If Bitmain opposes Segwit because of ASICBoost, why did they agree to the Hong Kong Roundtable? (Activating Segwit before a block size increase)
Translated from the original essay by Jiang Zhuo’er
I’d like to address the article and associated chat transcript published yesterday by WhalePanda, Why Jihan and Jiang want to block Segwit at all cost.
- The source of the chat log
The chat transcripts included in WhalePanda’s article come from a Wechat group that is used by Chinese Litecoin pools and Litecoin developers to communicate with one another. There are 15 people in the group. WhalePanda selectively chose a screenshot to create the appearance that this is some kind of secret society.
2. Litecoin’s own Segwit debate
Our goals have always been explicitly clear: according to the Hong Kong agreement, everyone agreed to first activate Segwit, and one year after that to initiate a hard fork to a 2MB block size limit.
But Core did not uphold their end of the Hong Kong agreement. After it became clear that Segwit would not activate on Bitcoin, the scaling debate spilled over into the Litecoin community, and there was a push to first activate Segwit there as an example for the Bitcoin community.
As stated in my last article, Why I am Still Not Voting for Segwit:
While the cryptocurrency community’s attention was focused on the Bitcoin scaling debate, a mysterious new Litecoin developer, shaolinfry, appeared on the scene. Shaolinfry appears to be deeply familiar with Segwit, and in a short amount of time helped the rest of the LTC development team to finish writing their Segwit implementation. Once he had secured the title of “Litecoin developer,” he switched his focus to Bitcoin, proposing the “user activated soft fork” (UASF). After launching his campaign for UASF on Bitcoin, he did the same for Litecoin and piggybacked on the reputation of Charlie Lee to push for the UASF there, too.
Our wishes have always been simple and clear-cut: Segwit and a block size increase, as agreed to in the Hong Kong Roundtable agreement. Fortunately there was not the same opposition towards increasing the block size among the Litecoin community, and we were able to come to a consensus much more peacefully: Litecoin Global Roundtable Resolution. This agreement was closely modeled on Bitcoin’s Hong Kong agreement, with Segwit activation first followed by a block size increase. This fully demonstrates that the broader community is not opposed to the Hong Kong agreement, so I do not understand why Bitcoin Core has been consistently against the agreement that they already signed.
3. The “far greater cost” mentioned in the transcript
This question was answered in my very next message in the chat log:
This is going to have a direct impact on Bitcoin’s adoption of Segwit soft-fork. Very clear precedence […]
Both sides of the debate have been represented in the discussion of Segwit on Litecoin: Core dispatched shaolinfry, and the big block camp organized the “Litecoin Global Roundtable.” Fortunately, without Bitcoin Core’s stubborn opposition to a block size increase, the Litecoin community was able to easily come to an agreement on their own version of Bitcoin’s Hong Kong agreement.
WhalePanda’s article completely ignored my own explanation, and makes the claim (without any evidence to support it) that the “greater cost” I was referring to was ASICBoost. If this was the case, then the Litecoin version of the Hong Kong agreement that I have agreed to should have invalidated the “greater cost” argument. However, the “greater cost” I referred to was clearly about the implications for the larger scaling debate, and not about ASICBoost, as WhalePanda concluded.
4. The “Bitmain opposes Segwit because of ASICBoost” rumor
This rumor is easily refuted by asking: If Bitmain only opposes Segwit because of ASICBoost, then why did they agree in Hong Kong to activate Segwit before ever activating a block size increase?
I will address the technical arguments and the logic below.
ASICBoost only works with mining pool and miner collaboration.
It is easy to demonstrate that Bitmain’s miners do not have the ASICBoost feature enabled. Anyone can take any Antminer machine, point it to any pool of their choosing, or even on Core’s Segwit testnet, and see for themselves that the hashrate and power efficiency are the same, no matter where the machine is pointed. Bitmain has derived no sales benefit from ASICBoost.
ASICBoost’s theoretical and actual cost savings are not the same.
ASICBoost can theoretically deliver a 30% savings in energy consumption for the person using it. Practically, it would be more like 20%. Most people hearing this have significantly misunderstood the implications. They think that this would increase a miner’s total advantage by 20 to 30 percent. If you take the current bitcoin price, and assume a figure of 4 cents per kWh as electricity cost, then an S9 miner will cost 15.36% of its total revenue on electricity. Making the miner 20% more efficient will bring power costs down to 12.29%, delivering a total advantage of only 3%.
Do you feel deceived? Weren’t you told that Bitmain was getting a 30% advantage? How can it actually be only 3%?
Here we can dispel another myth: that Bitmain must be using ASICBoost on their own machines pointed to their own mining pool. Bitmain’s operations are not like those of a top-secret military project, they are like those of any other business enterprise. Anything the company does will involve dozens if not hundreds of employees. Every mining farm would have numerous employees who would certainly be able to figure out for themselves that the S9 machines they are running are only using 1kW instead of the expected 1.2kW. The employees would easily recognize that the 3 megawatt mining facility they work in should be able to handle 2500 S9 machines, but somehow they manage to have 3000 of them.
Bitmain obviously cannot pay their mining farm employees the millions of RMB in salary that would be required to keep quiet about such a controversial secret. How could they possibly keep such activity so well hidden from the public? Would so much trouble, secrecy, risk, and additional cost really be worth it for a mere 3% gain from their mining operations?
Bitmain supports bcoin’s EXTBLK proposal, which is also incompatible with ASICBoost
Even without ASICBoost, Bitmain’s hardware would still have the lowest power consumption and greatest sales volume of any other Bitcoin mining hardware manufacturer.
For years Bitmain has been vocally in favor of increasing the block size limit. They signed the Hong Kong agreement. They support the ToTheMoon extension block proposal. Nothing about their actions is inconsistent with this. In fact it is Bitcoin Core who have been vocally opposed to both of these things, going so far as to renege on the agreement they signed in Hong Kong. I sincerely wish that Core would give some kind of clear-cut explanation for why they do not support the Hong Kong agreement, even as the Litecoin community has shown how easy it was for everyone to come to an agreement under the exact same terms. Core providing their reasons for opposing the Hong Kong agreement would go a long way towards helping the community move forward together.
Of course as long as Core is unwilling to do so, then we are left with no choice but to look elsewhere. The EXTBLK proposal is enough to satisfy everyone’s requirements: It’s a block size increase, it activates Segwit (BIP141), it enables Lightning Network and Rootstock, and it deploys as a soft fork.
If you do not like the idea of a coin split caused by Core’s “UASF” (or DASF, Developer Activated Soft Fork), if you want more on-chain capacity, if you want Lightning Network and Rootstock, then please join me in supporting EXTBLK.