Mining hash rate distribution

[alfredaino]

Hello,

I am researching the different types of blockchains both PoS and PoW. In general, I can find important data for the former that is apparently not available for the latter. Specifically, I am looking for a dashboard that shows the distribution of hash rate sorted by miner, by country, by ISP and so on, the total number of miners, how many miners control 51% of the hash rate. Something similar to this data from Ethereum https://beaconcha.in/ and https://etherscan.io/dashboards/beacon-depositors.
I found the following resources, some contain hash rates by country and the network map, but I did not find a complete dashboard like other PoS projects.
This data is very important in the light of the following research that shows the high centralisation of mining and thus of control of PoW consensus.

• Mining map https://chainbulletin.com/bitcoin-mining-map/
• Nodes map https://bitnodes.io/nodes/live-map/
• Hash rate by country https://hashrateindex.com/hashrate/pools

A Deep Dive into Bitcoin Mining Pools https://github.com/MatteoRomiti/Deep_Dive_BTC_Mining_Pools
we conduct the first in-depth analysis of mining reward distribution within three of the four largest Bitcoin mining pools and examine their cross-pool economic relationships. Our results suggest that individual miners are simultaneously operating across all three pools and that in each analyzed pool a small number of actors (≤ 20) receives over 50% of all BTC payouts.

Blockchain Analysis of the Bitcoin Market https://mitsloan.mit.edu/sites/default/files/2022-06/Bitcoin-blockchain%20-%20AER.pdf
We show that the Bitcoin mining capacity is highly concentrated and has been for the last five years. The top 10% of miners control 90% and just 0.1% (about 50 miners) control close to 50% of mining capacity. Furthermore, this concentration of mining capacity is counter cyclical and varies with the Bitcoin price. It decreases following sharp increases in the Bitcoin price and increases in periods when the price drops or when there are halving events. Thus, the risk of a 51% attack increases in these times as well.

Thank you

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[logfiles]

I am researching the different types of blockchains both PoS and PoW. In general, I can find important data for the former that is apparently not available for the latter. Specifically, I am looking for a dashboard that shows the distribution of hash rate sorted by miner, by country, by ISP and so on, the total number of miners, how many miners control 51% of the hash rate.

You can't find such data because a lot of miners join mining pools, so for example the readily available data is that the Hash rate is sorted according to the pools rather than individual miners. The same applies to location of miner.

A miner from Russia can use the same pool as a miner from the US. How are you going to group them if the pool won't reveal that information to the public.
Remember the crack-down of miners in China? I am pretty sure some solo miners definitely use VPN. So again the information is going to be unreliable

[DannyHamilton]

Not only don't we know who is running mining equipment, where they are located, or how much equipment any of them are running.

Believe it or not, we also have no way of even knowing how much total hashpower is actually running during any timeframe.

All we know is what the current difficulty target is, and how much time it takes for a block to show up. From there we can calculate an ESTIMATED total hash rate.

Some of the mining pools may publish their hash rate, but you have to decide if you trust them to tell the truth or not.  They easily could lie about it.  Some pools add data into their blocks to indicate that they mined that block, but there is nothing forcing them to do so, and they certainly could leave the data out of some blocks or even lie and put some other pools data into their own blocks if they wanted to.

Some mining businesses may publish information about how much hashpower they are running. Again, you have to decide if you trust them to be honest about it or not.

Am I running any minging equipment?  How would you know? If I told you I was (or wasn't) how would you know if you could trust what I said?

[BlackBoss_]

• Mining map https://chainbulletin.com/bitcoin-mining-map/
• Hash rate by country https://hashrateindex.com/hashrate/pools

You can use this one
https://www.blockchain.com/explorer/charts/pools-timeseries

Data from third party sites about mining pools are not accurate if you consider it by countries, geolocations because miners can connect their ASICs to mining pools through VPNs and IP addresses are not reflecting their real geolocations.

This weakness of data is mentioned by Cambridge Bitcoin Electricity Consumption Index's methodology.
https://ccaf.io/cbnsi/cbeci/mining_map/methodology

Data collection

We have partnered with several Bitcoin mining pools to collect geolocational mining facility data in a non-obtrusive and privacy-preserving manner. This geolocational data is based on IP addresses of mining facility operators (‘hashers’) that connect to the servers of mining pools.
 

Assumption 1: IP addresses of mining facility operators are an accurate indicator of hashrate location.

Each participating mining pool aggregates IP addresses on their end to create an average geographic distribution of total pool hashpower by country and region. Pools then periodically push their individual distribution to our database via a dedicated API endpoint, connecting with a unique, pseudonymous access token that obfuscates the identity of the pool. The corresponding name table is encrypted and stored locally for security purposes. Please note that CCAF has at no point access to the underlying IP addresses or any other sensitive pool data.

Extra information about Bitcoin Mining History

[pooya87]

This kind of data is not possible to acquire in Bitcoin with its PoW algorithm because of its decentralized nature. However, since there is some degree of centralization involved in Bitcoin mining in the form of mining pools, the data exists in their hands.

If you are serious about your research, your only option is to directly contact bitcoin mining pools one by one and ask them whether they are willing to publish this information. They don't have to publish it in details, all they have to do is to announce: their total hashrate, the IP distribution of the miners that connect to their servers and their individual or average hashrate and general information like that.
Then you can aggregate the data and get a better picture.

The problem is that not all of them are willing to publish this type of statistic and as it was mentioned it is not possible to verify this information. But I'd say if you put enough effort into it and if they actually publish something, the result could be close to reality with small error.

[philipma1957]

Hello,

I am researching the different types of blockchains both PoS and PoW. In general, I can find important data for the former that is apparently not available for the latter. Specifically, I am looking for a dashboard that shows the distribution of hash rate sorted by miner, by country, by ISP and so on, the total number of miners, how many miners control 51% of the hash rate. Something similar to this data from Ethereum https://beaconcha.in/ and https://etherscan.io/dashboards/beacon-depositors.
I found the following resources, some contain hash rates by country and the network map, but I did not find a complete dashboard like other PoS projects.
This data is very important in the light of the following research that shows the high centralisation of mining and thus of control of PoW consensus.

