Topic: Mining hash rate distribution (Read 692 times)

I'm not disputing that possibility. However, the so called transparency that you have mentioned in the whitepaper doesn't support your point. You can see everything is on the blockchain, but you cannot see which entity owns how many Bitcoins. Same principle applies to mining, which isn't highlighted in the whitepaper.

I find the entire discussion to be centered around hypothetical scenarios, which is rather unfortunate. I would expect more concrete points to support arguments rather than have the points revolving around the same few hypothetical scenarios.

Slush was obviously just an example. A sign im behind the times perhaps, But irrelevant




Sure there are miners out there who actually monitor what their miners are doing and would notice it moving on to new blocks but 99.99% wont and the ones that do will take time to get their word out. Then those people to move their hashrate. You only need 4 blocks with most exchanges.

That brings up another good point. Which large scale miners actually have monitoring in place for this? I doubt its standard across the industry. I know for a fact it wasn't when I was more involved and mining was even further centralized to a few pools.

This is all hypothetical of course as the risk of two or more major pools getting pwned and then the pwner deciding to carry out this specific attack are very minimal. I dont want people thinking I lose sleep over this, its certainly not a major concern now but if mining further centralizes into a handful of pools then the threat grows.

Do you have any good reason why you post five consecutive posts in a row within about an hour time only? You're quite obviously violating rule 32 of Unofficial list of (official) Bitcointalk.org rules, guidelines, FAQ!



I see your intention to address and reply to multiple statements from different posters, but your execution can lead to your posts being deleted if reported. Or was your intention to boost your number of posts and activity?

It's no rocket science to insert quotes of different posters into one reply, at least when you reply from a desktop browser (mobile browsers can be forced to operate in desktop mode).

Why do you change the actual interpretation of what was said there?


It's not that an attacks requires only 28% it is is just that at that number it stops having so many zeros after the dot that it becomes a possibility.
Again missing from this is that while you could theoretically in secret mine  temporary a longer chain with each new block your chain would need to have your chances go down proportionally to the hashrate you hold. That's why the 6 blocks confirmation! (Which most don't care anymore at all)
And how is attack going to unfold, you're going to deposit and withdraw to Binance every hour while hoping in the same hour you're going to finally manage to get the attack ready? And you're going to do this every hour for 20 weeks till you finally get it?
Ghash doublespending happened on unconfirmed transactions, nobody is doing large enough business on those anymore.

Honestly, I trust two scientific papers more than opinions of a random user or data provided by those with vested interests. Landlord how is the wine? Excellent
If these papers are wrong, I would like to have proof and suggestions to correct it.
Assuming the data from the two research papers is valid, any reasonable person understands that there is a decentralisation and transparency problem at the heart of bitcoin. Then if we want to hide the reality to prevent it from losing value, fine, just say so.

Not even close, just because you like spitting out numbers that mean nothing.
If you ever get off your chair and go to any of the large blockchain events you are going to meet a lot more then 50 to 60 people who control a few EH/s thought their companies.
Hell even here you can see the % of some of the mining in the US and that is spread among dozens and dozens of companies.

https://medium.com/foundry-digital/foundry-usa-pool-hashrate-by-state-f9dc92e7bc3b

Learn how things work before spouting off about them.

-Dave

Whitepaper:
The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it. If a majority of CPU power is controlled by honest nodes, the honest chain will grow the fastest and outpace any competing chains. To modify a past block, an attacker would have to redo the proof-of-work of the block and all blocks after it and then catch up with and surpass the work of the honest nodes.

https://bitcoin.stackexchange.com/a/112313
However, the original release of Bitcoin did actually use the height to pick the best chain, which was replaced with "most work" after people noticed this attack surface just like you did.

https://bitcoin.stackexchange.com/a/29744
Satoshi didn't initially realize that choosing the correct chain by just counting blocks allows for some extremely easy attacks. Version 0.1 just counted blocks. That's why the paper just says "longest". The idea of "chain work" was added a little later.

Thus, the longest chain is understood to be the chain with the highest computing power or PoW effort, but was implemented incorrectly in early versions. In practice, the longest chain means the highest blockchain in the chain, which should correspond to the chain with the highest computing power according to the PoW consensus algorithm.
There are PoS blockchains that follow the same principle as the longest chain with stakes instead of computing power.

This is a very good point and is no different from selfish mining, in which miners "hide" their generated blocks from the main blockchain and only require 28% of the hash power, according to this https://www.certik.com/resources/blog/7uiBC4AA6ex2MS9eEnkZKy-blockchain-fundamentals-key-consensus-algorithms.

Exactly. Also, in my opinion, the government might be interested in controlling bitcoin rather than destroying it.

A reasonable answer that seems to address the problem. Assuming there are the problems you have identified, do you know how to solve them? Also, the other research seems to get similar (same) results. They could both be wrong, but you need evidence to prove the invalidity of the research.

