Mining Pools and Profits
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This document summarizes a class on cryptocurrency mining. It discusses mining pools, where miners pool resources to receive a regular payout, and the risks of attacks. It also examines the expected revenues of a hypothetical $479 mining rig over 17 months, finding the most likely outcome is earning around $620 total during that period. The document concludes by noting the largest mining pool controls around 25% of network hash power, posing little risk of a 51% attack that could compromise the blockchain.
Mining Pools and Profits
- 1. Cryptocurrency Café UVa cs4501 Spring 2015 David Evans Class 11: Mining Pools and Attacks
- 2. Plan for Today PointCoin Update Mining Pools Attacks and Vulnerabilities 1
- 3. Snow Day! 2
- 4. 3
- 5. 4 Is this gambling or a “good/bad” investment?
- 6. 5
- 7. Expected Revenues (?) 6 Model Cost: US$ 479 1.7 TH/s BTC: US$ 240 Difficulty: (today) >>> expected_hashes # at current difficulty 1.9093455768686638e+20 >>> expected_hashes / (1.7 * 10**12) 112314445.6981567 # expected seconds to find block >>> _ / (60 * 60 * 24) 1299.935714099036 # days to find block >>> block_value = 240 * 25 >>> earnings_per_year = block_value * (365.25 / 1300) >>> earnings_per_year 1685.769230769231
- 9. Operating Profit 8 >>> kWh = 0.07 >>> hours_per_year = 24 * 365.25 >>> electricity_cost = (1.2 * kWh) * hours_per_year >>> electricity_cost 736.344 # US $ per year >>> profit_per_year = earnings_per_year - electricity_cost 949.4252307692309
- 10. Easy Money? 9
- 11. 10 March 2014
- 12. 11
- 13. 12 # this is a very low assumption - over past year, average rate was 0.35 rate_of_difficulty = 0.05 def guess_difficulty(month): return difficulty * ((1 + rate_of_difficulty) ** month) def expected_revenue(month): success_probability = find_target(guess_difficulty(month)) / 2**256 return block_value * hashes_in_month * success_probability def cumulative_income(months): income = 0.0 month = 0 while month < months: income += expected_income(month) month += 1 return income
- 14. 13 >> cumulative_income(1) 79.12571644571238 >>> cumulative_income(12) 571.0928818228372 >>> cumulative_income(24) 562.7786595271843 >>> cumulative_income(17) 619.9072133191279
- 15. Block Value 14
- 16. 15
- 17. What happened around block 210000? 16 https://blockchain.info/block/00000000000000f3819164645360294b5dee7f2e 846001ac9f41a70b7a9a3de1
- 18. 17 Date Difficulty Block # Days (delta) Increase % Per Difficulty Adj Daily increase % Tl. Network Strength (Mhash/s) Difficulty Increase 2012-11-12 3,368,767 207648 13.74 1.95% 0.14% 24,114,574 64,411 2012-11-26 3,438,909 209664 13.72 2.08% 0.15% 24,616,669 70,142 2012-12-10 3,370,182 211680 14.29 -2.00% -0.14% 24,124,701 -68,727 2012-12-26 2,979,637 213696 15.83 -11.59% -0.77% 21,329,070 -390,545 2013-01-08 3,249,550 215712 12.86 9.06% 0.68% 23,261,182 269,913 2013-01-23 2,968,775 217728 15.33 -8.64% -0.59% 21,251,322 -280,774 2013-02-05 3,275,465 219744 12.69 10.33% 0.78% 23,446,689 306,689
- 19. Expected Outcome 18 Given the expected useful lifetime of 17 months for this miner, what is the most likely result?
- 20. Expected Outcome 19 Given the expected useful lifetime of 17 months for this miner, what is the most likely result? def expected_blocks(month): success_probability = find_target(guess_difficulty(month)) / 2**256 return hashes_in_month * success_probability def cumulative_expected_blocks(months): blocks = 0 for month in range(months): blocks += expected_blocks(month) return blocks cumulative_expected_blocks(17) 0.27717686888652143
- 21. Probability Refresher 20 What is the probability that tossing a fair coin k times produces 0 tails?
- 22. Probability of Finding No Blocks 21 With target T, what is the probability no block is found with K hashes?
- 23. 22
- 24. Mining Pools 23
- 25. Mining Power 24 https://blockchain.info/pools?timespan=24hrs Last 4 Days Last 24 Hours
- 26. 25Last 24 hours
- 27. Mining Pools 26
- 28. Charge Don’t attack PointCoin yet! Project 2 Part 1: Due Sunday Quiz next Wednesday 27 If you don’t yet understand fundamentally how bitcoin works, definitely come to my office hours before then (Thursday 4-5pm, Monday 3:15-5pm) “GHash.IO does not have any intentions to execute a 51% attack… it could risk our investments in physical hardware and we see no benefit from having 51% stake in mining.”