Bitcoin mining device evolution
Many reputable economists acknowledge that the emergence of cryptocurrencies could be the starting point for a radical transformation of the entire global financial system. But financial technology is not the only area where Bitcoin has created an incentive for development and improvement. Another direction is the mining of bitcoins, known to us as mining.
In fact, the evolution of mining devices in just a few years is amazing. In fact, & lquot; coin mining & rquot; In just three years, the industry has created a new class of computers and has gone from a long-obsolete 130 nm process technology to the cutting edge of modern electronics.
In the first part of the article, we will talk about the development of mining technologies from the launch of the Bitcoin system to the start of mass production of specialized devices.
Despite the fact that for more than half of Bitcoin’s existence, mining went on general purpose computers, we will not dwell on a detailed description of this process. It is unlikely that you will be interested in reviews of the most ordinary processors and video cards.
But the history of the rapid development of ASIC miners, fierce competition, the rapid enrichment and ruin of manufacturers, the development of enthusiasts and the squeezing of all opportunities from new and old iron is actually fascinating, even for those who once took part in it now, in The noise of fans or the murmur of a cooler, continues to mine new coins.
It is easy to guess who became the very first miner in the history of Bitcoin. Of course, it was the creator (or creators) of the cryptocurrency – Satoshi (Satoshi) Nakamoto. It is widely believed in the community that Satoshi has long mined alone and has more than a million BTC in his wallets.
However, it is very difficult to substantiate this opinion with facts. The only evidence is that all these coins have not yet been set in motion. But there can be many reasons for this.
We will operate only with known facts. Between the creation of the genesis block on January 3, 2009 and the publication of the first client of the Bitcoin v0.1 network, only 15 blocks were mined – from 0 to 14. Thus, the “guaranteed” Satoshi premine is only 750 BTC. Further, other miners could compete with him.
Now these people are called ‘early adopters’ – early adopters. Most of them are unknown to the community. The first transaction in the Bitcoin network occurred in 3 days – January 12, 2009 between Satoshi and Hal Finney in the amount of 10 BTC. In total, from this address, which undoubtedly belongs to Satoshi, 5 transactions were made on the same day, for a total of 32 BTC.
From a technical point of view, mining Bitcoin on processors is not of interest – this is a normal SHA256 hash calculation operation, which is performed in many other cases not related to cryptocurrency.
Satoshi probably had no idea how fast the mining industry would develop. It was mining on PC processors, the most massive chips in the world, that was supposed to make Bitcoin truly decentralized. There is only one vulnerability – to botnets, which can force computers of tens of thousands of users to mine on one wallet.
While cryptocurrency remained fun for geeks, mining on the CPU was not very popular. The first change in Bitcoin complexity, which showed that several hundred processors are already mining, happened almost a year after the creation of the genesis block – December 30, 2009.
The biggest increase in complexity for one recount – 4 times – happened on July 16, 2010 in block 68544. This happened due to the publication of Bitcoin on July 11 on the popular site among geeks Slashdot. In just a few days, the number of Bitcoin users, and therefore miners, has grown many times.
Video card mining
By the summer of 2010, the popularity and rate of Bitcoin had grown so much that its extraction began to bring real income, albeit modest. In July, for 1 BTC they gave about 10 cents, that is, the extraction of one block brought about $ 5. Mining began to switch to commercial rails – which means that competition could not but lead to a technological race.
On July 18, someone ArtForz first launched a GPU mining farm and mined the first block using the parallel computing implemented in the OpenCL driver. Thus began the era of industrial mining.
Switching to video cards was a huge breakthrough compared to the ‘classic’ processor – not only does one video card count several tens of times more hashes than a processor, then up to 4 video cards could be installed on one cheap motherboard, and later up to 6 , with a limit of 8 GPUs (one dual-processor card counts as two GPUs). A computer even with two processors in the minimum configuration costs almost the same as a farm of several top-end video cards. Thus, video cards immediately pushed processors to the background.
But for some time, GPU mining programs remained inaccessible for mass use. Only in September 2010, a miner based on CUDA for nVidia cards was published, and in October – for ATI Radeon based on OpenCL.
On September 18, the first pool in cryptocurrency history opened – Bitcoin.cz, known as Slush’s pool. It works now, and its creator, Czech programmer Marek Palatinus, is still an active member of the community. In the early days of January 2011, the pool gained 10 Gh / s capacity, which now seems ridiculous. But then the Bitcoin mining difficulty barely exceeded 10,000 – only 5 million times less than now!
