The battle for Bitcoin's time computing power resources-the rise of computing power (Part 1)

Publisher: BuyBit Inc. & Paiclub Capital

Author: Mayer Ma, Su Wenjie

Words written at the beginning

"Columbus arrived in the Caribbean islands in 1492. Since then, the advanced" old continent "has collided with the" new continent "of the Americas. According to legend, the continent is full of gold, accompanied by religious fanaticism and the dream of treasure hunting. The settlers set foot on the land of the Americas. The most dramatic of these was the Spanish colonial Pizarro who led 169 soldiers to conquer the huge Inca Empire. On November 16, 1532, the Spanish illiterate adventurer and conqueror, Franco Sisko Pizarro, led by his exhausted and weak invasion force consisting of 62 cavalry and 106 infantry, met in Cajamarca, Inca Empire, with a population of 6 million and led 80,000 Attavalpa, the accompanying Inca Empire emperor. Atavalpa was not worried about the upcoming meeting, because one of his envoys had just visited the camp of Pizarro. The messenger told the Emperor of Incas that Pizarro and his followers Doesn't look like an armed man, and is weak. Just give this messenger 200 Indians and he can tie them all up to the emperor However, the situation on the day of the meeting was that Pizarro led his poor army and captured the Inca emperor Atahualpa in one fell swoop, killing 6,000 to 7,000 Indians before dark. The remaining 70,000 Many Indians were spared only as night fell and the Spaniards were too tired to continue the slaughter, which was historically known as the "Cajamarca conflict".

In the years that followed, Pizarro led his pocket army (and subsequent troops from Spain, with a maximum size of no more than two or three hundred people each time), eventually dying with 6 million The population of the Inca Empire, and the ruins of the Inca Empire established the Spanish's first large colony in South America, Peru.

The Spanish colonists accumulated a great deal of wealth on the bones of the Indians and blacks. From 1521-1544, they transported an average of 2,900 kg of gold and 30,700 kg of silver from the Americas each year. By 1545-1560, gold had increased to 5,500 kg and silver had 246,000 kg. At the end of the 16th century, Spain produced 83% of the world's precious metals mined in the Americas. "

——Recommended Reading "Guns, Germs and Steel" Jared Diamond

I. Bitcoin time computing resources

"From 1868 to 1872, the German Lichhofen came to China to investigate minerals seven times under the name of travel. Later, in an inspection report published in Shanghai, he said: China is rich in minerals, only in Shanxi, only in Shanxi. Coal in one province is sufficient for more than a thousand years in the world. The report also records the price, marketing scope and transportation of coal and iron. The investigation and publicity of Li Xihofen has further stimulated the ambitions of foreigners to mine Chinese minerals … … In March 1897, Angelo Luzzatti, commissioned by the British-Italian government, organized an Anglo-Italian Combination in London with a capital of 20,000 pounds. It was registered in accordance with British law and named the British Fortune Company (The Peking Syndicate Ltd.). Immediately, an Anglo-Commercial Office was set up in Tianjin, China, serving as the director-general of the British Consul-General in Shanghai, Jamieson, Sir George. In this way, the main purpose is to develop mines in Shanxi and Henan, China. Business, and attempted to create the British Fortune Company. "

——Recommended reading "On the plunder of British mineral resources in Henan by 1897-1915 and its impact" Huang Tianhong

The modern history of China is a history of territorial division by powers and mad plunder of resources by powers. The Opium War, the Second Opium War, the Sino-Japanese War of 1894-1895, the War of Aggression against China by the Eight Kingdoms, and the War of Japanese Aggression against China, the previous wars dragged the Chinese nation to the abyss. Since ancient times, the law of weak meat and strong food has never changed. Regarding the plunder of resources, regardless of country or age, in order to achieve its goals, a strong country will do whatever it takes. The predators have accumulated a lot of wealth from this, which is the root cause of its rich material life, and the slogans of "freedom" and "democracy" put on it a mask of tenderness.

