Excerpt from Bitnet’s whitepaper

Excerpt from Bitnet’s whitepaper.md

@cryptorebel wrote:

@hankdasilva some people think mining will become more decentralized over time: https://medium.com/@lopp/the-future-of-bitcoin-mining-ac9c3dc39c60

Ah sorry I debunked the PoW as space heaters in my unpublished whitepaper:

5.1.1 Specialization

As noted in the sub-sections Selfish Mining Example, Proof-of-Work on CPUs, and Proof-of-Work as Space Heaters, economies-of-scale enable opportunities for specialization of ASICs, data center cooling systems, etc., which foster lowest cost miners that have much higher profits and pro rata rate of return-on-investment than the marginal miners. This is a power vacuum feedback loop because the economies-of-scale grow faster for those with more economy-of-scale.

Proof-of-Work on CPUs

The posited caveat¹ that mining on “ASIC-resistant” general use computers (to maintain decentralization, as an implied refutation of the exponential or power-law distribution of resources feeding a power vacuum) would be economically viable if ASICs are not more efficient than (H + E) ÷ E (even if factoring that E might be psychologically 0 because it may be obscured in monthly variability of the electric bill) falls away at least because of the transition to power efficient (battery powered or fanless) devices which don’t consume enough electricity to provide enough security for a longest-chain-rule blockchain even if millions of said devices were mining.² And more generally because the portion of the general use computers’ cost (or even just considering the CPU die), which represents circuits applicable to proof-of-work computation, is equivalently too minuscule.

…

5.7 Wasteful

5.7.1 Proof-of-Work as Space Heaters

An erroneous posited caveat¹ which claimed that proof-of-work mining resources would not become exponentially or power-law distribution centralized due to the posited high electrical cost of dissipating heat in centralized mining farms coupled with the posited free electricity cost of using the “waste” heat of ASIC mining equipment as space heaters, is (in hindsight) incorrect because:

• Two-phase immersion cooling is 4000 times more efficient at removing heat from high-power density data centers³, reducing the 30 - 50% electricity overhead to 1%⁴.
• Electricity proximate to hydroelectric generation or subsidized electricity costs approximately 50 - 75% less than the average electricity cost.
• Heating is rarely needed year-round, 24 hours daily, at full output. Not running mining hardware at full output continuously renders its purchase cost depreciation much less economic because due to Moore’s Law the systemic hashrate is always increasing and (because) ASIC efficiency is always increasing⁵. The posited purchase of obsolete mining equipment⁶ is incorrect because MR = MC, thus a combination of increased demand for obsolete mining raising its price and weighted profit at the margins increasing, increases the mining systemic hashrate difficulty⁷ so that savings due to waste heat is offset.⁸ Closer to home, to make it profitable enough to be worthwhile (to justify the pita of jerry–rigging a space heater for equipment not designed for the purpose) requires running so many 10s or 100s of kWH of relatively much less efficient (i.e. obsolete) hardware generating more heat than can be typically utilized (unless infernos are in sufficient decentralized demand).

5.7.2 Security

Waste heat generated from a non-repurposable asset is the least expensive means to secure a consensus ordering system where the opportunity cost of not attacking the nothing-at-stake (of other consensus ordering systems such as (D)PoS) is significantly greater than the value of the attacker’s liquid stake irrevocably destroyed by said attack, regardless if the stake employed in the attack was rented.[^wasted]

Footnotes

1. Vitalik Buterin. On Mining. Ethereum.org blog, §ASICs and §ASIC Resistance, Jun 19, 2014. ↩ ↩²

2. Shelby Moore III. ASIC-resistance is implausible. Bitcointalk.org, “The Ethereum Paradox” thread, post #1162, Jul 12, 2016. ↩

3. Allied Control. Immersion Cooling. ↩

4. Allied Control. Analysis of Large-Scale Bitcoin Mining Operations. §Proposed Technical Solution: System Highlights, p. 9. ↩

5. lowstrife. I am thinking of using a bitcoin miner to heat my house this winter, thoughts?. Reddit.com thread, Apr 19, 2015. ↩

6. ArticMine. Re: Making PoW usefull. Bitcointalk.org, “Making PoW usefull” thread, post #23, Jan 11, 2015. ↩

7. Meni Rosenfeld. Analysis of Bitcoin Pooled Mining Reward Systems. Dec 21, 2011. ↩

8. Shelby Moore III. Re: My rebuttal to the fairness of proof-of-work launch (Monero's holier than thou). Bitcointalk.org, “My rebuttal to the fairness of proof-of-work launch (Monero's holier than thou)” thread, post #36, Nov 8, 2016. ↩