On February 9, 2011, the Bitcoin exchange rate on MtGox equaled the dollar, and over the course of several months without stops stopped over the $ 20 bar. Extraction of one block now brought $ 1000, and almost 150 thousand dollars were mined per day.
Feeling easy money, miners all over the world rushed to buy video cards. Competition grew, complexity continued to rush up, reaching 1,000,000 by mid-June. However, the hacking of MtGox, and then several other services, caused an outflow of Bitcoin users and a decrease in mining capacities, which continued until the fall.
On August 23, 2011, the first block was extracted by a decentralized pool – P2Pool. Unfortunately, due to the complicated setup and production instability, most miners still prefer centralized services, and p2pool eke out a miserable existence, very rarely mining more than 1 block per day.
On October 7, 2011, Litecoin was launched – the first fork of Bitcoin on an alternative hashing algorithm. It was designed to stop the dominance of video cards and give a chance for mining on the CPU. Ironically, after 2 years, it was LTC that also became a haven for miners on video cards fleeing the ASIC invasion. We will talk about this in another article.
For almost three years, video cards reigned supreme in mining. On November 28, 2012, the first block reward was halved – from 50 to 25 BTC. But it did not stop the gradual increase in complexity. At the beginning of 2013, despite a slight correction, it fluctuated around 3,000,000. However … it was only preparation for a new jump.
Smaller, colder, more powerful. FPGA come and go
Back in 2011, some enthusiasts began to realize that video card farms consume too much electricity, require constant attention and additional costs. They began to look for a solution that could cut costs.
At that time, the most obvious was the use of FPGA chips – less versatile than CPUs, but more energy efficient. It was much easier to parallelize them on one board and the requirements for power lines and cooling were noticeably reduced. The final device came out quite expensive, but much more compact and stable than a farm on video cards. And the gain in energy consumption was thousands of percent.
Nevertheless, video cards remained the most popular solution, cheap and affordable. There were few people willing to pay several thousand dollars for a device with very limited use. FPGA miners did not last long and remained a niche product that did not play a significant role in mass mining. But these developments later came in handy for manufacturers of ASIC miners, as the board layout, device layout, and software were very similar.
Among the manufacturers of FPGA miners, two companies can be noted, which later took a much more prominent place in history:
- Swedish KnC Miner, founded in September 2012, with its 6 Gh / s KnC Mars
- American Butterfly Labs with two devices: BitForce SHA256 Single with a hash rate of 832 Mh / s and Mini Rig with a hash rate of 25 Gh / s.
For that time, it was very powerful equipment, consuming only 20 W per 1 Gh / s – 20-30 times less than a similar farm from video cards. But it was worth it accordingly: for Mars they asked for $ 6,000, and for Mini Rig – $ 15,000. The number of devices released has not been published.
All other manufacturers could not recoup the costs, and even more so the development of new chips. Over time, they all closed. The payback of FPGA miners caused a lot of questions, but those who received them before the beginning of 2013 had every chance, if not extra profits, then worthy profit.
Coming. The first ASIC miners
Unlike FPGAs, which are mass-produced and used for a wide variety of tasks, Application Specific Integrated Cirquit (ASIC) chips can only perform one task for which they were designed. But they perform it much better than any processor with a wide profile – the difference in performance of devices similar in other parameters can differ by dozens of times.
There is a downside – only the design and release of a prototype ASIC chip on modern technology costs several million dollars. This is a long and laborious process, the positive result of which is not guaranteed by anyone. In addition to the chip itself, the developer has to do everything – from the motherboard, the ‘strapping’ and the cooling system to the software, and then carry out all stages of testing.
The most far-sighted manufacturers began developing specialized chips as soon as the first FPGAs went into the series – that is, in the summer-autumn of 2012. And the most enterprising decided that there was no need to take all the risk on themselves – it could be perfectly paid by customers. So there were pre-orders for ASIC miners.
The first well-known three of the creators of ASIC were two Chinese companies – ASICminer and Avalon and one American – BFL (Butterfly Labs).
This talking company was founded on July 18, 2012 by three Chinese citizens. She collected investments through public forums, but not at the first ones she met.
ASICminer’s approach to customers was completely different than that of other manufacturers. For a long time they did not trade in retail, but focused on large investors who received their share of the shares. In the open market, these shares began to be sold only after the main investors received their piece of profit. Representatives of the company answered absolutely all questions, including those related to deeply technical issues.
