This document discusses the growth and impact of cryptocurrencies, highlighting their decentralized nature and the disruption they bring to traditional banking systems. It covers the fundamentals of cryptocurrencies, their security protocols, blockchain technology, and the evolution of financial transactions, emphasizing the importance of decentralization and distributed consensus. Additionally, it examines cryptographic techniques used in transaction security and the emergence of multi-signature wallets as a method for enhanced protection.

1. Crypto-Currency Mining
Computer Architectures
Hugo Rodrigues
Silicon Valley, USA
hugo.rodrigues@gmail.com
Abstract—Crypto-currencies usage is growing in a more
connected world. The traditional banking industry is being
disrupted by a decentralized network, rich in computing
resources and connectivity.
Keywords—Computing; Hardware; Hash; Mining; GPU; CPU;
Bitcoin; Blockchain; Consensus; Ledger; Mathematical; Energy;
I. INTRODUCTION
Internet and computing development along time opened a
myriad of opportunities to change the way society lives
and interacts. This paper presents a new platform
focused on disrupting financial markets, more
precisely the centenary commonly accepted laws
and rules regarding currency utilization across the
world. Focusing on the strategy and tactics of
arising technology improvements, this work will create
awareness about the industry and gather information to
lead to a viable way of joining the race at the current state.
II. CRYPTO-CURRENCIES
A. Fundamentals
Bitcoin became the first decentralized cryptocurrency in
2009[1]. Since then, numerous cryptocurrencies have been
created. These are frequently called altcoins, as a blend of
bitcoin alternative. Bitcoin and its derivatives use decentralized
control as opposed to centralized electronic money/centralized
banking systems. The decentralized control is related to the use
of bitcoin's blockchain transaction database in the role of a
distributed ledger[2].
Decentralized cryptocurrency is produced by the entire
cryptocurrency system collectively, at a rate which is defined
when the system is created and which is publicly known. In
centralized banking and economic systems such as the Federal
Reserve System, corporate boards or governments control the
supply of currency by printing units of fiat money or
demanding additions to digital banking ledgers. In case of
decentralized cryptocurrency, companies or governments
cannot produce new units, and have not so far provided
backing for other firms, banks or corporate entities which hold
asset value measured in it. The underlying technical system
upon which decentralized cryptocurrencies are based was
created by the group or individual known as Satoshi Nakamoto
[3].
As of March 2015, hundreds of cryptocurrency
specifications exist; most are similar to and derived from the
first fully implemented decentralized cryptocurrency, bitcoin.
Within cryptocurrency systems the safety, integrity and
balance of ledgers is maintained by a community of mutually
distrustful parties referred to as miners: members of the general
public using their computers to help validate and timestamp
transactions adding them to the ledger in accordance with a
particular timestamping scheme.
The security of cryptocurrency ledgers is based on the
assumption that the majority of miners are honestly trying to
maintain the ledger, having financial incentive to do so.
Most cryptocurrencies are designed to gradually decrease
production of currency, placing an ultimate cap on the total
amount of currency that will ever be in circulation, mimicking
precious metals. Compared with ordinary currencies held by
financial institutions or kept as cash on hand, cryptocurrencies
are less susceptible to seizure by law enforcement. Existing
cryptocurrencies are all pseudo-anonymous, though additions
such as Zerocoin and its distributed laundry feature have been
suggested, which would allow for true anonymity [4].
B. Industry overview
Today, there are over 700[5] digital currencies in existence.
Entry into the marketplace is undertaken by so many due to the
low cost of entry and opportunity for profit making through the
creation of coins.
Network effects play an important role in analyzing the
development of cryptocurrency markets. Since any given
currency gains use value as the number of its users increase,
popularity of a certain currency is integral in that currency's
success. Economists postulate that large competitors (such as
the most popular cryptocurrency: bitcoin) will attract more new
users due to the size of their growing exchange pools and as a
result will effectively dominate the market.
A study entitled "Competition in the Cryptocurrency
Market"[6] conducted by members of the NET Institute over
three periods between 2013 and 2014 charts the analysis of
changes in price data over time in regards to budding
cryptocurrency markets. It analyzes bitcoin and other similar
cryptocurrencies referred to as "altcoins". These include
Litecoin, Peercoin, and Namecoin; cryptocurrencies listed in
order by which account for the largest percentages of digital
market capitalization behind bitcoin (which accounts for 90%).