How important resources are! The emperor of the Inca Empire, Atahualpa, carried ignorance and gold to the guns, germs, and steel of the Spanish conqueror Pizarro. The queen mother of China Cixi carried ignorance and silver to the guns and opium of the powers. History is always surprisingly similar. After looting, we stood up on our own and the protection of resources received unprecedented attention. The wheel of history rolled to the end of 2019, and the eyes of international capital fell on Bitcoin's time computing resources. The desire to control the power of Bitcoin stimulated the taste buds of predators. A battle of time computing resources has begun.

1.Definition of Bitcoin time computing resources

Bitcoin's entire network computing power (hash rate) is provided by the mining machines in the mining pool. These mining machines that can provide effective computing power are Bitcoin's time computing resources. Like the looted mineral resources mentioned above, time computing power is also the goal of international capitals competing for.

When the price of Bitcoin rises, the mining revenue brought by time computing resources is considerable. The following diagram is quoted from our previous article [1] "Bitcoin Ups and Downs Conspiracy under the Decision of the Bookmaker" ( ), which shows Bitcoin The market value of daily output and the cost of electricity (price in U.S. dollars), where the market value of daily production and the cost of electricity are the miner's profit margin. In this drawing, it is assumed that the mainstream mining machine in 2017 is 100W / T, 2018 is 90W / T, and 2019 is 80W / T. The electricity fee is approximately calculated at 0.39 yuan / degree:

Figure 1 Market value of daily output and electricity costs

Around May 2020, the block reward will be reduced from 12.5 to 6.25. In the literature [1], we pointed out that the miner's machine cannot allow the huge computing power of the entire network to divide up even thinner profits. It will suppress some bitcoins by shutting down the price of bitcoin, thus eliminating backward computing The purpose of force. The ant miner S9, which provided about 60% of the computing power for Bitcoin, and similar miners will be eliminated in the next cleaning. This means the beginning of a new round of strategic deployment of time computing resources.

2. The distribution of Bitcoin time computing resources [2]

The following figure illustrates the global distribution of time computing resources:

Figure 2 Global overview of Bitcoin mining regions

In the picture, the main mining areas are shown in cyan, Sichuan is shown in blue, and the remaining small mining areas are shown in black.

Literature [2] states that the major mining centers in these areas include: Sichuan, Yunnan, Xinjiang, and Inner Mongolia in China; Washington and New York in the United States; British Columbia, Alberta, Newfoundland, Latvia, Canada Provinces of Brado and Quebec; Iceland; Northern Scandinavia (Norway and Sweden); Caucasus (Georgia and Armenia); Russian Siberian Federal District; Iran; Kazakhstan. There are also small mining centers in similar geographical areas, such as Austria, Montana, USA, and Guizhou Province, China.

The remaining small mines (the literature is not yet certain) include: Florida, Texas, and Arizona in the United States; Western Australia and New South Wales; Belgium; Belarus; Northwestern Federal District of Russia; Argentina and Venezuela.

The document estimates that 65% of the world's mining takes place in China, Sichuan alone generates a global hash rate of 54%, and the remaining 11% is roughly evenly distributed among Yunnan, Xinjiang and Inner Mongolia. Of the remaining 35% of miners, an estimated 31% of the world's hashrate output is evenly distributed among Washington, New York, British Columbia, Alberta, Quebec, Newfoundland and Labrador, Iceland, Norway, Sweden, Russia's Siberian Federal District, Kazakhstan, Georgia, and Iran, the last 4% assume that they are sufficiently widespread elsewhere in the world.

