Monero is in the news lately due to an upcoming emergency hard fork on 28th of March, at the block height of 1,539,500. This is basically a hard fork, without creating a new coin and only for adding new features and upgrading code for better performance. Notably, some interesting news has surfaced today regarding how this hard fork will make Bitmain’s ASIC mining equipment useless. Let’s see this development in detail.
Monero’s upcoming hard fork:
Monero team is planning a forced software update to improve and introduce some new features like Sub-addresses, Multi-Signature, and Monero GUI upgrade to its platform. The upgrade was scheduled during mid-March and then postponed to 28th at the block height of 1,539,500. The interesting modification that the team is proposing is changing the CryptoNight Proof of work algorithm during this fork and they will continue to do it every scheduled fork, twice a year. The modification is significant since it will make mining of Monero “ASIC Resistance“. Asic Resistance means special mining equipment, with a high-performing or specialized chip, cannot take advantage and mine efficiently over other ones that use a less efficient CPU or GPU.
ASIC (application-specific integrated circuit) is a special kind of chip in mining hardware that is used to mine Bitcoin and other cryptocurrencies. Moreover, ASIC is generally more advanced and more powerful than CPU, GPU, and FPGAs, and it has a significant edge over other devices in the mining race. ASIC-enabled mining equipment is capable of outperforming other equipment in terms of speed and efficiency in finding the blocks. The miners who were using this were making huge profits since they were working with superior computational power.
Bitmain’s Monopoly in Mining
Bitmain, a Chinese mining hardware manufacturer, has what can be considered a monopoly in manufacturing ASIC mining equipment, since they have patented it. They also maintain about 50% of the mining hash power of the overall Bitcoin network. This has led to Bitmain becoming more powerful and highly profitable due to the advantage they hold in terms of their highly efficient mining hardware. However, this has centralized the process of Bitcoin mining, taking away the mining power from the “common man”.
Monero’s Proof of work change
To counter Bitmain’s monopoly, Monero’s developers are planning to change the Proof of work in its CyrptoNight algorithm. CryptoNight is simply the mining algorithm used in Monero, and it is because of this algorithm that we are able to enjoy the benefits of privacy and perform transactions confidentially. The proposed change, as per their blog, will help in preserving the ASIC resistance. In other words, the change will discourage ASIC miners from mining Monero. Monero’s official blog also states:
“Emergency hard fork will help in maintaining its goal of decentralization and to provide a deterrent for ASIC development and to protect against unknown or undetectable ASIC development.”
Furthermore, ASIC miners might only help the rich get richer, ultimately leading to the centralization of mining, that we are currently witnessing in Bitcoin’s ecosystem. This also creates a single point of failure, if the government seizes the mining pools or due to any natural calamities, the mining would get affected resulting in significant loss of hash power. It is always advisable to have mining geographically decentralized to avoid the single point of failure and potential 51% attacks. This is the main reason why Monero’s team decided to bring up this PoW change to prevent it from being mined by ASIC miners.
Bitmain shipping ASIC for CryptoNight
Contrary to the Monero’s PoW change that will nullify ASIC, Bitmain has surprisingly announced that they will be shipping ASIC miners compatible with the CryptoNight algorithm from May/June. The equipment will not work and it will not be able to mine Monero due to the ASIC resistance feature that is going to be incorporated in the upcoming fork. Bitmain didn’t anticipate this PoW change and they have started to manufacture for Monero’s algorithm, but unfortunately, it is highly unlikely that it will work effectively and just might be useless
Below are some strong twitter reactions from “Fluffy Pony”, the creator of Monero:
“Just a reminder that Bitmain’s ASIC miner WILL NOT work on Monero”
Fluffy also responded to one of our tweets here:
Meanwhile, Whale Panda reacted strongly to this development as well:
“These will be bricked after the XMR hard fork with small PoW change in 13 days, so with them shipping them in May/June… Good luck, you won’t be able to use them for Monero.”
A Twist in the Story:
There is a small twist in this story. Imagine if Bitmain was mining Monero secretly all this time, and they have started selling the mining equipment only after they have come to know of this upgrade, which will eventually nullify the ASIC miners. This could be a possible scenario and was evident in one of the tweets that stated:
“You’d be naive to not think BitMAIN has been mining with these for months, and are now selling them before they’re bricked on the most popular CryptoNight coin (Monero)”
The crypto space is becoming more political day by day. That’s why they say:
“There is no boring day in the world of Cryptocurrencies”.