If it is bullshit, so is the whitepaper since I got the quote from there. So you are saying bitcoin no longer follows the whitepaper? Can you report a link where I can read what it is actually following?


The problem is that mining is so centralised and not transparent. About 50-60 miners control 51% of the hash power, we also don't have a dashboard, a tool to check the status of the network, and we have to rely on the intensive work of researchers. This is a serious lack of transparency. The government does not want to destroy Bitcoin, it is enough to control it.

Since 50-60 miners control 51% of the computing power and since it is not possible to know who they are, one must trust that they are not either some private company or some government. The principles of decentralisation transparency of the whitepaper fail.

This is the only thing they have done right, they were tracking addresses that received payments from pools, not only coinbase distributions and monitoring the spending habit of them what opportunity they missed here was tracking the evolution of payments amounts, it would have been interesting data.


Exactly my thought, it works only if you split the world with some clearly defined boundaries.
So chinese miners will never use coinbase or bitstamp, us miners will never use binance, russian ones will never use one licensed in the us or europe and so on..
But, wtf you do with Canada? 
How can you say based on the exchange they use that this guy is Canadian and not from California, cause unless they use Quadriga...
What about the whole middle east  and former USSR? Would a guy in Kazakhstan have different preferences from a guy in Turkey or UAE ?
And if that is not messy enough, what do we do with Bitdeer that has a megafarm in the US and uses OKex and many others like them?

It's an interesting approach but it's really flawed!

The only things we can be sure about it's the hashrate from companies that are listed on the stock exchange, there guys need to release that data, that thing is the only reliable thing we had, the rest...is like finding Satoshi!


And at current hashrate we need to stop mining after a block for one and a half day writing for that pool to do two blocks. 


Except that web it comes to mining you have thousands of eyes watching those blocks and what their miners and the pools are doing, the moment farms keep mining blocks that are not broadcasted not validated you will have red light flashing everywhere! Also there is a huge difference between getting data from a server and reconfiguring it.
The ca$$h takeover of hashrate, that one I can believe it, the other not so much.

Im simply trying to point out you are assuming the person in control of those pools has any skin in the game and that they are mentally stable enough to make sensible decisions.

Pools can be taken over by attackers and people have mental breakdowns. Seal team 6 could come in and hold slush hostage until he builds a side chain. There are endless possibilities your defenses dont account for. You are just being Naïve. Perhaps intentionally.

These are the simple facts. 2 or fewer actors need to be compromised in order to gain enough hashrate to significantly harm Bitcoin and your only defense is blah blah game theory blah blah economic suicide.

Arion Kurtaj is completely relevant example. It doesnt matter how lucky he was to find the exploits he did the fact is he compromised multiple major players in an industry and was reckless with their data instead of thinking it through. Neither game theory or the thought of economic suicide would have stopped someone of his mindset

You can continue to be ignorant to these threats but dont expect to not be called out on them.

I'm surprised how you interpret my post. I'm still not entirely sure if I should reply... Anyway!


I think you overestimate the amount of control and what's at stake for such a potential malicious actor. To gain control over a majority of hashrate you will have to have a lot of skin in the game. Seriously, tell me, who would want to risk that many skin? You make funky actions with your majority of hashrate, the market would very very likely go crazy and go down the hill.

That's what I already wrote before, maybe in less words.



Interesting, how do you come to such a conclusion? Of course I'm aware and pretty sure that a lot of trust in Bitcoin would be lost, if substantial double spends were observed. Loss of trust would certainly lead to loss of value. This pretty much inevitable breakdown of value of Bitcoin wouldn't go well for the malicious actor as his required investment would go "poof!", too.
Doesn't make any sense for the bad adversary, does it!?


Your next paragraph also doesn't make much sense to me, but that could be entirely me. I may sound like a broken record, but in the end a malicious actor simply doesn't benefit from his disruptive actions. Too much skin in the game, too much to loose by himself.

What the heck has Arion Kurtaj to do in this discussion, c'mon, be serious. 

That's actually a noteworthy fact of the Bitcoin history. The whitepaper does include the phrase "longest chain", and while most people believe he meant "longest difficulty-wise chain", he actually didn't. The "longest chain" in the whitepaper is meant literally; the chain with the highest block.

If you search for "chainwork" in the v0.1, you will find no results. On the other hand, let's see the only part of the source code where "longest chain" and "longest branch" appear.

If you read the function Reorganize, you can notice yourself it doesn't check for most-worked chain at all; instead, it relies on the highest block number:

Satoshi made other mistakes too, like the value overflow incident. It is reasonable though; no human is infallible.

What benefit would a malicious attacker have? They would have control of a Trillion dollar network. You pointed out some of their abilities further down your post but most importantly, They could double spend. I dont think you understand the trust that would be lost in the system if a large double spend was successful.