The following table lists the above percentages together and estimates the share of renewable energy in the electricity consumption of the Bitcoin mining industry, pointing out that most of the industry uses clean renewable energy:

Table 1

3.Countries competing for Bitcoin time computing resources

(1) North America [3]-[4]

Ryan Porter, head of business development at BitOoda, told Bitcoin Magazine, "We are seeing explosive growth in bitcoin mining in North America, as mining companies and investors have seen a significant increase in the number of possible mining business consultations in 2019. . Some institutional investors who have been waiting and watching are mining their bitcoin. Now for investors who are involved in the Bitcoin mining business for the first time, many people think that North America is their best choice … The certainty and relative stability, coupled with the large amount of cheap electricity in North America, operators and investors realize that North America is ideal for Bitcoin mining. "

Likewise, Jonathan Hamel, founder and president of Académie bitcoin in Montreal and a close observer of Bitcoin mining, told Bitcoin Magazine: "I believe the reputational risks associated with Bitcoin mining in North America are increasing Gradually disappearing. For example, in Canada, Bitfarms is publicly listed on the Toronto Stock Exchange and audited by Ernst & Young, which has brought a lot of credibility to the industry. "

In central Texas, U.S., local economic development officials have partnered with companies like Bitmain to take over mining site land. For example, an abandoned Alcoa aluminum smelter in Rockdale has been equipped with built-in power plants and electrical wiring. "As more and more states and provinces look for abandoned industrial land markets, I believe we are moving towards standardizing and commercializing the industry.

Washington and New York have good climates and rugged terrain, and powerful rivers such as the Columbia and St. Lawrence rivers provide ample hydropower for Bitcoin mining. In addition to good natural conditions, Washington and New York have been at the forefront of economic change, with net outflows from manufacturing and energy companies, leaving a large number of abandoned factories, power plants and lines available for Bitcoin mining Relatively complete infrastructure. At present, Salcido Group and Bitmain are located in Washington State; the three mines operated by Coinmint are located in New York State.

Based on the industrialization advantages accumulated in the past few years, Texas has also opened a number of large-scale bitcoin mining companies. Bitmain, Layer1 (cryptocurrency infrastructure company), and German bitcoin mining company Northern Bitcoin AG are building bitcoin mining facilities in Texas, mainly using Texas ’abundant wind or other renewable energy sources for power generation. California-based Plouton Mining hopes to use local solar energy to ensure its long-term mining business.

Georgia has also recently joined Bitcoin mining and introduced Bitcoin mining company Blockstream, hoping to use local renewable energy for Bitcoin mining to provide economic development for the state. Nebraska also hopes to join bitcoin mining to support mining through wind, hydro, natural gas and electricity from nuclear power plants for economic benefits for the entire state. To attract Bitcoin mining company Compute North, Nebraska will offer lower subsidized energy rates. These Bitcoin mining companies will provide custody services for miners, including mining equipment, space, bandwidth / electricity rent.

Bitcoin mines can be found in another North American country, Canada, British Columbia, Alberta, Newfoundland and Labrador, and Quebec. In the past, thanks to the cool climate, the development and exploitation of resources in northern Canada in forestry, pulp and paper, and heavy industry has allowed Canada to have a large number of renewable hydropower to support the operations of Bitcoin mining companies.

As the entire Bitcoin mining business in North America, from Georgia in the United States to British Columbia in Canada, takes root, North America is quickly becoming the core of the entire Bitcoin mining industry. As these businesses continue to grow, the scope of the industry in the region will only continue to expand.

(2) Russia [5]-[7]

Russian Miner Coin (RMC), one of the company's shareholders in the background is an adviser to Vladimir Putin. The company plans to generate $ 100 million worth of cryptocurrencies, and its vision is to launch a large-scale Bitcoin mining business in Russia. And this company has the ambition to challenge China's bitcoin mining hegemony. In their opinion, the world's leader in the field of bitcoin mining will be an Asian country in the future.

RMC said in a report that Russia has a 20 gigawatts of electricity surplus and that consumer electricity prices are as low as 80 kopek (1.3 cents) per kWh, which is lower than China. According to media reports, the total annual consumption of Russia's largest digital currency mine is 4.5 mWh, which is 3240 MW. If the electricity price is calculated based on the above-mentioned electricity price in Russia, the annual electricity cost of the mine will be at least $ 42,120. If the same power consumption is put into China, based on the industry average price of 0.4 yuan per kilowatt (about 6.206 cents), the annual electricity cost of the "mine" will be as high as 200,000 US dollars, which is 4.77 times the previous one.

