GPU POWER SHIFT

Guest Written by Jason Deane

Bitcoin mining is the backbone of the Bitcoin network. It controls its monetary policy by issuing new coins, validates transactions and, importantly, provides impenetrable security for the network.

When Bitcoin transactions are made, they are encrypted into a block of information that is locked until the key to unlock it is found. When it is – and the key is confirmed by everyone else – that block of transactions is irrevocably added to the blockchain and a new block is created to start the whole process again.

The person who finds the key is rewarded with newly issued Bitcoin according to a specific schedule over time. Finding that key is where mining comes in and the whole process works like a giant global lottery.

It’s all about the hash

A hash is like a fingerprint for data. Bitcoin uses a system called SHA-256, which takes any input – such as a list of transactions – and produces a unique 64-character string.

For example, if you put the word ‘apple’ into SHA-256 you get the output

3C8C180B2444A2A8FA4D50395D398DDA53A8F186D6DFFC9D2D13E86A99C3BBAE

However, if you make even the smallest change to the word, for example, capitalising the letter ‘A’, you get something completely different, in this case:

0C3A8C180B244A2A8FA4D50395D398DDA53A8F186D6DFFC9D2D13E86A99C3BBAE

The key thing is that hashes are impossible to predict, which means you can only find the correct hash without knowing the original input through a process of trial and error. In terms of mining, this entails guessing numbers and running the SHA-256 algorithm repeatedly until the correct output is found. The nature of the process means that there are no shortcuts possible – you can only succeed by getting the answer faster than anyone else.

It’s a bit like being given a dice and asked to roll it – under supervision – until you get a specific sequence, like “1,1,1,1,1,1.” The only way to do so is to repeat the process until you succeed, while competing against thousands of others who have the same task. The faster you can repeat it, the more chances you have.

When the CPU Was King

This, of course, is an ideal task for a computer. In the early days of Bitcoin, people realised they could correctly guess the right sequence of numbers by getting a computer to randomly repeat submissions very quickly.

For a while, this was how it was done, but as more people joined the network and more guesses were being offered every second, it would have eventually meant that the rate at which blocks were found started to deviate from its programmed average of one block being found every 10 minutes – a setting that is essential for stability and security.

To counter this, the network had a secret weapon – the difficulty adjustment.

Every 2016 blocks (roughly every two weeks in human terms) the network looks at how quickly blocks are being found compared to the 10-minute average and makes the sequence easier or harder depending on the results.

In other words, if it’s nine minutes, the sequence in our game of dice might be increased to “1,1,1,1,1,1,1” to make it harder to get, but if it’s longer, it might be decreased to “1,1,1,1,1” to make it easier.

Today, as so many people are now part of the network, the difficulty is such that finding a valid hash is like guessing a random number between 0 and a number with 77 digits. This means you need to guess trillions of times a second to even have a chance of getting it right – something that no standard CPU can do.

And while you can still use a home computer to mine, the comparative rate is now so slow against miners using specialist guessing machines called ASICs (Application Specific Integrated Circuits) that you have little chance of winning.

The era of the CPU is well and truly over.