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History of Siacoin Mining

With the recent Sia Miners, by ePIC Blockchain and a secret group coming onto the market we wanted to do a quick recap of the industry. Sia mining has been one of the most eventful in crypto mining, with secret ASICs & FPGAs, hard forks, project manufactured ASICs, etc…

For those unfamiliar with the Sia project we recommend checking out this blog we made. A lot has happened since then such as their launch of Skynet.

Foundation

Sia started in 2014, one of the real OGs in the space. At the time you could mine with a CPU & GPU.

Up until 2018 Sia was dominated by a mining pool, SiaMining. Enter Luxor. We fundamentally believed in the Sia project and wanted to help the project by decentralization the hashrate. So we launched our mining pool.

In late 2017 the Network Hashrate was 300 TH and the pool breakdown was the following:

Siacoin Market Share Oct-2017

Crowdfunded ASICs — Obelisk

In June 2017, Sia announced that they would start producing ASICs to mine their own coin. This was quite a controversial move given that no other project had also manufactured a rig to mine the token.

In the announcement post, David, CEO of Sia, laid out the reasons why ASIC resistance was futile and why it would be safest if they made them. He also highlighted the centralization risk of Bitmain in the Bitcoin mining ecosystem.

Creating ASICs is incredibly capital intensive. In order to fund this project, Obelisk began taking pre-orders from the community. With the crowdfunded money they began development of Siacoin miners.

The mining industry was very different in 2017, the people that bought the ASICs were mostly the same people hanging out in Sia’s github and discord, contributing to the project and taking part in the community.

Bitmain Releases Secret ASICs

On January 16, 2018, the Sia community received surprising news: Bitmain announced a Blake2b ASIC miner. It turned out they had been working on a secret ASIC for months that immediately disrupted a multi-million dollar community funded project.

Most of Sia’s main contributors put forth a plan to hardfork the Bitmain machines off of the network, leaving the Obelisks on. It was backed by the majority of people actually engaged with the project.

The core Sia team decided against this action and let the new ASICs dominate the market and the future economics of the Obelisks slip.

For the Sia network, an important line was crossed when secret ASIC projects superseded a public project that had substantial community investment. Sia’s community started to disappear, contributors lost interest, people left the discord, everyone lost focus on the core technology.

A few months passed by with Innosilicon adding a new miner to the network.

Sia Implement Proof-of-Work Reset

In mid October, 2018, David posted another announcement to his blog. The Sia core team had decided to reset the Sia Proof-of-Work function to brick the Bitmain and Innosilicon hardware. This reset allowed Obelisk ASICs to keep mining on the Sia network. This revoked the Innosilicon monopoly and instated Obelisk as the incumbent ASIC monopoly.

Bitmain & Innosilicon owners were distraught. They had invested thousands of dollars into hardware that was now worthless. Obelisk miners were overjoyed, prior to the decision none of their machines were profitable. But with a swift reset of the function they became the most profitable mining rig in all of crypto.

For the next year Obelisk miners enjoyed a monopoly over the network.

Life After Obelisk

During the hardfork announcement, David wrote out that he belived in the long term, the Obelisks would be replaced by a 16nm chip from another manufacturer. The Obelisk monopoly over Sia mining was a temporary solution to what was seen as an attack on the community.

Due to Sia’s decreasing block reward and negative price action this turned out to be slower than anticipated. Also having been burned once, Bitmain and Innosilicon were not itching to get back into an ecosystem with little certainty.

Secret Chinese FPGAs

Obelisk released a few batches of machines for a total of around 3,500TH of hashrate. In Nov-2019 we started seeing an uptick in hashrate going to the Chinese mining pools F2Pool and DxPool. We found it quite odd since we did not receive a single new miner nor did any of our existing miners know of any new machines. We determined that new FPGAs were hitting the market in China. A repeat of history with a manufacturer, secretly building and releasing a machine without any interaction with the actual project’s community.

These new FPGAs almost doubled the network hashrate, heading all the way up to around 6,000TH.

Sia Mining Pools Evolution

Obelisk sold between their SC1 and SC1 Immersion about 3.5 PH/s of mining equipment. These miners started shipping almost 2 years ago and they are showing their age. By talking with the community and looking at pool share data we estimated that about ~30% (around 1 PH/s) of these miners are no longer mining either due to breaking or because it is no longer profitable to run them with residential rates.

Hashrate Distribution as of May 2020

From the original 3.5 PH/s of Obelisk hashrate only 2.5 PH/s keep securing the network.

Since late 2019 we saw new pools joining the network. Interestingly, these pools (DxPool and F2Pool) were not getting hashrate from the existing pools (Luxor, SiaMining and Hyperpool). Instead, both Chinese pools were getting new non-Obelisk related hashrate.

In early June-2019 we saw another ~3–3.5 PH come on to the market out of nowhere. No public machine was launched. The network hashrate climbed all the way up to 9 PH. Nowadays, hashrate fluctuates between 8.5 and 9 PH/s due to drops in Obelisk hashrate.

ePIC Miners & Sia Hashrate Outlook

Enter ePIC Blockchain, a Canadian ASIC firm…..

ePIC Blockchain will be shipping between 1,000 and 2,000 units of their 2.2 TH/s miners. This will represent between 2.25 and 4.5 additional PH/s to the network.

Given that Obelisk SC1’s are breaking-even at 7 cents USD all-in power and there is a lot of hashrate coming online, we estimate that most of the remaining Obelisk hashrate will be forced to shut down. Only the miners with access to the lowest electricity rates will be able to operate. This will reduce the network hashrate by about 2 PH/s which will be rapidly filled by the ePIC Blokchain miners.

This is our prediction on the hashrate distribution for Sia within the next couple of months:

Already a miner or interested in getting started?

Luxor is building infrastructure to support the next generation of digital assets. Learn more about us 👉 here.

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