Just one year after the opening of Russia's largest data center "Bit River Company", it has won customers from all over the world. Bit River leased a building near the Bratsk aluminum plant. The Bratsk Aluminium Plant is the largest aluminum smelter in the world. It was built by the Soviet Union in the 1960s with a nearby hydropower station because energy is the largest cost for the aluminum smelting industry. In this 100 MW mining facility, three-tier shelves standing along the wall are filled with ASIC devices and electrical equipment. The entire building is covered with industrial fans to provide the necessary cooling for these machines while mining. A team of field engineers monitors and routinely inspects ASIC devices and power equipment 24 hours a day. They wear hearing protection to block noise from miners and cooling fans. The Bratsk Hydropower Station is located on the Angara River, and hydropower in the region is one of the cheapest electricity in the world. According to reports, in addition to electricity supply, another reason that makes Bratsk an ideal place for the cryptocurrency mining industry is the climate of Siberia. Winter here is long and cold, and low temperatures are a positive factor for data center equipment.

The Leningrad region of Russia wants to build an industrial park for cryptocurrency mining, including bitcoin. Leningrad Governor Alexander Drozdenko has thrown olive branches at the miners' group, inviting them to the Sosnovy-Boll region near St. Petersburg to create an industrial-scale mine at the old Leningrad nuclear power plant. Drozdenko attended the Third Annual Forum of SMEs in Leningrad. At this event entitled "Energy Opportunities", he presented the idea of ​​the first Leningrad Nuclear Power Plant (LNPP) to be used to build a cryptocurrency mine. It is reported that 600 entrepreneurs and representatives of federal agencies attended the event. The Leningrad region borders Finland in the northwest and Estonia and St. Petersburg in the west. The first Leningrad nuclear power plant (LNPP) in the region was established in 1974 and is located in the town of Sosnovy-Bol. Currently, the region's second nuclear power plant (LNPP-2) is under construction and is adjacent to the first nuclear power plant. "The second nuclear power plant (LNPP-2) is under construction, and most of the supply of the first nuclear power plant will be released." Drozdenko explained, "and this site may attract cryptocurrency miners."

In Russia, one area that has been trying to attract digital currency miners is Kaliningrad. Vladimir Zarudny, President of Kaliningrad Regional Development Corporation, explained how the special economic zone in the region became an ideal choice for digital currency mining. A Google analysis showed that Kaliningrad is the region with the most mining-related searches in Russia.

The reason for Russia's change of attitude towards mining may be that by legalizing Bitcoin, Russia can eliminate potential cryptocurrency money laundering activities, and at the same time, it can be included in the state's taxation network to increase government revenue.

German Gref, head of the Russian Federal Savings Bank, said that they are currently participating in a constructive dialogue on cryptocurrencies, and the central bank is trying to understand what cryptocurrencies are and plan for the next step. "The introduction of a cryptocurrency ban will only make Russia uncompetitive," said the financial institution executive.

Russian bankers and financial elites have begun to change their attitudes and embrace virtual currencies with a more open mind. For the Russian government or "financial market", there is no need to treat cryptocurrencies as a threat. Now the government is considering changing its mind to define it as a "virtual commodity". This also seems to be one of the reasons why the government has revised its tax laws.

(3) Belarus [8]-[10]

Belarusian President Aleksandr Lukashenko supports cryptocurrencies and calls it a new chapter in the country's history. Lukashenko said that Belarus will allow cryptocurrency mining to set up factories in the country, and he fully trusts Belarusian entrepreneurs. According to the plan of the President of Belarus, a new mining plant will be established near the country's nuclear power plant, which may mean that nuclear energy will be used to produce Bitcoin. These plants are still under construction and will be fully operational by the end of 2019.