2. The NET study found that of these four, all were early
entrants into the digital currency marketplace, designed to
correct perceived bitcoin's flaws and amass popularity in an
infant market whose popularity was rapidly growing. This
study introduced the question of the role of demand in
cryptocurrency markets, and what impetus demand has in
relation to emerging coins. The study dealt namely with two
common forces of demand that shaped the market:
reinforcement and substitution effects. The reinforcement
effect expects demand to increase based on usership, and that
the cryptocurrency that could gain the most buyers and sellers
would win out above all others, thus dominating the
marketplace. The substitution effect implies that as the price of
bitcoins rose with increased usership, people would begin to
look for other options in the cryptocurrency market, thus
discouraging any one coin from gaining complete dominance.
Fig. 1. Crypto-Currency Market Capitalizations from coinchoose.com
C. Legacy banking technology
Today, the banking system is suported on a personal trust
relationship between customers and banks. Currently
transactions are complex due to a virtual technology bubble
that constraints each bank’s technology. Inter-relations among
banks are therefore supported by standard procedures and rules
that are overviwed by third party entities.
Using as an example a bank deposit and payment, the
transaction flow is as:
Fig. 2. Bank deposit and payments example
Bank A’s systems record the balances for Bank A’s
customers, Bank B’s systems record the balances for Bank B’s
customers and so on. Banking “facts” are usually recorded by
at least two different entities and an expensive process of
reconciliation is needed to make sure each party’s view of the
world is the same.
III. CURRENCY AND TECHNOLOGY
Currency is an enormous business with trillions of dollars
crossing borders each year, and historically an extremely
inefficient and opaque one. Those conditions have made the
business ripe for disruption by technology.
A. Blockchain
Blockchain technology is best known for being the magic
behind Bitcoin, but there are scores of other industries that are
benefiting from this revolutionary technology. Before we take
a look at the industries and companies innovating in these
spaces, let’s break down this technology so we are all on the
same page.
Blockchain technology is a big fancy word that describes
the act of recording events in a database. The database itself is
referred to as the blockchain. Once data is added to the
blockchain, it cannot be removed from the database or altered
in any way. The blockchain therefore contains a verifiable
record of history.
The technology is fairly simple yet very profound. You
might already be thinking of a business idea that could utilize
such a system, and many visionaries are in the same boat.
Steve Wozniak, co-founder of Apple, has joined a blockchain
firm. But before you go start a round of fundraising for your
own blockchain-based company check out the disruption the
blockchain is creating in these industries.
B. Shared ledger
Bitcoin blockchain is a network of public “nodes” that
function as individual ledgers, each of which maintains a full
record of all of the transactions ever executed on the network.
Unlike traditional, centralized ledger systems that rely on a
single trusted party to maintain an accurate database of
transactions, blockchain transaction authentication is achieved
by arrangement of data “blocks” and “chains” that are
validated through the consensus of all of the nodes on the
network. The processing protocol and the network of nodes
create the “strength in numbers” that makes blockchain
processing appealing.
In its 2016 Annual Report, the United States Treasury
Department's Financial Stability Oversight Council (FSOC)[7],
acknowledged the potential innovation and disruption
blockchain (also referred to as “distributed ledger” or “shared
ledger”) technology could impose on the financial system.
According to the report, “Distributed ledger systems may
mitigate risk and improve resilience in financial networks in a
number of ways. Because distributed ledgers can be designed
to be broadly accessible and verifiable, they could provide a
valuable mechanism for enhancing market transparency. By
eliminating the need for some transactions to flow through

3. trusted third parties, distributed ledgers could reduce
concentrated risk exposures to those firms and infrastructures.
In addition, by improving the speed and accuracy of settlement
systems, distributed ledger systems could reduce the
counterparty and operational risks which arise when financial
assets are exchanged.”
C. Ledger transaction
Transactions typically involve various participants like
buyers, sellers, and intermediaries (such as banks, auditors, or
notaries) whose business agreements and contracts are
recorded in business ledgers. A business typically uses multiple
ledgers to keep track of asset ownership and asset transfers
between participants in its various lines of businesses. Ledgers
are the systems of record (SORs) for a business's economic
activities and interests.
Fig. 3. Typical business ledger transactions
D. Network evolution
A centralized ledger network controls the flow of
information and operational control from a single central point.