Im not talking about game theory. I simply pointed out that the operator of a pool could use their users hashrate maliciously before anyone had a chance to move their hashrate off the pool. Effectively when looking at short term attacks like double spends they do control the hash, not the individual miners. Their incentive to do so is completely irrelevant to my statement. Your fork tracker is useless when a longer chain is being built in secret. Sure the pool might have a few hours of bad luck, but so will the whole network if 51% of the hashrate drops.


Really?  Money means nothing to the government. They can print it as they please. Never underestimate what they will do to keep their backdoor inflation tool as the global reserve currency.

Do you think someone like Arion Kurtaj would have cared about economic suicide if he got access to a few pools instead of nvidia, uber and the others?

I think there are a lot of scenarios , although highly unlikely where game theory doesnt apply. I dont think people put enough stock in those.

It's on-chain data, and there are no flaws in the math, in reality, it's even worse today, looking at the last 7 days, blocks were found are distributed as follows:


Foundry USA 30.3%
AntPool 27.7%
F2Pool 12.5%
ViaBTC10.4%

4 pools mined >80% of all blocks

Take this address as an example


Antpool blocks pay to this address, it has received 139,652 BTC so far, the research paper considers this address as a single person/miner, which is why the interpretation is wrong, but the math is right.


People treat hashrate distribution centralization as something new to BTC, but it's not, it has always been the case, it's always a few pools that control the majority of the hashrate, in fact, it has been worse at times, not too long ago I pulled the hashrate distribution history of 2018 or so, it was nearly 50% Bitmain, Antpool and the other pools they owned, even worse, the majority of mining gears physical location was in 2-3 Chinese provinces, so it's nothing new, these guys make a lot of money by playing honest, makes no sense to rekt billion of dollars of investment to double spend some transactions or attempt to fork the blockchain or anything stupid.

My issue with mostly the whole argument is what benefit would a malicious actor have? What kind of a bogeyman is being painted on the wall here?

To gather at least 51% of the global hashrate means an investment of billions of $$$ or convincing a huge amount of individual miners to join your pool. Attractive conditions for external miners don't come for free.

What can you do with your hashrate majority? Well, you can double spend your own transactions, you can censor foreign transactions and in essence you will disrupt the coin ecosystem. Particularly the latter won't be for your own benefit, on the contrary! Game theory is against a malicious actor who wants to exploit his hashrate majority. So, what's the fuss about it, unless a malicious actor doesn't care to burn billions of $$$.

I believe this scenario is highly unlikely and an economic suicide, thus the probability of such a malicious investment is neglectable, even for state level actors. Bitcoin is seen as a threat to government money control and the traditional finance system, but not enough to justify to burn billions of $$$ to disrupt Bitcoin.

Systematic double spends won't go unrecognized, nor would an increase in chain forks due to block races go unnoticed. https://fork.observer/ is a thing...

Dont get me wrong, I believe OP's research has some flaws if it came to that conclusion, I just havent had time to read it.

My issue with this specific argument is how long would it take word to spread of a pool acting maliciously? How long would it then take word to spread far enough to significantly impact their hashrate? Lastly, how long would it take someone with 51% hashrate to do damage to Bitcoins reputation or worse?

If the former is > latter, effectively they do control the hashrate.

It only takes a short time of a few pools having "bad luck" to build up a longer chain.

After reading the OP, I concluded that there might be an issue in the study. It seems unlikely for these students from the London School of Economics to arrive at such a conclusion unless they lack a proper understanding of how mining pools operate. As a result, I spent/wasted half an hour delving into the research paper to uncover the nuances, and here it is.



Obviously, I do not doubt that their figures are accurate, and this conclusion


Could have been guessed by anyone who has been mining long enough, but where did they go wrong?

These individuals seem to be entrenched in the early era of Bitcoin mining. In today's world, Coinbase transactions hold little significance in such research. To simplify, the vast majority of mining pools allocate Coinbase transactions to their own addresses and subsequently distribute rewards from there. Moreover, many mining pools operate on a Pay-Per-Share (PPS) model, meaning they pay out rewards before actually receiving them (or sometimes after). This results in payments originating from a different set of coins than those visible in the coinbase transactions.

Given that almost 90% of all blocks are solved by approximately only 10 pools, it may seem as though these 10 miners control 90% of the blocks. Mining pools typically don't attempt to conceal their rewards, otherwise, they could assign a new address for each coinbase transaction. If this were the case, the entire interpretation of the study would shift drastically. Therefore, while the presented figures may be accurate, the interpretation is fundamentally flawed.

Reading the paper further, I found another critical error in their approach which is linking the origin of exchanges to the location or nationality of miners. Their assumption, based on the use of a Chinese-owned exchange implying the miner is Chinese, or the use of a US or EU exchange indicating nationality, is flawed. Common sense dictates that this inference is far from accurate. Unless exchanges reveal miners' information to these researchers, which is highly unlikely, their methodology only exposes the identity of mining pools rather than individual miners.

In essence, this research may suffice for academic purposes in obtaining a master's or bachelor's degree, using it for anything else -- is a mistake.