His presidential decree provides preferential tax policies and financial aid for cryptocurrency companies, and related companies can enjoy these benefits before January 1, 2023. Companies involved in mining and digital token issuance and distribution do not pay taxes. This also applies to individuals who use cryptocurrency activities as a source of income, such as mining and cryptocurrency trading activities. Within the next five years, as long as the cryptocurrency company registered in Belarus does not need to pay taxes even if it operates abroad. President Lukashenko is also considering the formation of the Ministry of Digital Economy, the new national department is likely to be formally established this year.

A large amount of cheap electricity investment makes the profit rate of Belarusian mining behavior extremely high, far beyond the average "mine", the Belarusian government has never stopped the crazy "mining" step, but increased investment The financial report is estimated to be much more optimistic than in previous years.

Research on the status quo of the Bitcoin ecosystem

"Throwing stones and hitting the water, the waves can't be rippled.

When a person of insight calls you worse than a robber,

Scolder, blame immediately

Diagnosis without medical treatment is tantamount to a terminal illness.

What non-benevolent people do,

I can't bear this greater infamy.

Therefore, blame must be said "

——Recommended reading three "Distant Savior" Doudou

As can be seen from the above, countries are actively competing for the effective computing power of Bitcoin. Effective computing power is a time computing power resource in a narrow sense, and a substantial embodiment of the Bitcoin value network in a broad sense. Bitcoin and its value network form the Bitcoin ecosystem, and there are many issues in this system that deserve our exploration and study.

(I) Research on Industrial Order

1. The tragedy of the commons of time computing resources

From 2009 to 2045, the issuance of bitcoin will account for 99.95% of the total issuance. This 36 years will be the bitcoin era of bitcoin consensus system construction, application ecological development, and user growth. In 2140, the number of bitcoin issued cannot be further subdivided, and there will be no further issuance at that time. Bitcoin will enter the "satoshi era" with stable value from the "currency era" with price fluctuations [11].

The tragedy of the commons, that is, limited resources, is destined to be overexploited by free use and unrestricted demands. Because each individual seeks to expand the resources available to him, eventually conflicts will occur due to limited resources, which will harm everyone's interests. As stated in the text above, due to the strong volatility of Bitcoin at this stage, the rapid update and iteration of mining machine products under high-intensity competition, and the factors that caused the mining machine dealers to maintain their own interests to periodically suppress the currency price, which led to the mining machine Big price changes. When the bitcoin market was hot, the price of the mining machine doubled and only futures could be purchased, but the abandoned mining machine could only be sold by the pound in the winter. These unbalanced and disorderly phenomena just show that there is still a lack of information flow and exchange in the mining circle, and a market economy has not been fully established in it. For the sake of their own interests, people have shown all kinds of confrontations and conflicts on the computing power of time, and then broke their arms to survive when the market went down. This is undoubtedly a tragedy of the commons.

The mining circle supports the Bitcoin value network. Its importance is undoubted, but the mining circle has yet to be quantified and regulated to avoid the occurrence of huge losses and the waste of time and computing resources.

2. Hidden dangers of value network system security

Bitcoin's entire network computing power has recently remained near 100E. The huge computing power is a guarantee of its security, but we should still be alert to it. [12] classified mining attacks into four categories:

(1) 51% attack

In digital currency, the most important thing is how to solve the double payment problem, that is, how to ensure that the same money (digital currency) is not repeatedly paid twice. Bitcoin uses the entire network of public transactions, time stamps, and proof of work to solve the problem. The problem. At the same time, Satoshi Nakamoto proposed in the Bitcoin white paper a method to achieve double spending: a 51% attack, which is the earliest attack behavior faced by the Bitcoin system. All nodes of the Bitcoin network jointly maintain the same ledger. If you want to tamper with the data in the ledger, you must be able to control most nodes in the entire network, that is, to master 51% of the computing power.

