For the benefit of those who could not attend Zcon0, I will try my to best to describe the mining workshop as well as provide tidbits from hallway conversations and informal meetings. Errors and omissions are my own.

Mining Workshop

The workshop took place on the first day of Zcon0, 26th June 2018 and lasted for two hours, facilitated by @daira and myself. I prepared a handout which was provided to attendees. An attendee was also conscripted into being a note taker. You can find the handout [PDF] and notes here [Github].

Throughout the two hours, many talking points already discussed in the ASIC mining thread came up, so for brevity and sanity, I will not rehash them here, but instead focus on pertinent information.

Halfway through the workshop we were advised that all the workshops were being conducted under Chatham house rules. That is, we should try to not attribute quotes to individuals.

We kicked off by discussing why Zcash was ASIC resistant at launch. The point was brought up that ASIC resistance is not a value of Zcash itself, but instead a tool to help achieve mining decentralization. Equihash was chosen to help prevent 51% attacks at launch.

Looking at the mining pool slide on the handout, it was noted that Flypool’s share which has for a long period of time been around 50% or more, had gradually fallen to 20% over the past few weeks, whilst at the same time there had been a rise in unidentified mining addresses with significant hashpower.

Regarding the LiteCoin and SiaCoin hashrate charts, a hardware manufacturer declared that we would not see the same type of explosive growth in Zcash hashrate and that we would instead see a gradual increase. The rationale being that they had changed their distribution model for Zcash and were staggering sales of their ASIC miner.

We discussed an anonymous miner, who has been mining on F2Pool using ~1000 workers, capturing approximately 10% of the entire network hashpower. We could not identify the miner. A point was made that a similar event occurred with Decred, where around the launch of a new hardware miner, around 60% of the reward was being captured by a single miner.

With regards to miner privacy, a suggestion was made that perhaps miners with substantial hashpower should be publicly identified to help against miner collusion. Meanwhile, a hardware manufacturer confirmed that their customer database had indeed been hacked last year (2017).

We discussed potential options and where they might fit on the Zcashd release roadmap, taking into consideration ZcashCo engineering resources and safe delivery of Sapling. The higher the development effort required to update the PoW, the higher the opportunity cost in terms of delivering features on the Zcashd roadmap. The Sapling network upgrade is scheduled for October 2018, so the next available network upgrade for activating a PoW change would be April 2019.

We discussed if a PoW change could be made in a shorter time-frame such as 3 months. Although this might be possible for an option such as tweaking Equihash, some attendees felt that 6 months would give the ecosystem more time to prepare for any change. It was duly noted that the longer it took the Zcash project to make a decision, the more the political landscape would change as deployment of ASIC miners increased.

@zooko described his idea for a dual-PoW which would try to split the mining reward equally between ASICs and GPUs. In future, perhaps the split would also include proof-of-stake. https://imgur.com/rmeSSg0. The point was made that ASICs could be developed for the GPU friendly PoW. Another issue raised was that the ASIC PoW could not be fixed to a specific algorithm, in case of a bug or vulnerability. GPUs were more flexible in this regard. The dual-PoW was renamed and described as a multi-faction PoW during the conference workshop summary.

Regarding the option of status quo, doing nothing and retaining Equihash (200, 9), when asked if this meant forever, the response from attendees was no, since we did not want to exclude the possibility of one day moving to proof-of-stake.

The option of tweaking Equihash parameters to (144, 5) was discussed. It was noted that some other Equihash projects have already or are in the process of moving to this parameter set and thus we could learn from their experience. There was uncertainty as to whether or not any of the current Equihash (200, 9) ASIC miners could be updated to support the new parameters.

We discussed ProgPoW and how it had so far received positive feedback from engineers and researchers in the community, but since it was new to the engineering team, deploying ProgPoW would require more work than tweaking Equihash.

There was uncertainty around the deployment schedule for the multi-faction PoW. @daira and myself expressed concern over the time it might take to properly analyze the security properties since it was a new idea and there was no concrete design to reference, whereas there is an existing body of work related to Equihash and ProgPoW.

We discussed the impact of updating the PoW to be incompatible with existing ASIC miners. Would this increase the risk of forks and network attacks? An analogy was given during the discussion, “Imagine you hire some bodyguards to protect you. What do you think will happen if one day you tell these bodyguards that you’re going to fire them in three months time?”.

A hardware manufacturer said that their miner only used embedded memory on the ASIC itself. When asked if changing the Equihash parameters from (200, 9) to (144, 5) would be incompatible with their hardware, they said yes, and that they would subsequently need to create new hardware.

Another hardware manufacturer also said that changing the parameters would be incompatible with their hardware. However, when asked if a firmware update could handle new parameters, they said yes. When further quizzed to clarify if this was because the hardware had sufficient memory for a parameter change, they said no, but that it might be possible to add more memory.

It was pointed out that even if a PoW change were to deprecate all existing mining hardware, manufacturers would still be highly incentivized to develop new hardware because the dollar value of Zcash’s daily distribution is high. Manufacturers who pre-mine could possibly recover their capital expenditure and achieve their target ROI within just a month or two of mining.

A hardware manufacturer mentioned that they offered a plan, open to anyone, to white-label and license their Equihash ASICs for use in building miners.

We acknowledged that we had not discussed the possibility of hardware partnerships due to time constraints, but that this was something the Zcash Foundation would be looking into, given the ballot proprosal to switch to an open hardware ASIC friendly PoW.