• Mining map https://chainbulletin.com/bitcoin-mining-map/
• Nodes map https://bitnodes.io/nodes/live-map/
• Hash rate by country https://hashrateindex.com/hashrate/pools

A Deep Dive into Bitcoin Mining Pools https://github.com/MatteoRomiti/Deep_Dive_BTC_Mining_Pools
we conduct the first in-depth analysis of mining reward distribution within three of the four largest Bitcoin mining pools and examine their cross-pool economic relationships. Our results suggest that individual miners are simultaneously operating across all three pools and that in each analyzed pool a small number of actors (≤ 20) receives over 50% of all BTC payouts.

Blockchain Analysis of the Bitcoin Market https://mitsloan.mit.edu/sites/default/files/2022-06/Bitcoin-blockchain%20-%20AER.pdf
We show that the Bitcoin mining capacity is highly concentrated and has been for the last five years. The top 10% of miners control 90% and just 0.1% (about 50 miners) control close to 50% of mining capacity. Furthermore, this concentration of mining capacity is counter cyclical and varies with the Bitcoin price. It decreases following sharp increases in the Bitcoin price and increases in periods when the price drops or when there are halving events. Thus, the risk of a 51% attack increases in these times as well.

Thank you

A 51% attack is the least of btc worries.  Why is this because it would lose a shit ton of money for the top players.  If you want to worry about btc worry about fee manipulation which will get easier with every ½ ing


Why is that? Simple underclock your gear for ½ of the two week diff period of 2016 blocks.

this makes the mempool crowd.

then over clock your gear to grab blocks fill with fees in the second half of the 2016 block period.

Ie do the first 1008 blocks in 8 days.

do the second 1008 blocks in 6 days.

the diff stays the same.

you lose emptier blocks the first half
you make crowded blocks the second half.

a pool like foundry with ⅓ the hash should do 48 blocks a day.

so they do 38 a day for 8 days in the hole 80 blocks
they make  62 a day for 6 days up 84 blocks. the diff drifts up just a tiny bit.

the pool makes just over 48 blocks a day for the 14 days.

the diff moves just a bit up

and the pool gets  a lot of high fee blocks

6 x 62 = 372 high fee blocks

plus they do not raise the diff much.

they also get 304 low fee blocks

but they slow the diff growth which does not help them since they are near 33%

and this will get far worse after the ½ as they lose less coins.

Pretty sure foundry does this.

[alfredaino]

Hello,
thank you all for the detailed replies. So I understand that it is not possible to know such important details and to know how really decentralised the bitcoin PoW consensus is.
This is a major drawback that undermines the trustless principle of the network, as the do not trust, verify principle cannot be put into practice. As suggested by some of you, I will try to contact at least the first 5 mining pools to see if I can get some useful information.
Thanks

A 51% attack is the least of btc worries.  Why is this because it would lose a shit ton of money for the top players.  If you want to worry about btc worry about fee manipulation which will get easier with every ½ ing


Why is that? Simple underclock your gear for ½ of the two week diff period of 2016 blocks.

this makes the mempool crowd.

then over clock your gear to grab blocks fill with fees in the second half of the 2016 block period.

Ie do the first 1008 blocks in 8 days.

do the second 1008 blocks in 6 days.

the diff stays the same.

you lose emptier blocks the first half
you make crowded blocks the second half.

a pool like foundry with ⅓ the hash should do 48 blocks a day.

so they do 38 a day for 8 days in the hole 80 blocks
they make  62 a day for 6 days up 84 blocks. the diff drifts up just a tiny bit.

the pool makes just over 48 blocks a day for the 14 days.

the diff moves just a bit up

and the pool gets  a lot of high fee blocks

6 x 62 = 372 high fee blocks

plus they do not raise the diff much.

they also get 304 low fee blocks

but they slow the diff growth which does not help them since they are near 33%

and this will get far worse after the ½ as they lose less coins.

Pretty sure foundry does this.

I'm not sure, but it looks to me like a self mining attack that allows the network to be attacked with only 1/3 of the hash power. Majority is not Enough: Bitcoin Mining is Vulnerable https://arxiv.org/abs/1311.0243. 

[Cricktor]

...

I'm not sure, but it looks to me like a self mining attack that allows the network to be attacked with only 1/3 of the hash power.

How is this an attack to the network? Exploiting the fee market is not quite an attack or is it? I'm not entirely convinced of the benefit of this controlled hashrate limitting that philipma1957 describes, but there're some transaction market variables which are to some extend beyond the control of mining pools, e.g. transaction volume of bitcoiners induces by external factors like Bitcoin market value development. In situations where bitcoiners demand a spike of transactions for whatever reasons such hashrate control might exaggerate the fee market to a mining pool's benefit.

As far as I remember the last time we didn't have mempool congestion was around midth of April 2023 and before that at the beginning of 2023. Since then mempool never got emptied enough that there wasn't an excess of transactions waiting to be confirmed in new blocks.

When mempool has more unconfirmed transactions than fit in a (few) block(s) there's natural fee rate competition, a natural fee rate market for bitcoiners. To maximize profit mining pools should choose transactions solely based on the max. fee rate they offer, unless the pools have some special paid services, like paid transaction accelerators, that can compensate choice of lower fee rates.

Anything beyond the beneficial choice of transactions based on their top fee rate is likely intransparent, trust based, manipulated and hardly verifiable for participating miners of pools.

Concentration of hashpower in large pools is a problem of concentration of choice of which transactions go into blocks of those pools. Usually the pool decides about the block template that participating miners work on and miners don't have a word on the block template. Miners only choice is at which pool(s) they mine. Most likely this will be a pool which maximizes their profit. Mining gear and energy have to be paid...

[alfredaino]

...

I'm not sure, but it looks to me like a self mining attack that allows the network to be attacked with only 1/3 of the hash power.

How is this an attack to the network?

I was referring to the fact that a mining pool like foundry is close to 33% or 1/3 of the total hash rate, which allows a selfish mining attack. Majority is not Enough: Bitcoin Mining is Vulnerable https://arxiv.org/abs/1311.0243.

Thanks for the explanation.

[DaveF]

...

I'm not sure, but it looks to me like a self mining attack that allows the network to be attacked with only 1/3 of the hash power.

How is this an attack to the network?

I was referring to the fact that a mining pool like foundry is close to 33% or 1/3 of the total hash rate, which allows a selfish mining attack. Majority is not Enough: Bitcoin Mining is Vulnerable https://arxiv.org/abs/1311.0243.

Thanks for the explanation.