(2) Block interception attack

Finney's first user, Finney, proposed a way to achieve double spending: the Finney attack, which uses the idea of ​​block interception. Rosenfel first proposed the concept of block interception attacks in 2011. He described a block interception attack scenario: Sabotage, which is an attack by a malicious miner on a target mining pool. The profits of the mining pool and malicious miners are reduced. Courtois, Bahack, and Luu proposed that attackers use block interception attacks to increase their own revenue and analyze the revenue situation in different scenarios. Eyal analyzed the scenario of block interception attacks between mining pools and proposed the concept of miners' dilemma. In 2017, Bag and others proposed a new type of block interception attack: sponsored block interception attacks.

(3) Selfish mining

In 2010, some literature proposed that the idea of ​​selective delayed block publication can get more block rewards. Eyal and Sirer first proposed the concept of selfish mining in 2013. At the same time, Bahack researched and analyzed a series of mining attack strategies. In his article, he called the selfish mining attack a block drop attack. Sapirshtein et al. Extended the basic model of selfish mining attacks, and proposed an algorithm to find the optimal attack strategy. Using this algorithm, the algorithm can calculate the lower bound of the computing power of the attacker to launch selfish mining to obtain additional benefits. Nayak et al. Broke the rule of the longest chain and expanded the strategy space of selfish mining. It was proved that under certain conditions, even when the public chain is longer than the private chain, selfish miners can still obtain higher mining speed on the private chain. Expected benefits.

(4) FAW attack

In 2017, Kwon and others proposed a FAW attack, which comprehensively uses block interception attacks and intentional forks to increase the attacker's revenue.

Literature [12] proposed corresponding defense measures against the above four attack methods. Because these attacks require an attacker to have a certain amount of computing power, fully decentralized computing power can avoid the emergence of attack situations, so the dispersion of computing power is an important way to ensure the security of the entire Bitcoin network.

3. The problem of pricing power of time computing power

The price of mining machines fluctuates greatly with the change of the price of Bitcoin, which shows that there is a certain difficulty in the reasonable pricing of time computing resources.

Buyers often judge whether the price is reasonable based on their prediction of the return of the mining machine. From the BuyBit exchange ( ), you can get the mining income x that can be obtained by 1T computing power per day (this value is related to the difficulty of the entire network). For example, at a certain time, the value is x = 0.00001942BTC, after deducting the electricity fee After that, I got a daily profit of 1T computing power. Based on this, the buyer can estimate that he can pay back on the mth day. The buyer expects that Bitcoin will not fall to the shutdown price in these m days, and the total profit in these m days can offset the price of the mining machine.

However, the difficulty of the entire network is changing (resulting in a change in the value of x), the price of Bitcoin is also changing, and the estimate for m days is similar, so the estimate of the price of the mining machine is also similar. In fact, people's estimates are different based on their own judgments, reflecting the different understanding of the value of the miner by the miner manufacturers and different buyers, and reflecting the difficulty of the entire network and the price of bitcoin in different individuals. Judgment of future m-day trends. Therefore, it is difficult for people to reach consensus on the pricing of mining machines, which is the problem of pricing power of time computing resources.

4. Difficulties in evaluating the time and power resources

5. Difficulties in mining industry compliance and supervision

On April 8, 2019, in the "Industrial Structure Adjustment Guidance Catalogue (2019 Edition, Consultation Draft)", virtual currency "mining" activities were included in the eliminated industries and belonged to the "lagging production process equipment" category, and Mining activities are also included in industries that should be “eliminated immediately”. On November 6, 2019, the Chinese government website officially released the "Industrial Structure Adjustment Guidance Catalogue (2019 Edition)". According to the contents of the document, the "virtual currency mining" previously listed in the eliminated industry category was listed in the latest guidance catalogue. Was deleted. The catalog will take effect on January 1, 2020. It can be seen that the government's attitude is always swaying until the compliance and supervision difficulties of "virtual currency mining" are not clear.

