IEEE Spectrum June, 2013 - 12

The capabilities of the peer-to-peer network of computers behind the Bitcoin
cryptocurrency have grown rapidly in the last year. The network computes billions of hash
functions per second, and its operators are rewarded with bitcoins. During the past year,
purpose-built hash-crunching computers have more than doubled the network's capacity,
making it difficult for those using less powerful computers to compete.

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another lottery ticket, choosing the numbers
and hoping they match up. Only a specific
hash will be accepted, and the first computer
to find the right one gets the prize.
However, there's one more feature in
Bitcoin that controls the profitability of mining. "It has everything to do with difficulty,"
says Jeff Garzik, one of Bitcoin's core developers. As the hashing power of all the combined computers increases, the network
makes it less likely that a particular machine
will compute the right answer. In the lottery
example, this would be like making people
choose more numbers on a ticket. And if
the hashing power were to go back down,
so too would the difficulty.
As the price of a bitcoin has gone up,
more people have been building and buying dedicated machines they call mining rigs, which has driven the hash rate
higher. Back in January, when miners were
getting less than $20 for their bitcoins at
the online exchanges, the hash rate was
around 25 000 billion hashes per second.
At the rate of participation on 2 May, the

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network computed 69 123 billion hashes
per second.
Brock Tice, a miner in New Mexico, says it
all comes down to economics and whether
mining is worth the electricity bills. "I have my
own rack of miners in the garage here. I had
shut them down for a while...but then when
the price spiked, I fired them back up," he says.
It stands to reason that as long as miners are
getting more "real" money for their bitcoins
than they lost in electricity bills-last year the
Bitcoin network was probably consuming
100 to 300 megawatt-hours per day-they will
continue to mine. And what's more, they will
continue to upgrade their systems to ensure
a bigger payout. These are the ingredients for
a hardware arms race-one that really began
the day Bitcoin was created but is now on the
cusp of a rapid acceleration.
Early on, when a bitcoin cost a mere
25 cents to buy on an exchange and few
people were participating, the difficulty
level was so low that miners could run
Bitcoin using only a laptop's CPU and expect to make a handful of new coins every

SPECTRUM.IEEE.ORG

day. Many of the people who caught on early subsequently funneled their profits into
faster machines rather than cashing out.
Before long, this was the only way to keep
up. As the overall hash rate of the network
ratcheted up and it became infeasible to
mine new bitcoins with a PC's CPU, miners
began to turn to GPU-enhanced computers.
GPUs, although they are less flexible than
CPUs, can execute certain tasks thousands of
times as fast, speeding up the hash calculation. Eventually, people realized they could
save on electricity costs by mining with fieldprogrammable gate arrays (FPGAs). These
integrated circuits contain logic blocks that
can be reconfigured after manufacturing.
When configured for the specific task of
hash hacking, the FPGAs proved more energy efficient than GPU-enhanced systems.
But the ne plus ultra of customization is an
application-specific integrated circuit (ASIC)
that is purposely built to execute the hash
operation. Last month, people began running the first ASIC-powered mining rigs, a
development that could push the hash rate of
the Bitcoin network to 50 times what it was
last year while consuming half the electricity.
"ASIC is the technological progression
of the endgame for Bitcoin," says Yifu
Guo, the founder of Avalon, a mining-rig
manufacturer based in New York City and
Shenzhen, China.
ASICs can be costly to make in the relatively
low volume needed to supply Bitcoiners. In
mid-2012, months before Guo got involved,
Butterfly Labs, another rig manufacturer, began taking orders for a rig powered by ASICs
made using a 65-nanometer manufacturing
process. (That process was cutting edge in
2006.) A few months later, though, the company missed its shipping date, and people
were disgruntled. Finally, Guo approached
the Bitcoin community with a proposition:
If he could get enough money from people up
front, then he would begin making his own
ASIC-powered mining rig. "If people wanted
us to pursue it, we would pursue it, because
we knew we had all the connections. We just
didn't have the money," he says. "And then,

source: Blockchain.inFo

Bitcoin's Pumped-Up Computing Network

http://www.Blockchain.inFo http://SPECTRUM.IEEE.ORG

Table of Contents for the Digital Edition of IEEE Spectrum June, 2013