The identity of the main founder and mastermind of ASICminer is still unknown – in the community he is known only by the nickname ‘FriedCat’ (Fried Cat). Perhaps he is not Chinese, although he managed to settle down and build a business in this country. Employees of the company do not give out their boss.
In early 2013, a chip was developed at ASICminer using the 130 nm process technology that has long been outdated in consumer electronics. It was chosen because of its relatively low cost – a total of $ 150,000 was spent on developing a completely new ASIC.
The first generation miners from ASICminer were implemented as Blade Block Erupter boards with good characteristics at that time: a hash rate of 10 Gh / s and an energy consumption of about 100 watts. The energy efficiency indicator, despite the rough technological process, was twice as good as that of the most modern FPGAs.
Block Erupter boards could be installed in several pieces in one case, compatible with standard 19 ‘server racks. ASICminer was the first company to open a special data center for mining.
In the spring of 2013, the devices of the first batch were installed in it, which were bought out by the company shareholders for 1 hour at a price of $ 12,500. Their total performance was up to 40 Th / s, while on January 1, 2013 the hashrate of the entire Bitcoin network was about 25 Th / s. This data center for several months held absolute leadership in Bitcoin mining, ahead of the largest pools.
Blade Block Erupter v.2 was sold in April at a price of $ 7,500 in the open market. The miner turned out to be successful, so the company decided to improve ASIC and in the summer began large-scale sales of ASICminer Cube at a price of $ 7,000. Its characteristics: 30-37 Gh / s and 430 watts.
Simultaneously with the Blade Block Erupter, a portable version was released – USB Block Erupter with one chip, in a case similar to a USB flash drive. The trinket with a capacity of 330 MX / s was first sold for 1 BTC and at first the demand was rush – they were bought in dozens and connected via USB hubs in whole bunches. However, the idea was unsuccessful, miners were rapidly getting cheaper – in a few months their price fell 30-40 times. Now such a curious device can be bought on Ebay for a few dollars. This souvenir is also suitable for studying the operation of ASIC chips and device circuits.
By the end of the summer of 2013, ASICminer was forced to retreat under the pressure of competitors – its chips were quickly outdated, and the development of new ones was slow. Stocks were falling. The company was able to return to the market only a year later, but soon completely closed after the mysterious disappearance of the ‘Fried Cat’ with a large amount of money. He was never found.
Avalon sounds dignified, doesn’t it? That’s right, this company has something to be proud of. It was founded by Yifu Guo in September 2012.
Despite the fact that Yifu is a purebred Chinese, the association of his company with the fabulous city of King Arthur suggests that he is well acquainted with European culture and relied primarily on European and American buyers.
The Avalon team began developing chips simultaneously with competitors, but only released limited quantities at a high price. The so-called “batches” from Avalon aroused rumors and legends in the community. The first ASIC miners were released by the 110 nm process, with a default hash of 60-65 Gh / s (82-88 Gh / s in overclocking) and power consumption of about 700 watts.
The release of the first generation took place in three stages:
- The first batch of 300 devices was sold at the very start – in 2012 at $ 1300, when the idea seemed too bold, and the beginning of the pre-sales did not cause much excitement. Buyers received miners in February-March 2013. They paid off literally in a matter of days and began to make a net profit. The owners of the first batch from Avalon really got rich, and their example became a bait for the buyers of the following lots. But they were much less fortunate.
- The second batch, already out of 600 miners, went on sale in mid-February at $ 1,500 (at the exchange rate in bitcoins – at that time about 50 BTC) and was sold out in a few days, despite the generally accepted skepticism about ‘asics’ at that time. Here, buyers were much less fortunate – the devices arrived with a long delay and were already in use. However, they turned out to be a successful acquisition.
- But the third batch, also of 600 pieces, very much dampened the reputation of the manufacturer. Firstly, the price has risen almost 5 times – 75 BTC at an average rate of about $ 100. And secondly, the delivery delay turned out to be even greater – many buyers received their devices in July and even in August, when the complexity increased many times and the second generation ASICs entered the market. Most owners of Avalons of the third batch lost money and, not without reason, blamed the manufacturer for this.
Miners from Avalon work stably, but unfortunately the manufacturer uses an unsuccessful TP-Link controller, distinguished by its incompleteness and constant “freezes”. This flaw has accompanied Avalon devices for years. However, the company did not slow down and still remains in operation after the conversion to Canaan Creative, although it has lost the advantages accumulated at the beginning of the way – now Avalon is just one of many manufacturers.