Hi all,
first of all: I am not a tech guy like so many people here in the board. I'm not a mathematican or engineer, therefore, I lack some basic technical understanding when reading several posts and whitepapers.
What I am: A Bitcoin-enthusiast since years. I'm mining with some lousy 40 Th. I'm involved in a mine in Switzerland. I'm working on several Bitcoin-related projects. And I'm a profound enemy of conspiracy theories – i leave them for the nutties.
However, lately, I'm asking myself a couple of questions, and maybe, some savvy people here in the board will be able to explain me why my theories are totally wrong.
First two sentences which summarize my theories:
a) ASIC-producers could be behind withholding attacks
b) ASIC-producers could influence the difficulty
Let me explain.
Today, most of us rely on ASIC-producers. And a lot – if not most - of these ASIC-producers are also mining. This is not only intransparent, it is also a possible threat to the mining-sector of the Bitcoin-economy.
In the past, we have seen some withholding attacks. There was the one on Eligius. Wizkid wrote back then:
So, after some investigation over the past month or so, it turns out a couple of clients/addresses were involved in a “block withholding attack” against Eligius which has cost us an estimated 300 BTC, and likely miners of other pools as well. A block withholding attack is where a miner submits low difficulty shares but does not submit block solutions— so they appear to be working for the pool and continue to get paid while not actually doing useful work for the pool.
It is unknown how many other pools they’ve executed this attack against. While withholding attacks are detectable, they are not possible to prevent: the risk of block withholding is inherent in how Bitcoin pooling works. Since the attacker does not gain any direct benefit by performing the attack it is usually assumed to not be a serious risk. A withholding attacker can’t profit, except through indirect effects like making a pool look less “lucky” and driving miners to other pools.
So block withholding attacks are real. The question is: cui bono?
Producers of mining equipment who also are mining, for example, could take their profit out of this.
Just as a theorie:
A producer of ASIC-miners could produce two kinds of miners. Normal working miners and some which are not working correctly. What could they do with these miners?
a) They could sell these defetive miners and use them for a basically undetectable because widely distributed withholding attack. Alternatively, by using a closed-source software, they could remote control the behavior of some miners and switch them into „withholding mode“ at their will. Both scenarios would basically be undetectable.
b) They could stash such manipulated miners in their own premises and use them from time to time for a withholding attack against one or several pools. Again, this would be basically undetectable.
What would be the benefits of such an attack? First, they could steer miners to their own pools or pools they are working with. Or they could make sure that their own pools get profits while the attacked pools don't.
At the same time, they make two times profits: With their pools and with selling equipment.
Furthermore, the difficulty could be manipulated. A lot of worthless hashrate drives the difficulty up and could be used for manipulating it. If I look at the BTC-price and the posts of many miners who just switch off or underclock their equipment, while the hashrate is only going down a tiny little bit, the question arises why. If some ASIC-producers would be manipulating the hashrate, it would – in my laymans's understanding – make sense.
As mentioned before: I do not have any evidence that such an attack is taking place, nor do I blame any producer of such a behavior. But the fact that ASIC-producers are selling their equipment and some are using closed source software and also set up their own pools is making me suspicious.