A distributed ledger network [8] spreads computational
workload across multiple nodes in a network. A decentralized
ledger network allows nodes to make independent processing
and computational decisions irrespective of what other peer
nodes may decide.
Fig. 4. The 3 network topologies for business ledgers
It is not unusual for distributed systems to also be
decentralized (as is the case for a bitcoin network). What is
unique about a blockchain network is its decentralized
consensus mechanism. All validating nodes in the network run
the same (agreed-upon) consensus algorithm against the same
transactions, and thus validate (or invalidate) each transaction.
Valid transactions are written to the ledger.
E. Distributed consensus
The main hypothesis is that the blockchain establishes a
system of creating a distributed consensus in the digital online
world. This allows participating entities to know for certain
that a digital event happened by creating an irrefutable record
in a public ledger. It opens the door for developing a
democratic open and scalable digital economy from a
centralized one. There are tremendous opportunities in this
disruptive technology and revolution in this space has just
begun.
IV. CRYPTOGRAPHY
A. Hashing functions
Creation of a bit string (digest) representing integrity of
content other string. Changing one character in the original
string results in complete different has. Changing multiple
characters in original string that results in the same hash
requireslarge amount of processing power for a long period of
time.
B. Public & private keys
Two large prime numbers that have a mathematical relation
with each other. A string encrypted with one key can only be
decrypted with the other. One key needs to be kept private, the
other one can be made publicly known so that it can be used by
other parties to exchange data with you in a secure manner.
Private keys need to be stored that it is accessible only for
owner. This can be done on personal devices (PC, smart card,
USB stick, phone, …) or remotely with a service provider
(cold and hot wallets).
C. Encryption
Scrambling of clear text with the public key of the recipient
so that the holder of that private key is the only one that can
descramble the message. This is used to guarantee the
confidentiality of the data exchanged.
Wallet encryption uses AES-256-CBC to encrypt only the
private keys that are held in a wallet. The keys are encrypted
with a master key which is entirely random. This master key is
then encrypted with AES-256-CBC with a key derived from
the passphrase using SHA-512 and OpenSSL's
EVP_BytesToKey and a dynamic number of rounds
determined by the speed of the machine which does the initial
encryption (and is updated based on the speed of a computer
which does a subsequent passphrase change). Although the
underlying code supports multiple encrypted copies of the
same master key (and thus multiple passphrases) the client
does not yet have a method to add additional passphrases.
At runtime, the client loads the wallet as it normally would,
however the keystore stores the keys in encrypted form. When
the passphrase is required (to top up keypool or send coins) it
will either be queried by a GUI prompt, or must first be entered
with the walletpassphrase RPC command. This will change the
wallet to "unlocked" state where the unencrypted master key is
stored in memory (in the case of GUI, only for long enough to
complete the requested operation, in RPC, for as long as is
specified by the second parameter to walletpassphrase). The
wallet is then locked (or can be manually locked using the
walletlock RPC command) and the unencrypted master key is
removed from memory.

4. When the wallet is locked, calls to sendtoaddress,
sendfrom, sendmany, and keypoolrefill will return Error -13:
"Error: Please enter the wallet passphrase with
walletpassphrase first."
When the wallet is unlocked, calls to walletpassphrase will
fail. The moment a wallet is encrypted, a passphrase is required
to top up the keypool, thus, if the passphrase is rarely entered,
it is possible that keypool might run out. In this case, the
default key will be used as the target for payouts for mining,
and calls to getnewaddress and getaccount address will return
an error. In order to prevent such cases, the keypool is
automatically refilled when walletpassphrase is called with a
correct passphrase and when topupkeypool is called (while the
wallet is unlocked). Note that the keypool continues to be
topped up on various occasions when a new key from pool is
used and the wallet is unlocked (or unencrypted).
D. Digital signature
Encryption of hash representing of original data to be
secured with the private key of the sender (called digital
signature) that is decrypted by the recipient with the public of
the sender. If the decrypted hash matches the content of the
original data it implies two things. First, the encryption can
only be performed with the private key corresponding with
public key and secondly, the original data can’t be tampered
with.
V. MULTI-SIGNATURE ADDRESSES
A multi-signature address is an address that is associated
with more than one ECDSA private key. The simplest type is
an m-of-n address - it is associated with n private keys, and
sending bitcoins from this address requires signatures from at
least m keys. A multi-signature transaction is one that sends
funds from a multi-signature address.