Keep in mind foundry is mostly for institutional investors. Who are not stupid, if it looks like foundry is going to do something that may hurt the price of BTC they are going to leave and go elsewhere. Or sue them for violating fiduciary trust. Or both. Due to the nature of investing in mining it's a long term ROI having your pool tank the value of BTC is going to make you react.

-Dave

[alfredaino]

...

I'm not sure, but it looks to me like a self mining attack that allows the network to be attacked with only 1/3 of the hash power.

How is this an attack to the network?

I was referring to the fact that a mining pool like foundry is close to 33% or 1/3 of the total hash rate, which allows a selfish mining attack. Majority is not Enough: Bitcoin Mining is Vulnerable https://arxiv.org/abs/1311.0243.

Thanks for the explanation.

Keep in mind foundry is mostly for institutional investors. Who are not stupid, if it looks like foundry is going to do something that may hurt the price of BTC they are going to leave and go elsewhere. Or sue them for violating fiduciary trust. Or both. Due to the nature of investing in mining it's a long term ROI having your pool tank the value of BTC is going to make you react.

-Dave

This confirms that mining is very centralised and controlled by a few institutional investors acting in their own interests and not those of the other participants. Is there a chance to know who are the investors of Foundry, AntPool, F2Pool and ViaBTC?
In theory everyone can join the network, but in practice those who actually participate in the PoW consensus (51%) and produce blocks are less than 0.1% of the miners, i.e. those 50-60 miners reported in the research. To achieve such a high hash rate, it is necessary to have a mining farm and an economy of scale.

[DannyHamilton]

- snip -
This confirms that mining is very centralised and controlled by a few institutional investors
- snip -
In theory everyone can join the network, but in practice those who actually participate in the PoW consensus (51%) and produce blocks are less than 0.1% of the miners, i.e. those 50-60 miners reported in the research.
- snip -

I repeat myself:

- snip -
Am I running any minging equipment?  How would you know? If I told you I was (or wasn't) how would you know if you could trust what I said?

[DaveF]

This confirms that mining is very centralised and controlled by a few institutional investors acting in their own interests and not those of the other participants. Is there a chance to know who are the investors of Foundry, AntPool, F2Pool and ViaBTC?
In theory everyone can join the network, but in practice those who actually participate in the PoW consensus (51%) and produce blocks are less than 0.1% of the miners, i.e. those 50-60 miners reported in the research. To achieve such a high hash rate, it is necessary to have a mining farm and an economy of scale.

Not at all. Learn how mining and pools work. Just the people on this board who mine are more then the "0.1%" that you claim.
Anyone can point their miners at Ant or F2 or Via or Kano or another pool.

Just because you don't have a bunch of S19 sitting in your garage does not mean that other people don't.

https://explorer.btc.com/btc/insights-pools

-Dave

[philipma1957]

foundry has a 20ph minimum level.

that is 150 s19xp's burning 500kwatts an hour.


so you need 3000 x 150 =                     $450,000 in miners
a mining box maybe                                75,000
a transformer that can go to 600kwatts = $25,000

hard pressed to be ready for under 575K usd.

and power cost per month need to be under 6 cents. which is 262,800 for power.

add in labor.

I put it at 1 million dollars to be able to mine with foundry

[ranochigo]

This confirms that mining is very centralised and controlled by a few institutional investors acting in their own interests and not those of the other participants. Is there a chance to know who are the investors of Foundry, AntPool, F2Pool and ViaBTC?

Investors != Miners. If they are investors, they may not necessary be the ones mining at the pool either. The thing about these pools is that they are NOT exclusively tailored for a small number of miners, but they are tailored to accommodate for a large number of miners with their own farms. That alone should tell you how decentralized Bitcoin mining is.

The FUD that is put forth in this thread is largely unwarranted. The key factor that you're ignoring is with the game theory that the miners are involved in when they invest their resources into mining. The key question would lie with whether they gain more when they act maliciously, or honestly. It would be obvious that the answer is to be honest. Selfish mining is largely only a concern among pools, because they are able to gain an unfair advantage than the rest of the pools. It poses much less of a security threat than you think.

[alfredaino]

This confirms that mining is very centralised and controlled by a few institutional investors acting in their own interests and not those of the other participants. Is there a chance to know who are the investors of Foundry, AntPool, F2Pool and ViaBTC?
In theory everyone can join the network, but in practice those who actually participate in the PoW consensus (51%) and produce blocks are less than 0.1% of the miners, i.e. those 50-60 miners reported in the research. To achieve such a high hash rate, it is necessary to have a mining farm and an economy of scale.

Not at all. Learn how mining and pools work. Just the people on this board who mine are more then the "0.1%" that you claim.
Anyone can point their miners at Ant or F2 or Via or Kano or another pool.

Just because you don't have a bunch of S19 sitting in your garage does not mean that other people don't.

https://explorer.btc.com/btc/insights-pools

-Dave

According to the research reported in my first post:

Blockchain Analysis of the Bitcoin Market https://mitsloan.mit.edu/sites/default/files/2022-06/Bitcoin-blockchain%20-%20AER.pdf
We show that the Bitcoin mining capacity is highly concentrated and has been for the last five years. The top 10% of miners control 90% and just 0.1% (about 50 miners) control close to 50% of mining capacity. Furthermore, this concentration of mining capacity is counter cyclical and varies with the Bitcoin price. It decreases following sharp increases in the Bitcoin price and increases in periods when the price drops or when there are halving events. Thus, the risk of a 51% attack increases in these times as well.

Also, according to this research from August 2022 page 13 when the hash rate was about 207.2 EH/s https://kraken.docsend.com/view/2gwc64da9h5ccmhm, to get 51% hash rate were necessary 2.16 M S19 antminers, $8.6 B hardware cost and $19.8 M electricity cost/day.

So, in theory, everyone can participate, but in practice to be in the 51% hash rate, i.e. 0.1% of the miners, about 50, several hundred million dollars are needed. These are the reasons for the questions in my first post.

[Cricktor]

I've glimpsed over your cited paper and their methodology to try to identify individual miners who point their hashpower to pools looks quite legit (to me). It's not fool-proof but to my understanding they tried to apply reasonable efford to make a good miner attribution (in the sense to identify pool payout to individual miners and thus those miner's hashpower contribution).

