Bitmain’s mining pool, AntPool, has supposedly activated one of their controversial methods of mining Bitcoin more efficiently, called AsicBoost. The controversial Bitcoin mining “hack” supposedly increases mining efficiency by up to 20% and is controversial because many developers claim that its use damages the Bitcoin network.
Weakness in Bitcoin PoW Exploited
According to AsicBoost Block Explorer, block #540032, mined by AntPool, was mined using the AsicBoost, which exploits a previously known weakness in Bitcoin’s proof-of-work algorithm that allows for faster mining. Bitmain notably holds a patent in China for a system that exploits the Bitcoin network’s weakness in order to increase mining productivity.
The patent, which describes an “optimizing method,” details a system that uses a “device and circuit for Hash computing chip of bitcoin proof of work, and relates to the technical field of cipher computing, computer network and integrated circuits.”
The patent abstract also notes that the “The method, device and circuit provided by the invention greatly reduce the power consumption of the circuit.”
Bitmain has a history of using AsicBoost and has been accused several times over the past year of utilizing the controversial mining method. Blockstream CTO, Greg Maxwell, was one of the first to call Bitmain out for using AsicBoost, accusing the them of using the method to increase profits.
Bitmain Denies use of AsicBoost
In the past year, Bitmain has ardently denied their use of the “mathematical workaround,” expressing that they have never used the technology before. Following the controversy that followed Maxwell’s accusations, Bitmain released a statement, saying in part that:
“Bitmain has tested ASICBOOST on the Testnet but has never used ASICBOOST on the mainnet as implied in Gregory Maxwell’s proposal. We ask conclusive proof from whoever claims this to be false because such baseless claims are toxic for the Bitcoin space. We also believe the math used by Gregory Maxwell is incorrect and that the method is not practical in a production environment.”
Bitmain also addressed the Chinese patent they hold on a system that utilizes AsicBoost, saying that:
“Bitmain holds the ASICBOOST patent in China. We can legally use it in our own mining farms in China to profit from it and sell the cloud mining contracts to the public. This, however profitable, is not something we would do for the greater good of Bitcoin.”
Possible AsicBoost use comes as Bitmain is Reportedly Losing Money
Bitmain has yet to release any statements regarding AntPool’s potential use of AsicBoost, but the use of this mining method would coincide with a recent BitMEX Research report that claimed that the mining giant is bleeding money due to low cryptocurrency prices and increased operational costs.
BitMEX Research also concludes that the sharp decline in mining revenue is partially a strategic decision, explaining that:
“We believe this decline represents a smart strategic decision by Bitmain to divest (relatively speaking), from an increasingly competitive and lower margin area. In our view, as one moves down the mining supply chain, the competition is likely to increase faster and Bitmain made a sensible move by trying to focus their efforts up the chain, where an increasingly large proportion of the value from mining may accrue.”
Although unconfirmed, it would make sense that Bitmain is utilizing the AsicBoost mining method in an effort to increase efficiency and profitability while still driving their competition’s profits into the ground.