Hi All.

I’m Sam Cole, the founder of KnCMiner. We were a hardware and mining company for a few years based out of Sweden. While our history is now just that — history — I do have some points that many of you may still be interested in.

I have been asked to share my thoughts on the latest debate in the Bitcoin space. This is one I do happen to have first hand knowledge of. We at KnC studied the technology now more commonly known as ASICBoost. The theory is correct. If the process is used to perfection it can reduce Cost of Coin, (or CoC–the main thing any miner is interested in)) However what’s not common knowledge about the technical process is that it lowers not just OPEX (mainly electricity) but it can also lower CAPEX (mainly wafer cost). It does this because the amount of physical space used on the wafers is reduced thus allowing more chips per wafer. This means any mining company taking full advantage of this process would have an advantage of around 30% in Electricity costs and around 15% of Wafer costs.

At first glance that sounds massive, but let;s look at some of the disadvantages first. To take advantage of this processes the pool server can only hand to the chip with ASICboost partially processed work. This means that any chip using ASICboost wont connect to any public pool, it will simply return the vast amount of shares as invalid. “AH,” I hear you say. “But a manufacture could hide this part in the chip and have it turned on and off when the owner of the device is using it against the public pool.”

Lets just think about that for a second. One of the main advantages was space saving on the wafer. If any manufacture was to have two cores in the chip one for ASICBoost and one for standard SHA, then that would mean a near halving of the usable cores. I can tell you all that having such a chip in the bitcoin space that wasted half of its cores would be a joke. iI simply would make no sense at all to any good engineer.

So no company would ever produce a chip that would have a switch in to hide that it;s actually an ASICboost chip.

But what about doing the pre-processing on the device in some sort of on-board process?The amount of pre-processing which has to be done to hand off the work to the ASICBoost chip is large. In fact it’s so large that it would require a lot of processing and a huge amount of VERY fast memory to hold the lookup table. If the pre-processing was done on device, you would not have to be an engineer to see the massive laptop stuck to the side. My 3 year toddler could point it out to you. It really is only of use in the data-center where dedicated servers using GPU’s can create the lookup table.

I also hear people claim to have reverse-engineered the chip not the device to look for the hidden laptop but the chip. This claim is not one that anyone should take as likely to be true. It’s nearly impossible to reverse engineer any 16nm ASIC chip without a huge lab. In one of those chips there are billions of transistors 16nm in size. The microscope needed to even see that they exist isn’t exactly bought at Walmart. Without having access to the code of the chip it would be futile.

That’s not the end of the story. Miners are still producing empty blocks, and people are using that as evidence to suddenly say that it proves the existence of ASICBoost. Empty blocks have been a part of Bitcoin since the very beginning. The miners create them because of one simple reason: hey are worth it.

As a miner, when a new block is announced by one of your competitors you have to stop your data center from processing the old block and start its processing on the new one. After all, finding an old block is 100% useless. BUT stopping the chips so hard and fast is like pulling the plug out of a working computer. You will end up with a higher hardware failure rate and trip a lot of fuses. So you can’t simply STOP working on the old block and wait for the new one. The chips need something to do, and it takes around 30 seconds to validate the block, assemble all of the new transactions, and broadcast it out to the nodes again for processing. So what do you do with those 30 seconds when the block flush comes? You can’t waste them after all. Its simple: you send out the empty block template. This takes only nanoseconds to process and send to your nodes. They will then work on the empty block for the first 29.5 seconds until the block with transactions comes along. So why do some miners have more empty blocks than others. The larger the miner, the larger chance they have of finding a block in the first few moments after a flush. It has nothing to do with ASICboost — its just miners looking after their machines.

Now onto the business of hardforking away ASICBoost. Firstm in case it wasn’t clear, I support well-coordinated hard-forks. The issue is that all hard-forks set precedence. We all know what happened with ETH and the DAO. Is bitcoin going to be forked every time a new invention comes along that gives one miner an advantage over the other? Well I was a major miner for over two years, and I lost out because other people had a lower CoC. I had to say goodbye to a business that I built from the ground up. I’m not calling foul play and throwing my toys out of the pram. It’s called business, and it’s what enables people to invest in bitcoin. The rules are set, like it or not. if developers want to suddenly change the rules because someone may or not be doing something they don’t like and making more money than them, they’re simply being jealous

ASICBoost has a potential to produce 30% lower cost of CoC, but

1, Mining with free energy has the potential to reduce the CoC of coin by 95%.

2, Mining when it’s cold outside can also drop the CoC by 30%

3, Using a lower process node (7nm is next) can reduce it by 50%

All of those above reduce the CoC by more than ASICBoost alone. Improvements can and will be made to make bitcoin the most secure network on the planet. I’m very proud to have done my bit. It is however my firm opinion that anyone who wants to reduce the security which the bitcoin network produces to support their own views should not have a part in the future of bitcoin.

Bitcoin has incentives built into it. They have been there from the very start. They are what allow Bitcoin to scale. Start changing the rules because of jealousy, and we will end up with a mess that no one can trust will be the same in a few years time. That would stop all investment not just in VC-funded business but in stakeholders. Changing the way POW works should scare people more than increasing the 21 million limit.

Miners produce hardware and are in bitcoin to make money. That should be clear to everyone. Developers are in bitcoin to produce code and work on fun projects. When either party step over to the other side, they really need to have good reason,stand up to more scrutiny, and provide more evidence. The idle threats of forking away Bitcoin to change the POW needs to stop. Its not helpful to anyone and makes the people pushing the idea look like children threatening to not invite you to their birthday party.

If it’s still confusing, imagine the following. You have thought of a process that you call TN (ThunderNetwork). It allows millions of bitcoin transactions a second in a sort of layer2 setup. its 30% cheaper than its competition. Transactions happen 30% faster and it doesn’t allow for central hubs at all.

Go you! Sounds good, right?

Well, consider if it was proven to work but then hard-forked out for a more expensive competitor that someone else favored because they didn’t like what you were doing, even though you were playing within the rules. That would be pretty obviously wrong.

So please don’t believe everything you read on the internet. People have hidden agendas. I have nothing to gain by writing this other than if i didn’t I would feel that people were being cheated by only having one side of the story shown to them.

I will end with a statement as to what bitcoin is to me.

Bitcoin is to me the most secure public participation storage of value on the planet. There will only ever be 21 million coins. I will be able to use bitcoin to transfer value across borders in near real time, and its is cheaper than other alternatives.

I do hope that bitcoin can satisfy all of those criteria again soon

Thanks for reading.

Sam