAIN (@BITMAINtech) 3 April 2018
The master of surprises from China has successfully refuted the general belief that the Ethash protocol is ASIC resistant and that Ethereum can only be extracted through traditional GPU cards.
In addition to Bitmain, three other companies are working in this direction, one of which – Halong Mining – recently joined the Blockchain Defensive Patent License initiative with a patent for the open version of AsicBoost technology.
This seems to have caused concern in the Ethereum Foundation, which until then had been slow to adopt the Proof of Stake (PoS) algorithm to reduce the role of mining. Is Bitmain sure that Ethereum will not be able to leave PoW and the transition to PoS will result in another classic style Ethereum hard fork?
While one of the developers of Ethereum starts a hard fork Ethereum Improvement Proposal (EIP) no. 958 on Github and the other receives a vote of 57 percent of his Twitter followers who support this radical measure, Vitalik Buterin shared with Cointelegraph his opinion that the threat is overestimated:
"In principle I'm open to it, but I think it's too early to engage in a specific fork, because we still know pretty little about what kind of ASIC we're dealing with, whether they're really ASICs or just super-optimized GPUs with non-parts essentials eliminated, and what options are there to change the algorithm. "
He also told Cointelegraph that he expects "to continue to be debated within the community in the short to medium term".
He seems to be right. While some users expect to see a large number of GPU cards coming to the secondary market soon, others pay attention to the fact that when Antminer E3 reaches the consumer, it may actually lose its relevance. According to AsicMinerValue, E3 owners will receive $ 7.38 per day or $ 221.36 per month after deducting electricity costs.
Image source: AsicMinerValue
While Bitmain again takes away responsibility and happily accepts orders for Antminer E3, no more than 5 units can be ordered at a time. According to the manufacturer, when shipments begin, the performance and energy efficiency of the model will be improved.
Risk of penalty
Bitmain's monopoly continues to grow. At the same time, the number of coins available decreases and the number of miners remains the same. The debate is becoming more acute, shifting more pressure on the development team. The creators of ZCash have been openly accused of betraying the interests of the community, Monero has led a heavy blow and Ethereum is on track to change the algorithm.
While some companies conduct hard forks and others occupy waiting positions, Bitmain and his colleagues are bringing ever more powerful devices onto the market that can supplant obsolete configurations. However, it is worth mentioning a weak point of ASIC is that they may be affected by the followers of the ASIC Resistance. This is the impossibility of reprogramming the nucleus. Thus, fundamental changes in the PoW algorithm could soon send Bitmain to the panel panel.