It's not too surprising that in Bitcoin mining bigger is better as you gain advantage with size because certain cost factors don't scale linearly with size. A very simple example is an individual miner with 10 ASICs. This individual could likely handle also 20 ASICSs alone, so no additional expenses for labour. Maybe this miner also has the space for the additional 10 ASICs, so almost no additional cost for storage of his mining rig. On the other hand he has doubled costs for energy and likely cooling. I'm very much simplifying here…

This confirms that mining is very centralised and controlled by a few institutional investors acting in their own interests and not those of the other participants. Is there a chance to know who are the investors of Foundry, AntPool, F2Pool and ViaBTC?

How do you come to that conclusion regarding your institutional investors?

Hashpower concentrates into pools. According to your cited paper there are not many miners with a great percentage of hashpower that point their hashpower to large mining pools. Agreed on that and this development isn't actually too surprising and I personally don't see much of an issue here. It's economy in a very competetive playground.

In theory everyone can join the network, but in practice those who actually participate in the PoW consensus (51%) and produce blocks are less than 0.1% of the miners, i.e. those 50-60 miners reported in the research.

This is nonsense or paints an oversimplified picture. In practice anybody can join a mining pool and point his hashpower to it. You're probably excluded from certain larger pools that have a lower limit of required minimum hashpower, but that doesn't prevent you from finding some other pool that will accept your hashpower.

If there're 50-60 miners who provide a majority of hashpower to pools, then those big miners gain most of the coin rewards from pool payouts. That doesn't mean that all other participating miners don't get anything, see below for explanation.

Are you sure, you understand PoW mining? There's no such thing as PoW consensus (51%). Bitcoin mining PoW forces you do execute hashwork to find a blockheader hash that satisfies the required mining difficulty (your to be found blockheader hash needs to be lower than a certain hash value dictated by current difficulty). Finding such a blockheader hash is due to the used hash algorithm a completely random process. You can hit a valid blockheader hash within a few thousands or millions hashes (statistically very … very unlikely) or you need a ridiculously high number of hashes to hit it for which you need longer than some other miner who was luckier than you.
Again: it's a random process and with higher hashpower you gain statistical advantage.

Mining pools mitigate the risk of solo-mining. With "fair" pools you're paid statistically according to your provided hashpower compared to global hashpower within the granularity of the pool's payout scheme. Choose your mining pool wisely! I didn't want to go into pool payout schemes as it's probably not relevant to go into such details here and now.

[stompix]

This confirms that mining is very centralised and controlled by a few institutional investors acting in their own interests and not those of the other participants. Is there a chance to know who are the investors of Foundry, AntPool, F2Pool and ViaBTC?

Investors != Miners. If they are investors, they may not necessary be the ones mining at the pool either.

Hihi, yeah but also
Investors != Miners. hmmm but also != Poll owners != Investors in a mining company !=  CEOs out of touch with reality !=  Drunk technician coming high at work!

The FUD that is put forth in this thread is largely unwarranted. The key factor that you're ignoring is with the game theory that the miners are involved in when they invest their resources into mining. The key question would lie with whether they gain more when they act maliciously, or honestly. It would be obvious that the answer is to be honest. Selfish mining is largely only a concern among pools, because they are able to gain an unfair advantage than the rest of the pools. It poses much less of a security threat than you think.

The only way a 51% would unfold right now  (not counting area 52 having a replica of Omnius in the basement) would be a wave of bankruptcies due to losing profits and someone being able to take over those mining farms at a fraction of the costs or even for free and with deep enough pockets and grudge to actually mount such a thing, but by the time this happen we would already be in a lot of deep *** since it would come with a ridiculous drop in price.

So basically nobody is going to kill the golden goose, but someone might want to throw a few rocks at it when you leave it out of the yard unguarded!

I've glimpsed over your cited paper and their methodology to try to identify individual miners who point their hashpower to pools looks quite legit (to me).

It's outdated since it doesn't have Foundry and it's before the great migration, the second the payment tracing is a bit ridiculous, how do you deal with guys that have mining farms in 3 countries and how do you deal with the ones that don't sell their coins! If riot or core decides to make a purchase in BTC from Bitmain and send 1000 BTC to Okex you suddenly move 30 Exahash from the US back to China!  Genuinely curious how would separate with this method Canada and the United States!

[alfredaino]

I've glimpsed over your cited paper and their methodology to try to identify individual miners who point their hashpower to pools looks quite legit (to me). It's not fool-proof but to my understanding they tried to apply reasonable efford to make a good miner attribution (in the sense to identify pool payout to individual miners and thus those miner's hashpower contribution).

It's not too surprising that in Bitcoin mining bigger is better as you gain advantage with size because certain cost factors don't scale linearly with size. A very simple example is an individual miner with 10 ASICs. This individual could likely handle also 20 ASICSs alone, so no additional expenses for labour. Maybe this miner also has the space for the additional 10 ASICs, so almost no additional cost for storage of his mining rig. On the other hand he has doubled costs for energy and likely cooling. I'm very much simplifying here…

My first paper in my first post confirms the results:
A Deep Dive into Bitcoin Mining Pools https://github.com/MatteoRomiti/Deep_Dive_BTC_Mining_Pools
we conduct the first in-depth analysis of mining reward distribution within three of the four largest Bitcoin mining pools and examine their cross-pool economic relationships. Our results suggest that individual miners are simultaneously operating across all three pools and that in each analyzed pool a small number of actors (≤ 20) receives over 50% of all BTC payouts.
However, if you have a more updated and better version, I will read it.

This confirms that mining is very centralised and controlled by a few institutional investors acting in their own interests and not those of the other participants. Is there a chance to know who are the investors of Foundry, AntPool, F2Pool and ViaBTC?

How do you come to that conclusion regarding your institutional investors?

Hashpower concentrates into pools. According to your cited paper there are not many miners with a great percentage of hashpower that point their hashpower to large mining pools. Agreed on that and this development isn't actually too surprising and I personally don't see much of an issue here. It's economy in a very competetive playground.

According to both articles, some miners, about 50-60 or <=20 per pool, control more than 50% of the network hashing power, thus controlling the PoW consensus. Who do you think own these miners? They need hundreds of millions of dollars of investment.

In theory everyone can join the network, but in practice those who actually participate in the PoW consensus (51%) and produce blocks are less than 0.1% of the miners, i.e. those 50-60 miners reported in the research.

