Reducing miners' electricity consumption

[gori]

See PDF document at: http://www.mrgori.com/Articles/White%20Paper%20gg.pdf

In this document we show how a change in the mining and reward mechanisms can
drastically reduce the miners’ hours of operation, and consequently their electricity
consumption, which will translate into higher incomes.

[arnoudk]

Thanks for these thoughts.

Ok, I have read your paper and I am sure I don't quite get every aspect of it, yet.

You state that mining is wasteful, because hashes are thrown away most of the time. This is not accurate, the value is exactly in the work of the hashes that are thrown away. The successful block hash is the one that qualifies to create the next bitcoin block - but the fact that you found it means that you have done the work, including trillions of non-qualifying hash calculations.

An attacker would have to out-calculate the entire honest network. To rewrite the history, he would have to out-compete the entire network, exponentially (depending on how far you'd want to go back). The original white paper has probability calculations for this event, I believe.

Does your proposal not increase the odds of an attack, when a lot less work is done on the block chain?

Lets say I have 10% of the network hash power. (I wish!). And lets say your proposal has been implemented.

By pretending to be many different small miners (thousands!) rather than one big one - I build up thousands of reputations in your system. Then, when just ONE of these reputations gets selected into the privileged club, then I can still use all of my processors to build blocks for that identity. The odds of at least one of my identities being selected through the selection logic is quite high, no? (What if I scale to tens of thousands of identities?).

So if that is the case, I can 51% attack the network with 10% hash power. (The 10% number is completely made up and not calculated).

Where is my reasoning different from yours?

[gori]

Thank you for your comments.
RE: first observation:
You are right. Even if 99.99% of the time hashes are thrown away, they are necessary for "proof-of-work". You will find the following in my document:
"The work of a miner processor essentially consists in:
- collecting, verifying and assembling transactions into a block, and
- using hashing techniques to assemble a “proof-of-work”, by looking for the shortest hash of the block.
While the first is “useful work”, the second is necessary and very expensive, but largely fruitless work. It was devised to deter malicious attacks by making this task very difficult to compute. However, many Kilowatts/hour are spent globally to accomplish this task."

RE: attacks by multiple coordinated identities:
To be part of the "Privileged group" you must have created a previous block and solved the block hash within the last N "open blocks" WHEN ALL MINERS ARE COMPETING. A group of malicious attackers would have to have solved a majority of the last N "open blocks".
In the document I stated:
"The probability of being able to claim membership in the selected group is the same for all miners, since all miners have an equal probability (factoring in the processor speed) to make a block and provide proof-of-work.
The probability (m/M)s of “m” malicious attackers out of the total “M” malicious attackers being members of the selected group, is the same as “Mt”, the probability of “M” malicious attackers in the total group of miners.
Thus, in a privileged group above a practical minimum, the probability of a successful malicious attack by a group of malicious attackers is the same as for the total group of miners in current implementations."
In other words, winning the majority of the last N "open blocks" is as difficult as winning the majority of the last X blocks in current implementations, which would result in a successful malicious group attack.

[gori]

P.S. (perhaps a bit more specific to your second point example)
In order to claim membership to the "privileged group" each identity has to point to an earlier generation transaction. This "reference" is easily verifiable.
Creating multiple identities does not make these part of the privileged group, since they have not been used in a previous generation transaction.

In other words, you prove you are "real" through proof-of-work. Later you prove you are the same identity by pointing to the (accepted) block in the block chain.

In addition, each identity will be part of the privileged group for N blocks only (after their last generation transaction). This avoids possible long-term alliances among previous solvers: You need to re-gain membership by competing with everyone else.

Hope it helps...

[zju]

How would your reward system work when the subsidy is 0?

[gori]

Zju,

For "privileged blocks" I wrote that transaction fees should be more than sufficient, since the probability of creating a new block for a miner in the privileged group are much higher.

Thus I assume your question is about the "open blocks" available for all miners to participate.
I wrote that the reward for "open blocks" should be about "P" times higher, to compensate for the fact that all miners participate in creating "open blocks" only 1/P times ("P" being the period).
Thus the speed of mining new coins will remain approximately the same as in current implementations.
When coins are exhausted (?xx? years from now), the same reward/incentive solution(s) applicable to the current implementations will work for "open blocks" with my "modified" mechanism.

Hope this answers your question.

[zju]

What I am wondering about is if you somehow scale the transaction fees like you do to the subsidy. That doesn't seem possible.

Also, is it even necessary to scale the reward? Even if the reward is not scaled, people will mine the public block at a loss because the ability to mine the privileged blocks has value.

Also, I believe that your plan unfortunately promotes mining centralization by encouraging bigger pools. Currently, a miner with 1% of the hash power will generally not go for more than a couple days without finding a block. They don't need to be in a pool. However, in your plan, since the public blocks are so far apart, the 1% miner might go weeks without finding a block, and would more motivated to join a pool.

[gori]

Zju,

I do not think the transaction fees need to be reduced, (although, I am not sure how these fees work for different bitcoin-type crypto-networks).
The reason is that there would be no other rewards (no mined coins) for "privileged blocks".
So you are right.

Currently, an independent miner has a hard time competing, especially because the electricity costs in most western nations (apart from the US) are prohibitive. Thus I assume that most miners in most western countries are already part of mining pools.
The top three bitcoin mining pools are Chinese and choose their sites carefully, re: energy cost and climate.
They are aware that people would mistrust them if they grow to more than a certain percentage of the market (e.g.: 30%).

There are already reasons attracting miners to pools.
If these incentives continue (or grow), I suspect that more entrepreneurs will go into the "mining pool business".

For those independent miners that will remain, the overall probability would be the same, so it is a question of patience (and time).
However, I agree that if the time is too long, some miners may get discouraged, or run out of money (or possibly join a pool).
This is one of the reasons I suspect such changes need to be introduced gradually, as I mentioned.

Thanks for your comments.