(II) Research on the governance of Bitcoin community

1. Anonymity disappears

When Bitcoin was created, anyone can create a Bitcoin address, and no real-name system is required. No corresponding real identity can be found through the Bitcoin address. One person can apply for multiple Bitcoin addresses, and there is no connection between them, and no direct correlation can be found. However, since Bitcoin entered the consensus development period, it has been constrained by the completeness of the ecological structure, KYC certification of the exchange, and the address tracking system.

2. Competitor market erosion

image 3

As shown in the figure above, on April 29, 2013, Bitcoin accounted for 94.17% of the cryptocurrency market share. By July 8, 2018, it had fallen to 33.39%. After the entire cryptocurrency market was converted, it was December 18, 2019. On the day, the market share of Bitcoin climbed again to 66.45%. Bitcoin market share competitors are no shortage of innovative consensus builders that promote the advancement of blockchain technology. At the same time, it is regrettable that many of the same number of competitors are plagiarized using blockchain technology for personal gain. Consensus destroyer.

3. Belief leader vacuum

The creation of Bitcoin has been ruggedly moving from silent to unknown, across dark trades, and through the mainstream of will. From the innovator who held the "flag of freedom" to the creator of the "myth of wealth creation", the complex and contradictory followers of Bit Citizens made it impossible for them to agree. Some of the creators of the "myth of wealth creation" are arrogant and arrogant, claiming to be veterans, standing under the spotlight, making nominations and leaving words, favoring the platform, and even usurping the founder of Satoshi Nakamoto, a crown maker. On the stage of the leader of the believers, the liar and the elite dance together, and the fool and the fool are applauding.

4. Alienation of bit civil rights

Some scholars have declared high-profile that Bitcoin is a highly civilized and cross-generational product of private ownership. It is a medium of value exchange for all economic participants. It comes from individual participants and returns to the economic cycle. Individual participation in the issuance of bitcoin is a basic right of bit citizens. From January 2009 to June 2011, the time computing resources experienced CPU and GPU iterations. With the increasing difficulty of mining throughout the network, ordinary CPU and GPU computing speeds can no longer meet the difficult mining algorithms. As a result, the era of FPGA and ASIC professional chip miners has ushered in. While technological progress has brought about increased production efficiency, it has alienated bitcoin citizen rights, and the monopoly problem of currency issuance rights has once again fallen into a trance.

In the above, we introduced the time computing power resources scrambled by various countries and pointed out that it is the representative of the Bitcoin value network. Further, Bitcoin and its value network form the Bitcoin ecosystem, which has been analyzed in detail in this article. It seems that our discussion can end here. However, the Bitcoin value network has always been undervalued. This is the purpose of this article. It is discussed separately below.

Third, the undervalued Bitcoin value network

"In 1887, in Germany, at the laboratory of Karlsruhe University on the Rhine, a young man trying to approach the ultimate mystery of nature was pouring into his device completely, without It is expected that his experiment will bring about a revolution of the times.

There is no need to doubt it anymore. Electromagnetic waves exist in space. It is exactly the spark that ignites the receiver. He triumphed, Maxwell's theory triumphed, and a new peak in physics, electromagnetic theory, was finally established. The great Michael Faraday laid the groundwork for it, the great Maxwell built its main body, and today, the great Hertz-capped the building …

In 1896, an Italian young man had performed a radio communication show in public after reading a paper that experimentally confirmed the existence of electromagnetic waves. His company was established shortly afterwards, and he successfully obtained a patent certificate. By 1901, the seventh year of Hertz's death, the radio telegraph was able to cross the Atlantic Ocean and achieve real-time communication between the two places. This young man from Italy is Guglielmo Marconi, meanwhile Russia's Aleksandr Popov also made the same contribution in the field of wireless communications. They set off a revolutionary storm and brought the entire human race into a brand new 'information age'. Hertz's name could finally be engraved in the Hall of Fame of the history of science, but as a purely serious scientist, Herz did not think of the huge commercial significance contained in his discovery. He left the world he was intoxicated with before he was 37 years old. "

——Recommended Reading Four Biography of Heinrich Hertz Michael Eckert

Bitcoin uses a distributed public ledger (blockchain) composed of many nodes in its entire P2P network to confirm and record all transaction behaviors. Miners will receive two types of rewards during the mining process, that is, the creation of new blocks. Transaction fees (miner fees) for new currency rewards and transactions included in the block.

