{"id":24042,"date":"2017-04-12T02:35:34","date_gmt":"2017-04-12T02:35:34","guid":{"rendered":"http:\/\/ci027cfe80400126c3"},"modified":"2017-04-12T02:35:34","modified_gmt":"2017-04-12T02:35:34","slug":"breaking-down-bitcoins-asicboost-scandal","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/technical\/breaking-down-bitcoins-asicboost-scandal","title":{"rendered":"Breaking Down Bitcoin’s “AsicBoost Scandal”"},"content":{"rendered":"
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Through a Bitcoin Improvement Proposal (BIP) draft sent<\/a> to the Bitcoin development mailing list last week, long-time Bitcoin Core<\/a> developer and Blockstream<\/a> co-founder and CTO Gregory Maxwell revealed<\/a> that a Bitcoin mining hardware<\/a> producer implemented the patented \u201cAsicBoost\u201d technology in its chips. While the specific manufacturer was not named in the email, it was easy to surmise that Maxwell was alluding to the Chinese mining giant Bitmain<\/a> \u2014 a suspicion confirmed through a press release<\/a> issued by the company the next day.<\/p>\n

Rumors, clues and accusations have dominated social media, news sites, and chatrooms ever since, as a new dimension in Bitcoin\u2019s long-lasting scaling debate kicked tensions into high gear. Instead of the reasons given so far, some now believe that Bitmain and its mining pools<\/a> have rejected the Segregated<\/a> Witness<\/a> soft fork<\/a> (SegWit) because it is incompatible with the covert use of AsicBoost technology embedded in their chips.<\/p>\n

For anyone not \u201cin the loop\u201d: here\u2019s an overview of what\u2019s going on\u2026<\/p>\n

AsicBoost<\/strong><\/p>\n

In short, AsicBoost is a technology invented by former CoinTerra<\/a> CTO Timo Hanke and RSK<\/a> Chief Scientist Sergio Dami\u00e1n Lerner. When implemented in ASIC chips (chips specialized for Bitcoin mining), AsicBoost can take advantage of a quirk in the implementation of Bitcoin\u2019s proof-of-work mining algorithm. This lets miners take a sort of a \u201cshortcut\u201d to finding a valid block.<\/p>\n

This shortcut can give miners up to a 30 percent efficiency advantage \u2014 though some 15 to 20 percent seems more likely. Since miners compete on small margins, even small efficiency gains can result in big profits. Maxwell estimated that a large miner can bank up to $100 million extra per year; a claim backed by calculations<\/a> by the pseudonymous \u201cpraxeology_guy.\u201d Though others, including the founder of now-defunct ASIC manufacturer KnCMiner Sam Cole<\/a>, downplayed this figure. In the scheme of things \u2014 cost of electricity, ASIC design, and more \u2014 the added profit from AsicBoost alone could be much smaller. <\/p>\n

Update: Former Spoondoolies-Tech CEO Guy Corem also estimates<\/a> the added profits from AsicBoost would be significantly smaller; some $2 million extra per year.<\/em><\/p>\n

AsicBoost has been subject to some controversy<\/a> before. Since the technology is patented, and patents are state-enforced, some worry that AsicBoost could skew Bitcoin\u2019s mining competition by non-market factors. This could in a worst-case scenario lead to a centralized and perhaps even regulated mining landscape, providing reason enough for some developers to consider changing the Bitcoin protocol to counter AsicBoost. Others, however, see AsicBoost as an optimization like so many mining optimizations realized over the years, and argue that innovative miners should not be punished by a protocol change.<\/p>\n

In light of last week\u2019s events, it is important to note that AsicBoost not only can be utilized overtly, in which case it is obvious that a miner is using it, but it can also be employed covertly, which is much harder to detect. And, as it now turns out, covert use of AsicBoost is largely incompatible with the current soft fork implementation of Segregated Witness, the protocol upgrade as proposed by the Bitcoin Core development team.<\/p>\n