A. Aplication
The primary use case is to greatly increase the difficulty of
stealing the coins. With a 2-of-2 address, you can keep the two
keys on separate machines, and then theft will require
compromising both, which is very difficult - especially if the
machines are as different as possible (e.g., one pc and one
dedicated device, or two hosted machines with a different host
and OS).
It can also be used for redundancy to protect against loss -
with a 2-of-3 address, not only does theft require obtaining 2
different keys, but you can still use the coins if you forget any
single key. This allows for more flexible options than just
backups.
It can also be used for more advanced scenarios such as an
address shared by multiple people, where a majority vote is
required to use the funds.
Multi-signature transactions are often conflated with BIP
16 and 17. In fact they are not directly related. Multi-signature
transactions have been supported by the protocol for a long
time; but implementing them would require a special output
script.
VI. WALLETS
Bitcoin 1.0 can be described as a simple send-receive
system. In a Bitcoin account, there is a set of 34-character
Bitcoin addresses, similar to:
MMC: MGM8jcq6F8gN7vCt6eZaTBQA6PoeA94zke
Quark: QitSWH9ZVZaadyVzRbLM1ZuKnJxrjgLKYA
LiteCoin: LVtAdoLmgJgcZaqUXCHYQxnEqAZwbYCZeX
EarthCoin: eRi2NVviQoDDFVunG7pGbQ2sYSWsLAcTJP
DigiByte: DELB1n6z6R5JJdvwQLkqwqizsSDZYE4gGY
are used to receive bitcoins, and each address has an associated
64-character private key, in this case:
c4bbcb1fbec99d65bf59d85c8cb62ee2db963f0fe106f483d9a
fa73bd4e39a8a
can be used to spend bitcoins that are sent to the address.
Private keys need to be kept safe and only accessed when you
want to sign a transaction, and Bitcoin addresses can be freely
handed out to the world. And that's how Bitcoin multi-sig
wallets are secured. If you can keep the single private key safe,
everything's fine; if you lose it the funds are gone, and if
someone else gains access to it your funds are gone too -
essentially, the exact same security model that we have with
physical cash, except a thousand times more slippery. The
technology referred as Bitcoin 1.5, is a concept that was first
pioneered and formalized into the standard Bitcoin protocol in
2011 and 2012: multi signature transactions.
In a traditional Bitcoin account, as described above, you
have Bitcoin addresses, where each address has one associated
private key that grants the keyholder full control over the
funds. With bitcoin multi signature addresses, you can have a
Bitcoin address with three associated private keys, such that
you need any two of them to spend the funds. Theoretically,
you can have one-of-three, five-of-five, or six-of-eleven
addresses too; it just happens that two-of-three is the most
useful combination.
A. Generation of Multi Signature
A 2-of-3 MULTI-SIG address can be created by following
these steps:
Gather (or generate) 3 bitcoin addresses, on whichever
machines will be participating, using getnewaddress or
getaccountaddress RPC commands.
Get their public keys using the validateaddress RPC
command 3 times.
Then, create a 2-of-3 multi-sig address using
addmultisigaddress; e.g.
bitcoind addmultisigaddress 2
'["044322868cb17d64dcc22185ae2d4493111d73244c3668f8a
c79ecc79c0ba8d30a6756d0fa20157

5. 709af3281cc721c7f53321a8cabda29b77900b7e4fe0174b114",
"..second pubkey..","..third pubkey.."]’
addmultisigaddress returns the multi signature address
Public keys are raw hexadecimal and don't contain
checksums like bitcoin addresses do.
Send funds into that 2-of-3 transaction using the normal
sendtoaddress / sendmany RPC commands.
B. Choose Your Own Arbitrator
The first major use case of multi-sig protocol is consumer
protection.
When making a payment with a credit card, if a claim
needs to be put later without getting the product it is possible to
request a "chargeback". The merchant can either accept the
chargeback, sending the funds back (this is what happens by
default), or contest it, starting an arbitration process where the
credit card company determines who argues for the better case.
With Bitcoin (or rather, Bitcoin 1.0), transactions are final.