This is nonsense or paints an oversimplified picture. In practice anybody can join a mining pool and point his hashpower to it. You're probably excluded from certain larger pools that have a lower limit of required minimum hashpower, but that doesn't prevent you from finding some other pool that will accept your hashpower.

If there're 50-60 miners who provide a majority of hashpower to pools, then those big miners gain most of the coin rewards from pool payouts. That doesn't mean that all other participating miners don't get anything, see below for explanation.

Are you sure, you understand PoW mining? There's no such thing as PoW consensus (51%). Bitcoin mining PoW forces you do execute hashwork to find a blockheader hash that satisfies the required mining difficulty (your to be found blockheader hash needs to be lower than a certain hash value dictated by current difficulty). Finding such a blockheader hash is due to the used hash algorithm a completely random process. You can hit a valid blockheader hash within a few thousands or millions hashes (statistically very … very unlikely) or you need a ridiculously high number of hashes to hit it for which you need longer than some other miner who was luckier than you.
Again: it's a random process and with higher hashpower you gain statistical advantage.

Mining pools mitigate the risk of solo-mining. With "fair" pools you're paid statistically according to your provided hashpower compared to global hashpower within the granularity of the pool's payout scheme. Choose your mining pool wisely! I didn't want to go into pool payout schemes as it's probably not relevant to go into such details here and now.

Thanks for the explanation. As you pointed out, mining is a random process and the probability of being the first to mine a block is proportional to the hash power, i.e. if you have x% of the total hash power, in the long run you will mine x% of the blocks on average. Thus, miners who have at least 51% of the hash power on average control the PoW consensus and are rewarded by the network. Again, in theory everyone can participate, but in practice the chances of influencing the 51% decision and being rewarded are only statistically significant for those with a high hash rate and an investment of hundreds of millions of dollars.

I've glimpsed over your cited paper and their methodology to try to identify individual miners who point their hashpower to pools looks quite legit (to me).

It's outdated since it doesn't have Foundry and it's before the great migration, the second the payment tracing is a bit ridiculous, how do you deal with guys that have mining farms in 3 countries and how do you deal with the ones that don't sell their coins! If riot or core decides to make a purchase in BTC from Bitmain and send 1000 BTC to Okex you suddenly move 30 Exahash from the US back to China!   Genuinely curious how would separate with this method Canada and the United States!

If you have better sources I will gladly read them. They may be out of date, however the data collected shows the history of bitcoin mining has been.

[BlackBoss_]

If you have better sources I will gladly read them. They may be out of date, however the data collected shows the history of bitcoin mining has been.

I shared but you did not read.

Extra information about Bitcoin Mining History

There are some researches and reports that show in the past, there are some dominating mining pools, which can have combined hash rate big enough to attack Bitcoin network. Unfortunately, they did not do that and I believe they see no good benefit by attacking the network.

Visual Analytics of Bitcoin Mining Pool Evolution: On the Road Toward Stability?


The evolution of mining pools and miners’ behaviors inthe Bitcoin blockchain

[alfredaino]

If you have better sources I will gladly read them. They may be out of date, however the data collected shows the history of bitcoin mining has been.

I shared but you did not read.

Extra information about Bitcoin Mining History

I have read all your links without finding answers to my questions.

There are some researches and reports that show in the past, there are some dominating mining pools, which can have combined hash rate big enough to attack Bitcoin network. Unfortunately, they did not do that and I believe they see no good benefit by attacking the network.

Visual Analytics of Bitcoin Mining Pool Evolution: On the Road Toward Stability?
https://i.ibb.co/dtJPxF1/petra1.png

The evolution of mining pools and miners’ behaviors inthe Bitcoin blockchain
https://i.ibb.co/Ldz3bWz/hal2.png https://i.ibb.co/FYm4ZcV/hal3.png

These two articles are interesting, but show nothing new.
Beware attacking the network for malicious purposes is one thing, controlling the production of a blockchain for one's own favourable interests another.
Relying only on the past to predict the future is misleading, see the inductivist turkey example https://en.wikipedia.org/wiki/Turkey_illusion

[stompix]

According to both articles, some miners, about 50-60 or <=20 per pool, control more than 50% of the network hashing power, thus controlling the PoW consensus. Who do you think own these miners?

Go to every single company listed onto the stock exchange and you're going to see the shareholders and you get pretty much 30% of the hashrate!
Btw, if you think they are some illuminati that can control everything and down in money , why don't you buy shares in them too?

Thanks for the explanation. As you pointed out, mining is a random process and the probability of being the first to mine a block is proportional to the hash power, i.e. if you have x% of the total hash power, in the long run you will mine x% of the blocks on average. Thus, miners who have at least 51% of the hash power on average control the PoW consensus and are rewarded by the network.

Stop with the POW consensus!!!!
Miners that mine 70% receive 70% of the reward, they can't change the "consensus" , they can fork the chain and keep mining there  by their rules but that can be done even by a guy with 5%, see BCH and BSV! If a 51% attacker would try to mine blocks that don't follow the rules they will be rejected by nodes, this is not a democracy where the guys having 51% of the vote can pass every single rule and the rest are forced to obey them!

If you have better sources I will gladly read them. They may be out of date, however the data collected shows the history of bitcoin mining has been.

There is none and there will never be!
As long as a company mines in two countries and points the hashrate at a private pool you have zero chances of knowing how much is there owned by who and where it resides, and this is just a simple example!
I mined over various pools, sent my money to both cold wallets and different exchanges, so there is no way one could allocate my hashrate (of course minuscule in the great scheme) to any location with precision, that unless they have access to all the logs of all mining pools in this world!

[alfredaino]

According to both articles, some miners, about 50-60 or <=20 per pool, control more than 50% of the network hashing power, thus controlling the PoW consensus. Who do you think own these miners?

Go to every single company listed onto the stock exchange and you're going to see the shareholders and you get pretty much 30% of the hashrate!
Btw, if you think they are some illuminati that can control everything and down in money , why don't you buy shares in them too?

I am not at all interested in investments. I am here for the technology.

Thanks for the explanation. As you pointed out, mining is a random process and the probability of being the first to mine a block is proportional to the hash power, i.e. if you have x% of the total hash power, in the long run you will mine x% of the blocks on average. Thus, miners who have at least 51% of the hash power on average control the PoW consensus and are rewarded by the network.