The Admission<\/strong><\/p>\n

While it was up in the air for a day or so, it is no longer a question whether Bitmain indeed implemented AsicBoost technology in its chips.<\/p>\n

In their press release, the company readily admitted that it did, stating:<\/p>\n

\u201cOur ASIC chips, like those of some other manufacturers, have a circuit design that supports AsicBoost.\u201d<\/p>\n

Additionally, Bitmain said that it \u201chas tested AsicBoost on [Bitcoin\u2019s] Testnet,\u201d while also explaining that the company can legally use the technology:<\/p>\n

\u201cBitmain holds the AsicBoost patent in China. We can legally use it in our own mining farms in China to profit from it and sell the cloud mining contracts to the public.\u201d<\/p>\n

Furthermore, Bitmain said that AsicBoost wouldn’t be bad for the company\u2019s business model, writing:<\/p>\n

\u201cBitcoin mining equipment depreciates rapidly. Bitmain has constantly been introducing newer more efficient miner models for all. As such the statement that the deployment of AsicBoost, which can lead to a 20% difference in power efficiency, is some kind of negative development for Bitmain\u2019s business model is false.\u201d<\/p>\n

And on top of that, the ASIC producer rejects that AsicBoost is something detrimental in itself. Instead, it argues that widespread use of the technology would benefit the Bitcoin network:<\/p>\n

\u201cIf all mining equipment could use AsicBoost, it will lower the J\/GH cost and the total network hash rate will increase, making the Bitcoin network even stronger. So, the AsicBoost method is not a \u2018covert attack\u2019 on the Bitcoin [proof of work] function. It is an engineering optimization.\u201d<\/p>\n

So, in summary, Bitmain admits it implemented AsicBoost technology in its chips, acknowledges testing it, explains that using it in China is legal, says that it is not a negative for the company, and also says it’s not a negative (an attack) in itself \u2014 but rather something positive: an optimization.<\/p>\n

Yet\u2026<\/p>\n

The Denial <\/strong><\/p>\n

Even though Bitmain argues that AsicBoost is a positive on all fronts, the company maintains that \u201cthe AsicBoost method has not been used by us on the mainnet.\u201d<\/p>\n

As well as:<\/p>\n

\u201c[Using AsicBoost], however profitable, is not something we would do for the greater good of Bitcoin.\u201d<\/p>\n

These claims may be true.<\/p>\n

While the denial seems oddly inconsistent with with the statements that there is nothing wrong with AsicBoost, it has so far not been conclusively proven that Bitmain did, in fact, use AsicBoost on Bitcoin\u2019s main net. And this may be hard to prove conclusively, as covert use of AsicBoost can, indeed, be done covertly.<\/p>\n

That said, covert use of AsicBoost could in some cases be noticeable after all. Specifically, using AsicBoost could result in odd transaction ordering in blocks, or even in the mining of (near) empty blocks. Efforts to further analyze blocks are ongoing.<\/p>\n

So far, it does<\/a> appear<\/a> that Bitmain\u2019s main mining pool, AntPool<\/a>, has both mined blocks with odd transaction ordering<\/a>, as well as nearly<\/a> empty<\/a> blocks<\/a>. And while both of these may be explained by spy mining<\/a>, buggy mining pool software, or perhaps other reasons we don\u2019t yet know of, the timing and structure of some of some of the (near) empty blocks is at least suspicious.<\/p>\n

Moreover, AntPool\u2019s mining of (near) empty blocks has always been notable, since Bitmain\u2019s co-CEO, Jihan Wu, is one of the most prominent proponents of a block size limit increase: If Bitcoin needs to process more transactions, mining empty blocks doesn\u2019t help.<\/p>\n

And when asked about the empty blocks last year, no reason was given by Wu at all. In fact, there is little indication Wu had \u201cthe greater good of Bitcoin\u201d in mind at that time:<\/p>\n

\n

@sysmannet<\/a> sorry, we will continue mining empty blocks. This is the freedom given by the Bitcoin protocol.<\/p>\n

— Jihan Wu (@JihanWu) March 1, 2016<\/a><\/p><\/blockquote>\n