ZcashCo agreed that it should clarify its position to the community before Sapling activated, so that there would be at least 6 months before the next network upgrade when a PoW change could be activated.

Tidbits

On the first day of Zcon0, I noticed a trade banner had been set up by an ASIC manufacturer. Advertising and props were not allowed, so this was eventually removed by conference organizers. https://imgur.com/Wxcrhjy

A day or two after the workshop, I noticed there was a “Buy 1 Get 1 Free” offer for the Innosilicon Zmaster. I don’t remember seeing this at the time I put together the handout. Taking into considertaion this promotion, the Zmaster $/sol/s falls to $0.10, closing the gap with the Antminer Z9 mini at $0.085.

I spoke with a chip designer to discuss the feasibility of an open-source ASIC design as proposed to the Zcash Foundation. General thoughts were that due to economies of scale, we can already see the emergence of an oligopoly of ASIC mining manufacturers, mirroring the rest of the semiconductor industry. Thus, they would be happy to design and sell an open-source ASIC design to the community, but would not want to get involved with the manufacturing of a miner itself. They told me there are only a few foundries in the world, TSMC, GlobalFoundries, UMC/Samsung, who can mass manufacture chips at competitive prices. The ASIC mining manufacturers already have existing relationships with these foundries, so new entrants will be at a disadvantage.

I also discussed PoW algorithms with the chip designer. They told me that optimizing for Equihash had been quite challenging. They acknowledged that changing the Equihash parameters to increase the memory requirements could be an issue. However, they also mentioned that they were developing a novel way to handle all memory-hard algorithms, so that the amount of memory in future would no longer be a roadblock. Memory bandwidth and performance was not disclosed. When asked about ProgPoW, they mentioned that they had looked at it and were currently unsure how they would go about implementing it.

A GPU miner I spoke with emphasized that whatever decision the Zcash project moves forward with, they hope Zcash will stay as one and not fork into multiple chains.

Bitmain are seeking an IPO in Hong Kong, with a valuation around USD $40 billion, a number higher than the $10-$12 billion which has been reported by some news outlets. The IPO was described by one person I spoke with as “Bitmain taking some cash off the table”.

I spoke with a member of the Zcash Foundation who confirmed that the final review of the ProgPoW grant proposal would be independent of the results of the ASIC-related ballot votes.

How the community can move forward (personal opinion)

Zcash launched with Equihash, an ASIC resistance PoW, as a means to achieve mining decentralization in order to improve the security of the blockchain. Diversifying network hashpower helps reduce the risk of miner collusion and 51% attacks. A beneficial side-effect is that it also helps to better distribute coins across a broad base of miners.

Fair mining is a safeguard against any one group with access to a certain technology, from holding such a significant advantage over other groups, as to prevent them from participating. Fair mining combined with a low entry barrier to mining, such as the use of a home computer, can help promote global participation and adoption of a cryptocurrency.

With Zcash, the two groups are general-purpose commodity hardware e.g. a PC with a graphics card, and single-purpose specialized hardware e.g. ASIC miner. In order to achieve fair mining, the PoW algorithm should be ASIC resistant, to reduce the advantage which specialized hardware might hold over general-purpose hardware.

Let’s compare the performance of specialized hardware against a popular graphics card, the Nvidia 1080 Ti:

sha256 (Bitcoin)

Antminer S9, 14 Th/s @ 1350 Watts = 10182 Mh/W/s

Nvidia 1080 Ti, 980 Mh/s @ 250 Watts = 3.92 Mh/W/s

ASIC advantage ~ 2600x

Equihash (200,9) (Zcash)

Innosilicon Zmaster, 50000 Sol/s @ 620 Watts, 80.65 Sol/W/s

Nvidia 1080 Ti, 720 Sol/s @ 250 Watts = 2.88 Sol/W/s

ASIC advantage ~ 28x

Ethash (Ethereum)

Antminer E3, 180 MH/s @ 800 Watts, 0.225 Mh/W/s

Nvidia 1080 Ti, 31 Mh/s @ 250 Watts, 0.124 Mh/W/s

ASIC advantage ~ 1.8x

Design goals are fair mining and ASIC resistance [LeastAuthority analysis]

ProgPoW

Equihash (144, 5)

Requires at least 5x the memory of Equihash (200,9) for initial list size [SolarDiz]

Peak memory usage > 2 GiB [BTG]

Considered expensive and impractical to build a single-chip solver with GiB of memory

By reducing the ASIC advantage to a minimum, GPUs and ASICs can co-exist. Indeed, a single PoW highly tuned to fair mining, can achieve the end goal of the multi-faction PoW idea, without the uncertainty and complexity of deploying multiple independent PoWs to achieve equilibrium, but instead by letting a competitive market determine the share of the block reward.

I conclude that switching to Equihash (144,5) whilst researching ProgPoW, or switching straight to ProgPow (or even Ethash) are options which will best align stakeholders in maintaining a single Zcash chain, as well as demonstrating a good faith effort by the Zcash project to support fair mining.

GPU miners who have supported the project since inception can still participate

Manufacturers can continue to innovate and build competitive hardware for those who prefer ASIC mining

Professional mining operations can deploy a portfolio of GPUs (flexible) and ASICs (brittle) to suit their business requirements

Some might consider updating the PoW as a distraction on the path towards Proof-of-Stake, but fair mining is necessary for fair distribution of coins before a time when mining becomes staking.