Stop with the POW consensus!!!!
Miners that mine 70% receive 70% of the reward, they can't change the "consensus" , they can fork the chain and keep mining there  by their rules but that can be done even by a guy with 5%, see BCH and BSV! If a 51% attacker would try to mine blocks that don't follow the rules they will be rejected by nodes, this is not a democracy where the guys having 51% of the vote can pass every single rule and the rest are forced to obey them!

According to the whitepaper https://bitcoin.org/bitcoin.pdf:
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.

So whoever controls most of the hash power controls the PoW consensus. According to the two searches in my first post, 50-60 miners control it.

If you have better sources I will gladly read them. They may be out of date, however the data collected shows the history of bitcoin mining has been.

There is none and there will never be!
As long as a company mines in two countries and points the hashrate at a private pool you have zero chances of knowing how much is there owned by who and where it resides, and this is just a simple example!
I mined over various pools, sent my money to both cold wallets and different exchanges, so there is no way one could allocate my hashrate (of course minuscule in the great scheme) to any location with precision, that unless they have access to all the logs of all mining pools in this world!

From my point of view, this is a serious lack. Knowledge of the distribution of the hash rate is crucial. This invalidates one of the principles of blockchain: don't trust, verify. How is it possible to know whether mining is controlled by finance or government?

[ranochigo]

From my point of view, this is a serious lack. Knowledge of the distribution of the hash rate is crucial. This invalidates one of the principles of blockchain: don't trust, verify. How is it possible to know whether mining is controlled by finance or government?

That's a valid point but there is no provable ways to accurately tell where the hashrates are, what the hashrate is or the distribution of it. Bitcoin is designed to be transparent, but unfortunately the pseudonymous nature also means that it is difficult to ascertain certain things beyond a reasonable degree. I don't think it is easy to do so, or if you have a feasible idea to do it, then we can hear from you as well. If not, then I believe that should be the end of that discussion.

POW or basically any mechanism favours those with the most resources, because it functions by game theory and the assumption that you stand to lose the most if you are dishonest. I have no doubt that financial institutions or governments have a hand in mining. But, what can they do? Attack the chain? That would probably achieve nothing, beyond a minor inconvenience while costing them tens of millions of dollars, and even more in terms of opportunity cost. I don't foresee any governments being willing to attack Bitcoin for practically no benefits.

[stompix]

According to the whitepaper https://bitcoin.org/bitcoin.pdf:

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.

So whoever controls most of the hash power controls the PoW consensus. According to the two searches in my first post, 50-60 miners control it.

NO! Again this is not about control!
The longer chain will take over ONLY if it follows the rules, that's it!
Imagine if that wouldn't have been the case, it would mean every miner with 1TH/s could create his own blockchain, how would that work if you would have to follow whatever chain there is?
The 51% attacker doesn't change the rules, he just present a chain with VALID transactions, VALID blocks that follows the rules but it has more work behind it!

From my point of view, this is a serious lack. Knowledge of the distribution of the hash rate is crucial. This invalidates one of the principles of blockchain: don't trust, verify.

Then I think we should introduce mandatory KYC data in the blockchain since right now:
- you trust mining nodes by verifying the blocks just as you verify a transactions coming from someone
- your NEEDS demand that you know the identity of the miner creating a valid block, then obviously you need the IDENTITY of a guy sending you coins, right?  

How is it possible to know whether mining is controlled by finance or government?

What part of permissionless did you skip?  

[BlackHatCoiner]

So whoever controls most of the hash power controls the PoW consensus. According to the two searches in my first post, 50-60 miners control it.

He will control the ordering of the transactions. And sure, if he controls it ad infinitum, then he can choose to never mine any transaction.

From my point of view, this is a serious lack. Knowledge of the distribution of the hash rate is crucial. This invalidates one of the principles of blockchain: don't trust, verify. How is it possible to know whether mining is controlled by finance or government?

You can verify the source code, the signatures of the transactions, the Proof-of-Work, the amount of chain work that is accurately estimated to have happened. But no; you cannot be certain about the distribution of the hash rate. You can only rely on statistics.

The 51% attacker doesn't change the rules, he just present a chain with VALID transactions, VALID blocks that follows the rules but it has more work behind it!

I like how handily you insert that "just". 

[stompix]

The 51% attacker doesn't change the rules, he just present a chain with VALID transactions, VALID blocks that follows the rules but it has more work behind it!

I like how handily you insert that "just".  

Yeah, handily, you mean tossing around words and realizing what I've said with two hours of pondering even after someone pointing it out
just...
You might not believe it but it really made me thinking a lot, would you have a case against such a miner in court if you sustain financial loss? It might sound like  solid case but I wonder if they could go clean with just negligence blaming on not receiving and sending the blocks via a faulty node configuration.
3-4 blocks might not be much but 6-12 hours will wreak havoc on chain for a good while.
But on the other hand, all transactions are visible in the chain and any such thing would require first a settlement between the two parties in the transactions before the miners, weird one.

Oh, and something to add about the distribution and identifying hashrate location, we had a 4% drop mainly because of Texas shutting down, (officiality acknowledge by large farms), all those farms are making the bulk of Foundry, yet Foundry didn't lose significant market share, nor it is gaining right now with hashrate up 6%, so applying tinfoil hat (quadruple layers) on as I said in mining speculation, they might have well over the 30% just mining over other pools undercover!

[alfredaino]

From my point of view, this is a serious lack. Knowledge of the distribution of the hash rate is crucial. This invalidates one of the principles of blockchain: don't trust, verify. How is it possible to know whether mining is controlled by finance or government?

That's a valid point but there is no provable ways to accurately tell where the hashrates are, what the hashrate is or the distribution of it. Bitcoin is designed to be transparent, but unfortunately the pseudonymous nature also means that it is difficult to ascertain certain things beyond a reasonable degree. I don't think it is easy to do so, or if you have a feasible idea to do it, then we can hear from you as well. If not, then I believe that should be the end of that discussion.

POW or basically any mechanism favours those with the most resources, because it functions by game theory and the assumption that you stand to lose the most if you are dishonest. I have no doubt that financial institutions or governments have a hand in mining. But, what can they do? Attack the chain? That would probably achieve nothing, beyond a minor inconvenience while costing them tens of millions of dollars, and even more in terms of opportunity cost. I don't foresee any governments being willing to attack Bitcoin for practically no benefits.

