Once upon a time, at the beginning of Bitcoin’s history, it was possible to mine bitcoin at home using a PC’s CPU. Later, miners had to switch to GPUs, then to ASICs and then to more and more sophisticated bitcoin mining equipment. Today, most mining is done in specialized mining farms, operated by a few large players that invest substantial money in hardware facilities located in places with low temperatures and low electricity costs. It would seem that the era of private mining is over and the trend toward professional mining is here to stay. Early next week, however, Bitmain will launch the latest addition to its bitcoin mining product line, the Antminer R4, designed to address some of the hurdles that have kept home miners on the sidelines. It’s worth noting that the advent of professional mining was foreseen by Satoshi Nakamoto himself in 2010. “The current system where every user is a network node is not the intended configuration for large scale,” said Nakamoto. “That would be like every Usenet user runs their own NNTP server. The design supports letting users just be users. The more burden it is to run a node, the fewer nodes there will be. Those few nodes will be big server farms. The rest will be client nodes that only do transactions and don’t generate.” It appears that Nakamoto was right. However, it’s important to remember that, besides generating cash from electric power, which is the objective of miners, distributed mining validates bitcoin transactions and maintains the blockchain. The distributed maintenance of the blockchain, crowdsourced with financial incentives, is what gives power and resiliency to the Bitcoin network. If, on the contrary, only a few large operators maintain the blockchain, then the network becomes de-facto centralized, and its stability is threatened by […]