As soon as a product is paid, funds are send. And in Bitcoin
1.0, this is a good procedure; although it harms consumers to
not have chargebacks, we would argue, it helps merchants
more, and in the long term this would lead to merchants
lowering their prices and benefitting everyone. In some
industries, this argument is very correct; in others, however, it's
not. Bitcoin 1.5 instead providing a real solution to the
problem: escrow. Multi signature escrow works as follows:
When Alice wants to send $20 to Bob in exchange for a
product, Alice first picks a mutually trusted arbitrator, whom
we'll call Martin, and sends the $20 to a multi-sig between
Alice, Martin and Bob. Bob sees that the payment was made,
and confirms the order and ships the product. When Alice
receives the product, Alice finalizes the transaction by creating
a transaction sending the $20 from the multi-sig to Bob,
signing it, and passing it to Bob. Bob then signs the
transaction, and publishes it with the required two signatures.
Alternatively, Bob might choose not to send the product, in
which case he creates and signs a refund transaction sending
$20 to Alice, and sends it to Alice so that Alice can sign and
publish it. Now, what happens if Bob claims to have sent the
product and Alice refuses to release the funds? Then, either
Alice or Bob contact Martin, and Martin decides whether Alice
or Bob has the better case.
Whichever party Martin decides in favor of, he produces a
transaction sending $1 to himself and $19 to them (or some
other percentage fee), and sends it to that party to provide the
second signature and publish in order to receive the funds.
Currently, the site pioneering this type of approach
bitrated.com; the interface at Bitrated is intuitive enough for
manual transactions such as contracts and employment
agreements, but it is far from ideal for consumer to merchant
payments. Ideally, marketplaces and payment processors like
BitPay would integrate multi-sig technology directly into their
payment platform, and Bitcoin multi-sig wallets would include
an easy interface for finalizing transactions; if done correctly,
the experience can be exactly as seamless as Bitpay or Paypal
are today. So all in all, given that this multi-sig approach does
require intermediaries who will charge fees, how is it better
than Paypal?
First of all, it's voluntary. In certain circumstances, such as
when you are buying from a large reputable corporation or
when you're sending money to an employee or contractor you
have an established relationship with and trust, intermediaries
are unnecessary; plain old A to B sends work just fine. Sending
to charities is a similar circumstance, because charities don't
really owe you anything when you send them money in any
case. Second, the system is modular. Sometimes, the ideal
arbitrator for a particular transaction is a specialized entity that
can do that particular job much better; for example, if you're
selling virtual goods the ideal arbitrator would be the operator
of the platform the virtual goods are on, since they can very
quickly determine whether a given virtual good has been sent.
At other times, you might want a generic arbitrator, but you're
in an industry where mainstream providers are too squeamish
to handle the task. And, of course, at other times a generic
institution similar to Paypal is indeed the best approach. With
bitcoin multi-sig wallets, you can easily choose a different
arbitrator with every single transaction, and you only pay when
you actually use arbitration; transactions that go through as
planned are 0% fee.
The company leading the charge with Bitcoin multi-sig
wallet technology is Armory [9]. They already innovated the
entire concept of cold storage and are the leading provider of
enterprise grade Bitcoin security software. Now they released
Lockboxes. With Armory you are in complete control of the
creation and storage of all Bitcoin private keys. Additionally,
each key in the bitcoin multi-sig wallet can be protected with
its own security profile.
C. Multi signature transaction wallets
Another company bringing Bitcoin 1.5 technology to the
world at large is CryptoCorp [10], and the core offering is
something that a large number of people have been trying to
implement and push forward for nearly a year: multi signature
transaction wallets. The way that a multi signature bitcoin
wallet works is simple. Instead of the Bitcoin address having
one private key, it has three. One private key is stored semi-
securely, just as in a traditional Bitcoin wallet. The second key
the user is instructed to store safely (e.g. in a safety deposit
box), and the third key is stored on the server.
Normally, when a wallet owner wants to spend funds, the
wallet would make a transaction and sign it locally, and then it
would pass the transaction on to the server. In the simplest
implementation, the server would then require you to input a
code from the Google Authenticator app on your smartphone
in order to provide a second verification that it is indeed you
who wants to send the funds, and upon successful verification
it would then sign the transaction and broadcast the transaction
with two signatures to the network.
When picking this basic idea, and applying two major
improvements it is possible to excel the outcome. First of all, a
new technology is being introducing that is referred as
"hierarchical deterministic multi signature" (HDM) wallets;
that is, instead of having three private keys, there are three
deterministic wallets (essentially, seeds from which a

6. potentially infinite number of private keys can be generated).