I basically agree, unfortunately one has to trust without being able to verify.

[alfredaino]

According to the whitepaper https://bitcoin.org/bitcoin.pdf:

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.

So whoever controls most of the hash power controls the PoW consensus. According to the two searches in my first post, 50-60 miners control it.

NO! Again this is not about control!
The longer chain will take over ONLY if it follows the rules, that's it!
Imagine if that wouldn't have been the case, it would mean every miner with 1TH/s could create his own blockchain, how would that work if you would have to follow whatever chain there is?
The 51% attacker doesn't change the rules, he just present a chain with VALID transactions, VALID blocks that follows the rules but it has more work behind it!

PoW works like this. The rule of the longest chain plus 51% hash power is written in the whitepaper.

From my point of view, this is a serious lack. Knowledge of the distribution of the hash rate is crucial. This invalidates one of the principles of blockchain: don't trust, verify.

Then I think we should introduce mandatory KYC data in the blockchain since right now:
- you trust mining nodes by verifying the blocks just as you verify a transactions coming from someone
- your NEEDS demand that you know the identity of the miner creating a valid block, then obviously you need the IDENTITY of a guy sending you coins, right?  

The reality is that one has to trust the various actors, without being able to verify their actions. This invalidates one of the basic principles of blockchain.

How is it possible to know whether mining is controlled by finance or government?

What part of permissionless did you skip?  

So we have to trust, Bitcoin could be controlled by the government or finance. A tool that was born to fight the banks has become part of them. So sad https://imgur.com/a/PreVIYz

[ranochigo]

The reality is that one has to trust the various actors, without being able to verify their actions. This invalidates one of the basic principles of blockchain.

So we have to trust, Bitcoin could be controlled by the government or finance. A tool that was born to fight the banks has become part of them. So sad https://imgur.com/a/PreVIYz

Fundamentally, Bitcoin is built on the principle of transparency, at least to the extent where feasible. It would be incorrect to say that the principles that Bitcoin was built on is compromised solely because there are limitations to what we can do as far as decentralization, transparency, etc can go. Make no mistake, there are no perfect systems in the world and compromises has to be made in every of them.

For example, if you want something to be completely decentralized, then you would have to do it at the expense of something else, which can be transparency or any other property that Bitcoin has. The assertion that Bitcoin is compromised just because of what is postulated in this thread would be wrong. There are limitations to what an adversary can do with a good proportion of the hashrate, and as mentioned, it wouldn't make sense for adversaries to do so.

[Cricktor]

PoW works like this. The rule of the longest chain plus 51% hash power is written in the whitepaper.

Bullshit, the part what you write as "plus 51% hash power". It's certainly some time ago when I read the Whitepaper last, but I can't remember something in it to support your claim.

You do realize that Bitcoin evolves, don't you? The "longest chain" has changed to the "chain with most accumulated work" wins, for obvious reasons. There's no point in clinging to the wording of the whitepaper. It's not the Bible or the Ten Commandments.

The reality is that one has to trust the various actors, without being able to verify their actions. This invalidates one of the basic principles of blockchain.

I disagree and I seriously can't follow you how you come to this conclusion. While it is somewhat problematic that certain mining pools aggregate quite some percentage of hashrate, I still don't see what kind of an issue it is as long as their percentage doesn't approach substantially more than 35-45%. We had in former times a pool that got to about or slightly over 50% and concerns and "shitstorm" were loud. To my knowledge that didn't happen again.

Where's the problem? Pinpoint it, please! What benefit should a party have which made enormous investments required to approach 50% of the global hashrate. Do funky stuff then and send Bitcoin into unseen turmoil? That would be economic suicide, very certain! I'd say, no government would dare to burn an investment like this to the ground, even if they hate Bitcoin. It wouldn't make any sense, economically.

So we have to trust, Bitcoin could be controlled by the government or finance. A tool that was born to fight the banks has become part of them. So sad

Still can't follow you, but if you want to believe this, well, you do yours. Maybe I'm just too tired now or you've already made up your mind and cling to it.

[mikeywith]

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.

This figure documents the concentration capacity of miners based on Coinbase rewards that miners receive from pools. Each month, we sort active miners
by the amount of Coinbase rewards they receive and calculate the percentage of total mining capacity controlled by different quantiles of the miner distribution.

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

The top 10% of miners control 90% and just 0.1% (about 50 miners) control close to 50% of mining capacity

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.

[mullick]

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.

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.

[Cricktor]

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?

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...

[mikeywith]

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.

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

Code:

38XnPvu9PmonFU9WouPXUjYbW91wa5MerL

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.

My issue with this specific argument is how long would it take word to spread of a pool acting maliciously?

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.

[mullick]

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?

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.

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 $$$.

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.

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.

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.

[BlackHatCoiner]

You do realize that Bitcoin evolves, don't you? The "longest chain" has changed to the "chain with most accumulated work" wins, for obvious reasons.

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.

Code: (main.h, line 1000)

//
// The block chain is a tree shaped structure starting with the
// genesis block at the root, with each block potentially having multiple
// candidates to be the next block.  pprev and pnext link a path through the
// main/longest chain.  A blockindex may have multiple pprev pointing back
// to it, but pnext will only point forward to the longest branch, or will
// be null if the block is not part of the longest chain.
//
class CBlockIndex
{
<defines the BlockIndex class>

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:

Code: (main.cpp, line 974)

bool Reorganize(CTxDB& txdb, CBlockIndex* pindexNew)
{
    printf("*** REORGANIZE ***\n");

    // Find the fork
    CBlockIndex* pfork = pindexBest;
    CBlockIndex* plonger = pindexNew;
    while (pfork != plonger)
    {
        if (!(pfork = pfork->pprev))
            return error("Reorganize() : pfork->pprev is null");
        while (plonger->nHeight > pfork->nHeight)
            if (!(plonger = plonger->pprev))
                return error("Reorganize() : plonger->pprev is null");
    }

    // List of what to disconnect
    vector<CBlockIndex*> vDisconnect;
    for (CBlockIndex* pindex = pindexBest; pindex != pfork; pindex = pindex->pprev)
        vDisconnect.push_back(pindex);

    // List of what to connect
    vector<CBlockIndex*> vConnect;
    for (CBlockIndex* pindex = pindexNew; pindex != pfork; pindex = pindex->pprev)
        vConnect.push_back(pindex);
    reverse(vConnect.begin(), vConnect.end());

