Mining’s dirty little secret

A highly-adaptable microchip is being used secretly to mine crypto. Can a new generation of low-cost FPGA help miners dig themselves out of a hole?

Any career advisor will tell you that adaptability is the most important skill for 21st-century success. The manufacturers of specialized cryptocurrency mining rigs will be ruminating on this as they survey rooms of idle customized circuits and shelves heaving with unsold chips—the casualties of crypto’s nuclear winter. For them, things are about to get even worse.

Cryptocurrency mining has evolved from bedroom activity to mass-scale production, undertaken by enterprises that use specialized rigs called ASICs, or application-specific integrated circuits.

Often, to increase their odds of winning new digital currency, mining firms will pool resources, leading to mega conglomerates which terrify crypto startups because of the implications for security (when mining power is concentrated in the hands of too few individuals, it can give rise to a takeover, such as a 51 percent attack). Startups have been fighting back by introducing ASIC-resistant algorithms.

The efficiency of ASICs has already led to a decline in the popularity of GPUs, previously the mining medium of choice. However, a new type of highly-adaptable, efficient, low-cost technology has been developed quietly in secret, and it’s about to change mining as we know it.

The FPGA, short for field-programmable gate array are mining rigs that can be programmed on the fly. If a network changes its algorithm, an FPGA can change with it. Although they’ve been around since 2012, initial versions weren’t cost-effective. Now, however, new models are about to hit the market, alongside free software that promises to improve efficiency. This democratization of mining–with potential to take crypto back to its bedroom-mining roots–could improve security through increased decentralization and make miner revolts like the Bitcoin Cash debacle less likely.

Where’s the off-switch?

Back in July, Richard Ells, CEO of mobile based cryptocurrency Electroneum, had a miner mutiny of his own to contend with.

Like a fair number of crypto companies, Electroneum had given into demands from GPU miners to switch off ASIC mining, which was making it difficult for GPU-based operations to compete. But, as the powerful ASICs were routed, the GPU owners refused to return, complaining that the degree of hashing power now needed to mine made it unprofitable. A nail-biting couple of weeks saw hash power drop by 97 percent, and the GPU owners still refusing to mine.  

It was Ells’ belief in the game-changing potential of FPGAs and their ability to combat ASIC resistance that ultimately led to his decision to give up the ghost on GPU-mining, let the ASICs back in and become an advocate for FPGAs. If a company changes its algorithm, all a user has to do to start mining again is load a new program, he explained. “Your equipment stays the same but you change the effect. They’re very powerful, very cheap, they are the future of mining cryptocurrencies. Nobody will be able to switch them off.”

ASIC resistance is a hot topic because altcoins—all with comparatively small networks compared to bitcoin—are so vulnerable to attack. According to a report published by Technavio, ASICs dominated the mining hardware market in 2017, accounting for more than 74 percent of the market share, so there is good reason to be concerned.

FPGAs aren’t quite as efficient as purpose-built, custom ASICs but they are more flexible. They also offer a reduction in operational cost of up to 40 percent for enterprise mining facilities, according to Canada-based mining infrastructure developers Squire. Squire claims one leading enterprise mining group estimated this to be worth up to $60 million per year in savings.

But while they have manifold advantages, the current generation of FPGAs is costly to reprogram. This has meant that, up to now, miners using the technology have done so in secret, fearful that revealing the power they have at their disposal would cause coin developers to more frequently change their algorithms. So they’ve kept their operations covert and revelled in the huge processing advantage they enjoy over miners using GPUs and the security of being able to adapt, unlike ASIC-based systems.

Diving into the fray

That all changed last April, when a pseudo-anonymous post by user whitefire990 on bitcoin forum, Bitcointalk revealed the extent of the secret FPGA activity, along with an intent to enable anyone to mine with FPGAs. His post generated 93 pages of responses, with miners desperate to find out more.

While the creator of the technology goes by the alias whitefire990, a quick Google search easily identified him as Eric Fattah. In an email, Fattah said that his motivation is simple: to achieve better decentralization. “No one wants a single private group to be able to take over the entire coin, and large secret farms are therefore not in the interest of any coin’s future and security. Having FPGAs in the hands of ‘home’ miners (distributed equally all over the world) greatly increases a coin’s security.”

“We have had many huge financial offers from large private farms, offering us lots of money to provide private/exclusive bitstreams for their private farms. In all cases we declined.”

Eric Fattah, Zetheron

Fattah already has some experience in trailblazing. But of a very different variety. A world class diver, in 2001 he set the world record in “constant weight” freediving, achieving a depth of 269ft. As an engineer, he’s already established one company and his inventions have won seven patents.

Fattah’s latest venture startup, Zetheron, based in Canada, has already started supplying FPGA software, more accurately described as “bitstreams.” The software is free, but has a four percent “development fee,” which means that for four minutes out of every 100, it will mine to Zetheron’s address. However, he’s adamant that he’s not in it for the big bucks:

“Since our April 30 ‘reveal’ of the FPGA landscape, we have had many huge financial offers from large private farms, offering us lots of money to provide private/exclusive bitstreams for their private farms. In all cases we declined, as that defeats the purpose of what we are trying to accomplish.”

Zetheron is also working in tandem with hardware manufacturers, advising them on the best ways to optimize rigs and how to enable the hardware to adapt with only software-based changes. FPGA hardware is still expensive but, according to Fattah, offers a faster return on investment (ROI) than GPUs.

All change

However, there are coins that are not suitable for FPGA mining. Bitcoin, which still requires huge amounts of power has never changed its algorithm, meaning ASIC miners are likely to continue. Networks that are deliberately optimized for GPUs, like Bitcoin Private, will remain out of reach of FPGA mining.

But for coins such as Monero and Bitcoin Gold–those which, in an effort to deter ASIC miners, change their algorithms every few months–the fastest reconfigurable processors are FPGAs. New models coming in 2019 will serve the majority of altcoins including Ethereum. Several coins (Electroneum is among them) are also trying to adopt FPGA-friendly algorithms. And the practice is likely to catch on as startups try to arm themselves against the big mining conglomerates.

“With distributed FPGAs mining on a coin’s network, the chance of an ASIC takeover drops dramatically,” says Fattah. “Because FPGAs are so incredibly fast, an ASIC may only have a 3x to 20x speed advantage over an FPGA, versus 30x to 1000x speed gain over a graphics card. This means that a coin that is being mined by FPGAs is way more resistant to ASIC takeover.”

In order to out-process FPGAs, Fattah believes that a mining operation would need a lot of expensive ASICs, making it impractical (as the machines would cost much more to design and manufacture, while making only a negligible amount more per day).

With bitstream development advancing at pace, interest high and prices for FPGA hardware starting from $480, FPGAs will undoubtedly impact sales of both ASICs and GPUs. GPUs, which have other uses–such gaming and, now, decentralized storage–will readily find new employment. But what about all those custom ASICs? It’s already a bit of a joke in the industry, but they make a superb doorstop. 

Read Next: Cats and Doge