Address 0 of the HDM wallet is made by combining public key
0 from the first seed, public key 0 from the second seed and
public key 0 from the third seed, and so on for addresses 1, 2,
etc. This allows wallets to have multiple addresses for privacy
just like Bitcoin wallets can, and the multi signature signing
can still be performed just as before.
Second, and more importantly, more than just doing two-
factor authentication, every time a server receives a transaction
to co-sign, it will run the transaction through a complex
machine-learning fraud-detection model taking into account
the amount, the frequency and amount of prior transactions and
the identity of the recipient, and will assign the transaction a
risk score. If the risk score is low, the server will simply co-
sign the transaction without asking. If the risk score is higher,
the server can ask for a standard two-factor confirmation via
Google Authenticator or by sending a code as a text message to
the user's phone number. Email confirmation is another option.
At very high risk levels, the server would flag the transaction
for manual review, and an agent may even make a phone call
or require KYC-style verification. What is important to note is
that none of this is new; such risk metric schemes have been in
use by mainstream banks and financial institutions for over a
decade, and they have existed in low-tech form in the form of
withdrawal limits for over a century.
Multi signature transaction wallets marry these benefits of
the traditional financial system with the efficiency, and trust-
free nature, of Bitcoin - even if a server denies a transaction it
still is possible to process it yourself by getting your second
key from your safety deposit box, and if the server tries to seize
your funds they would not be able to, since they only have one
key.
VII. TRANSACTION ORDER PROTECTION
Crypto-currencies use various timestamping schemes to
avoid the need for a trusted third party to timestamp
transactions added to the blockchain ledger.
A. Proof-of-work schemes
The first timestamping scheme invented was the proof-of-
work scheme. The most widely used proof-of-work schemes
are based on SHA-256, which was introduced by bitcoin, and
script, which is used by currencies such as Litecoin. The latter
now dominates over the world of cryptocurrencies, with at
least 480 confirmed implementations [11].
Some other hashing algorithms that are used for proof-of-
work include CryptoNight, Blake, SHA-3, and X11.
B. Proof-of-stake and combined schemes
Some crypto-currencies use a combined proof-of-
work/proof-of-stake scheme. The proof-of-stake is a method of
securing a cryptocurrency network and achieving distributed
consensus through requesting users to show ownership of a
certain amount of currency. It is different from proof-of-work
systems that run difficult hashing algorithms to validate
electronic transactions. The scheme is largely dependent on the
coin, and there's currently no standard form of it.
C. Mathematical protection
Considering that the transactions are passed node by node
through the Bitcoin network, there is no guarantee that orders
in which they are received at a node are the same order in
which these transactions were generated.
Fig. 5. Double spending due to propagation delays in peer-to-peer network
This means that there is need to develop a mechanism so
that the entire Bitcoin network can agree regarding the order of
transactions, which is a daunting task in a distributed system.
Fig. 6. Generation of Blockchain from unordered transactions
The Bitcoin solved this problem by a mechanism that is
now popularly known as Blockchain technology. The Bitcoin
system orders transactions by placing them in groups called
blocks and then linking these blocks through what is called
Blockchain. The transactions in one block are considered to
have happened at the same time. These blocks are linked to
each-other (like a chain) in a proper linear, chronological order
with every block containing the hash of the previous block.
There still remains one problem. Any node in the network
can collect unconfirmed transactions and create a block and
then broadcasts it to rest of the network as a suggestion as to
which block should be the next one in the blockchain. How
does the network decide which block should be next in the
blockchain? There can be multiple blocks created by different
nodes at the same time. One can’t rely on the order since
blocks can arrive at different orders at different points in the
network.
Bitcoin solves this problem by introducing a mathematical
puzzle: each block will be accepted in the blockchain provided

7. it contains an answer to a very special mathematical problem.
This is also known as “proof of work”—node generating a
block needs to prove that it has put enough computing
resources to solve a mathematical puzzle. For instance, a node
can be required to find a “nonce” which when hashed with
transactions and hash of previous block produces a hash with
certain number of leading zeros. The average effort required is
exponential in the number of zero bits required but verification
process is very simple and can be done by executing a single
hash.