    // Disconnect shorter branch
    vector<CTransaction> vResurrect;
    foreach(CBlockIndex* pindex, vDisconnect)
    {
        CBlock block;
        if (!block.ReadFromDisk(pindex->nFile, pindex->nBlockPos, true))
            return error("Reorganize() : ReadFromDisk for disconnect failed");
        if (!block.DisconnectBlock(txdb, pindex))
            return error("Reorganize() : DisconnectBlock failed");

        // Queue memory transactions to resurrect
        foreach(const CTransaction& tx, block.vtx)
            if (!tx.IsCoinBase())
                vResurrect.push_back(tx);
    }

    // Connect longer branch
    vector<CTransaction> vDelete;
    for (int i = 0; i < vConnect.size(); i++)
    {
        CBlockIndex* pindex = vConnect[i];
        CBlock block;
        if (!block.ReadFromDisk(pindex->nFile, pindex->nBlockPos, true))
            return error("Reorganize() : ReadFromDisk for connect failed");
        if (!block.ConnectBlock(txdb, pindex))
        {
            // Invalid block, delete the rest of this branch
            txdb.TxnAbort();
            for (int j = i; j < vConnect.size(); j++)
            {
                CBlockIndex* pindex = vConnect[j];
                pindex->EraseBlockFromDisk();
                txdb.EraseBlockIndex(pindex->GetBlockHash());
                mapBlockIndex.erase(pindex->GetBlockHash());
                delete pindex;
            }
            return error("Reorganize() : ConnectBlock failed");
        }

        // Queue memory transactions to delete
        foreach(const CTransaction& tx, block.vtx)
            vDelete.push_back(tx);
    }
    if (!txdb.WriteHashBestChain(pindexNew->GetBlockHash()))
        return error("Reorganize() : WriteHashBestChain failed");

    // Commit now because resurrecting could take some time
    txdb.TxnCommit();

    // Disconnect shorter branch
    foreach(CBlockIndex* pindex, vDisconnect)
        if (pindex->pprev)
            pindex->pprev->pnext = NULL;

    // Connect longer branch
    foreach(CBlockIndex* pindex, vConnect)
        if (pindex->pprev)
            pindex->pprev->pnext = pindex;

    // Resurrect memory transactions that were in the disconnected branch
    foreach(CTransaction& tx, vResurrect)
        tx.AcceptTransaction(txdb, false);

    // Delete redundant memory transactions that are in the connected branch
    foreach(CTransaction& tx, vDelete)
        tx.RemoveFromMemoryPool();

    return true;
}

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

[Cricktor]

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

They would have control of a Trillion dollar network.

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.

I dont think you understand the trust that would be lost in the system if a large double spend was successful.

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. 

[mullick]

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

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. 

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.

[stompix]

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.

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.

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.

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!

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.

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. 

Arion Kurtaj is completely relevant example.

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.

[alfredaino]

The reality is that one has to trust the various actors, without being able to verify their actions. This invalidates one of the basic principles of blockchain.

So we have to trust, Bitcoin could be controlled by the government or finance. A tool that was born to fight the banks has become part of them. So sad https://imgur.com/a/PreVIYz

Fundamentally, Bitcoin is built on the principle of transparency, at least to the extent where feasible. It would be incorrect to say that the principles that Bitcoin was built on is compromised solely because there are limitations to what we can do as far as decentralization, transparency, etc can go. Make no mistake, there are no perfect systems in the world and compromises has to be made in every of them.

For example, if you want something to be completely decentralized, then you would have to do it at the expense of something else, which can be transparency or any other property that Bitcoin has. The assertion that Bitcoin is compromised just because of what is postulated in this thread would be wrong. There are limitations to what an adversary can do with a good proportion of the hashrate, and as mentioned, it wouldn't make sense for adversaries to do so.

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.

[alfredaino]

PoW works like this. The rule of the longest chain plus 51% hash power is written in the whitepaper.

Bullshit, the part what you write as "plus 51% hash power". It's certainly some time ago when I read the Whitepaper last, but I can't remember something in it to support your claim.

You do realize that Bitcoin evolves, don't you? The "longest chain" has changed to the "chain with most accumulated work" wins, for obvious reasons. There's no point in clinging to the wording of the whitepaper. It's not the Bible or the Ten Commandments.

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 reality is that one has to trust the various actors, without being able to verify their actions. This invalidates one of the basic principles of blockchain.

I disagree and I seriously can't follow you how you come to this conclusion. While it is somewhat problematic that certain mining pools aggregate quite some percentage of hashrate, I still don't see what kind of an issue it is as long as their percentage doesn't approach substantially more than 35-45%. We had in former times a pool that got to about or slightly over 50% and concerns and "shitstorm" were loud. To my knowledge that didn't happen again.

Where's the problem? Pinpoint it, please! What benefit should a party have which made enormous investments required to approach 50% of the global hashrate. Do funky stuff then and send Bitcoin into unseen turmoil? That would be economic suicide, very certain! I'd say, no government would dare to burn an investment like this to the ground, even if they hate Bitcoin. It wouldn't make any sense, economically.

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.

[alfredaino]

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.

This figure documents the concentration capacity of miners based on Coinbase rewards that miners receive from pools. Each month, we sort active miners
by the amount of Coinbase rewards they receive and calculate the percentage of total mining capacity controlled by different quantiles of the miner distribution.

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

The top 10% of miners control 90% and just 0.1% (about 50 miners) control close to 50% of mining capacity

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.

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.

[alfredaino]

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.

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.

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.

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

[alfredaino]

You do realize that Bitcoin evolves, don't you? The "longest chain" has changed to the "chain with most accumulated work" wins, for obvious reasons.

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.

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.

[DaveF]

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 dashaboard, 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.

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

[alfredaino]

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 dashaboard, 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.

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

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.

[stompix]

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.

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

Selfish mining attacks start to become significantly probable when a node or a group of nodes control at least 28% of the network's computational power

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.

[Cricktor]

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!

32. Posting multiple posts in a row (excluding bumps and reserved posts by the thread starter) is not allowed.

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).

[mullick]

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.  

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

The moment farms keep mining blocks that are not broadcasted not validated you will have red light flashing everywhere!

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.

[ranochigo]

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.

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.