The following figure is taken from the literature [1], which vividly shows the daily Bitcoin production and the average computing power of the entire network (as of 2019.11.22):

Figure 4 Daily output and average computing power

As shown in the above figure, the huge computing power of the Bitcoin network is a guarantee of the security of the entire Bitcoin system, and the miner fee is an auxiliary support for the network maintenance. After 21 million bitcoins were mined in 2140, Miner fees will be the main support for the network.

In essence, the foundation that supports the entire Bitcoin system is security. It cannot be overemphasized that security, and all human bitcoin ledger information is stored on its network. The impact of its network on the entire Bitcoin system has not been Fully understand that the entire Bitcoin value network is currently undervalued.

When the eyes of major media focus on the market fluctuations and future development of Bitcoin, they often ignore the foundation of the Bitcoin system-the Bitcoin value network. While some media criticized the energy consumption of bitcoin mining, they did not recognize the importance of computing time resources and their decisive influence on the bitcoin system. And it is worth thinking deeply for people with critical spirit.

Words written at the end

The scramble for time computing resources is actually the scramble for the bitcoin value network they weave. This is not only the instinct of humans and nations on resources, but also a long-term strategic offensive of the value network resources they represent. This is a future-oriented war.

Hertz may be based on purely spiritual pursuits, while ignoring the impact of the application of electromagnetic wave theory on the transition of human survival methods, leaving the historical responsibility for the construction of the wireless communication era to Marconi and Popov. The earliest TCP / IP was developed by Vinton Surf and Robert Kahn, and it slowly jumped into the information age by competing against other network protocols.

In 2008, the third financial crisis clouded. At a time when many people were uneasy about the actions taken by central banks in various countries, Satoshi Nakamoto's paper entitled "Bitcoin: Peer-to-Peer Electronic Cash System" caused a thousand waves. The historical experiment of value anonymous storage and point-to-point value transfer through a decentralized network system was opened. After more than ten years, the historic task of building a Bitcoin value network system once again issued a call.


[1] Mayer Ma, Su Wenjie. BuyBit Inc. & Paiclub Capital. Bitcoin's Ups and Downs Conspiracy under the Dealer's Will. Golden Finance. Https://

[2] Christopher Bendiksen, Samuel Gibbons. The Bitcoin Mining Network (December 2019 update). CoinShares. 6-9.

[3] Caiyun Blockchain. North American Bitcoin Mining: The Gold Rush in the New World and New Era. Golden Finance. Https://

[4] OKEX Intelligence Bureau. Explosive growth of Bitcoin mining industry in the United States, a new round of gold rush, but don't be blindly optimistic. Baijiahao.

[5] Guo Min. Russian mining subsidies the cost of electricity, official attitude change wants to challenge China's mining status. Golden Finance. Https://

[6] Coin Mi Community. The big gold rush in the new era, Russian mines attract global "miners". Mine Vision. Http://

[7] Miners were invited to mine in Leningrad with nuclear power. Https://

[8] Ostrich blockchain. Belarus plans to use nuclear energy to mine bitcoin and start full mining at the end of 2019.

[9] Belarus officially legalizes cryptocurrencies, mining and transactions are all tax-free. Block Network. Http://

[10] Gump. For Bitcoin, nuclear power plants can also be used for mining. MottoIN. Http://

[11] Mayer Ma, Wenjie Su. XBIT Digital Power Depository Trading System Manual. BuyBit Inc. 7.

[12] Han Jian, Zou Jing, Jiang Han, Xu Qiuliang. Research on Bitcoin Mining Attacks. Chinese Journal of Cryptography. 2018, 5 (5): 471-482