D. Transaction function
This mathematical puzzle is not trivial to solve and the
complexity of the problem can be adjusted so that on average it
takes ten minutes for a node in the Bitcoin network to make a
right guess and generate a block. There is very small
probability that more than one block will be generated in the
system at a given time. First node, to solve the problem,
broadcasts the block to rest of the network. Occasionally,
however, more than one block will be solved at the same time,
leading to several possible branches. However, the math of
solving is very complicated and hence the blockchain quickly
stabilizes, meaning that every node is in
Fig. 7. Mathematical race to protect transactions-I3
.
The network only accepts the longest blockchain as the
valid one. Hence, it is next to impossible for an attacker to
introduce a fraudulent transaction since it has not only to
generate a block by solving a mathematical puzzle but it has to
at the same time mathematically race against the good nodes to
generate all subsequent blocks in order for it make other nodes
accept its transaction & block as the valid one. This job
becomes even more difficult since blocks in the blockchain are
linked cryptographically together.
VIII. MINING
Mining is the process of adding transaction records to
Bitcoin's public ledger of past transactions or blockchain. This
ledger of past transactions is called the blockchain as it is a
chain of blocks.
The nodes use the blockchain to distinguish legitimate
transactions from attempts to re-spend coins that have already
been spent elsewhere. The primary purpose of mining is to
allow nodes to reach a secure, tamper-resistant consensus.
Mining is also the mechanism used to introduce Bitcoins into
the system: Miners are paid any transaction fees as well as a
"subsidy" of newly created coins.
This both serves the purpose of disseminating new coins in
a decentralized manner as well as motivating people to provide
security for the system.
Bitcoin mining is so called because it resembles the mining
of other commodities: it requires exertion and it slowly makes
new currency available at a rate that resembles the rate at
which commodities like gold are mined from the ground.
A. Computationally-Difficult Problem
Mining network difficulty is the measure of how difficult it
is to find a new block compared to the easiest it can ever be. It
is recalculated every 2016 blocks to a value such that the
previous 2016 blocks would have been generated in exactly
two weeks had everyone been mining at this difficulty. This
will yield, on average, one block every ten minutes.
As more miners join, the rate of block creation will go up.
As the rate of block generation goes up, the difficulty rises to
compensate which will push the rate of block creation back
down. Any blocks released by malicious miners that do not
meet the required difficulty target will simply be rejected by
everyone on the network and thus will be worthless.
B. Block Reward
When a block is discovered, the discoverer may award
themselves a certain number of bitcoins, which is agreed-upon
by everyone in the network. Currently this bounty is 25
bitcoins; this value will halve every 210,000 blocks. See
Controlled Currency Supply.
Additionally, the miner is awarded the fees paid by users
sending transactions. The fee is an incentive for the miner to
include the transaction in their block. In the future, as the
number of new bitcoins miners are allowed to create in each
block dwindles, the fees will make up a much more important
percentage of mining income.
C. Mining software
The mining software consists in adapting algorithms and
functions into different platforms, fulfilling the particularities
in the instruction set for each technology.
The software Yet Another Miner (Yam) turns mining
possible for a diversity of hardware platforms. At the date of
this paper, M7k version of yam miner is available. It contains
reduced memory mode for MMC, improved performance and
connection stability.
The M7k version of yam allows efficient CPU mining of
MemoryCoin with all threads even with 1Gb RAM used for
mining. Yam M7k runs significantly faster on AVX2 CPUs
(Haswell) and has improved CPU load profile for overclocked
configurations.

8. This software is also available to other multiple platforms:
• Sandy bridge
• Ivy bridge
• Pentium
• Core2
• K8
• Etc.
Next, there are described the steps to use this mining
application and implement a mining station.
./yam -c yam-mmc.cfg
YAM - Yet Another Miner by yvg1900
yam M8a-linux64-haswell/yvg1900
**************************************************
* Supported coins: PTS MMC MAX GRS DMD MYR BCN
QCN FCN XMR XDN LTC DRK BCR *
* Author: yvg1900 (Twitter @yvg1900)
*
*
*
* Addresses for Thanks and Donations:
*
* PTS: PZxsEQoiMeB6tHcW2ZySBEiCPio1WkxbEL
*
* XPM: AW2388DEWNEfMH4rP9kcj9yKcMq1QywYT4
*
* DTC: D6PmUogMigWvXurgFTqm5VLxQeVpXdYQj3
*
* MMC: MVk7PuJCa9o6qTYeiQRJDd3uHxKXMrQuU6
*
* LTC: Lby4YjhcAxhmbsdHFb4nYydrwGoiJezZt1
*
* BTC: 1FxekeK5La7AuF3oxiLzPKnjXyLMrux6VT
*
* NMC: N9KXqmzEqP7gB2dGHpEZiRMgFjUHNM38FR
*
* MAX: mTEsqg9dp3U9YXwduKxhhhDx1TRPBcNRvA
*
* NRS: 9qwyC34MCZ9XGopaNDNTnaMBtjAZhHvBd3
*
* GRS: FpHaQNJ2nMUc2kgBbzYue13E9VUfL8YbQp
*
* DMD: dEQZa7W7AczvUsjJkvWWrim1j8ZtgbAwXv
*
* MYR: MFDpLPThL6D6vtWW42XobFNBpPdrJFPQb6
*
* DRK: XvRxZEWcKVqrPLqPjBFmwVa8FnSELCpyGc
*
* BCR: 5wUcc3k19mQkgb3AhGyMeULDjT3Ney62Mb
*
* XMR:
45w9aqVA6iVeMJ6jVHZPEyPqgVnBEAGhBBqGAW9ncXp
44qbZy9vXkd2KpqYwcyVTQHF1kaSJm97GyceP3Y2dRMd7
E9gyuZf
*
* BCN:
2AcGMZmmNWTiLvAg5n7ywMCAxXTxysYGsi1xzba2ok4
UPccWTLqRyKN7EnQYUpEWpqBw1c9EVZrqo2CUG8f8m
bjG5NA9njF
*
* QCN:
1V6wZP6aycYPbeafHxPcvaQfGs4M5kabHDQoTEsyCTT3Hj
ccMyQbvEVNPoJuRc79XrPRYWESiAezyipWojpZ8bii3kczN
gW
*
* FCN:
6rNjXkY5YQzWiTMmDUbL5gYTWx9UTdUMSA98S1G3c
TmhZN9Xp6kq4woGeoK5Q8B3fPZV6TFKs36zdHpZnYxA4
BFK3fLpJzW
*
* XDN:
ddde7SyPF9RRjnjCL6NbX3JTwpnMTLcFs1KP54fEkK6bcdb
mELxt95aMNfn4bkxkv3geZQNBzrdWnTV1XKzi4VgK2EeJ
2dqtd
*
**************************************************
Loading config file [yam-mmc.cfg]
Miner version: yam M8a-linux64-haswell/yvg1900
Checking target
[stratum+tcp://15S18Qd8wABeRWeC4D8KKjSt9SmidbEsYx
@mmc-square.com:8080/mmc]...
Target OK
Checking target
[stratum+tcp://15S18Qd8wABeRWeC4D8KKjSt9SmidbEsYx
@shrine.mmc-square.com:8080/mmc]...
Target OK
Checking target
[stratum+tcp://15S18Qd8wABeRWeC4D8KKjSt9SmidbEsYx
@santana.mmc-square.com:8080/mmc]...
Target OK
Checking mining params
[mmc:av=1&aesni=on&m=1024&donation-interval=50]...
Mining Params OK
Checking MMC Stage 1 optimizations compatibility...

9. Checking MMC Stage 2 optimizations compatibility...
OK: MMC optimizations are compatible
MemoryCoin: Memory usage 1024M, Algorithm Variation 1
Using 24 CPU mining threads as 1 workers
Will mine 4 rounds for miner developers to support
development of the next version
MMC Agg. SPM: ?, HPM: ?; Rnds C/I: 0/0, Don. C/I: 0/0;
Cfg/Wkr SPM: ?/?, Cfg/Wkr HPM: ?/? 0 rnds AV=1, ART=?
mmc-square.com: Connecting, Shares Submitted 0, Accepted 0
shrine.mmc-square.com: Connecting, Shares Submitted 0,
Accepted 0
santana.mmc-square.com: Connecting, Shares Submitted 0,
Accepted 0
IX. HARDWARE
Nowadays, the most mature hardware platforms avaiable
on the market gravitate around Intel. The Intel Xeon processor
was the most common platform used for mining. However, the
reward for joining the mining community works as a positive
motivation and leads to growth.
Poor performance doing calculations results in the loss of
the computational mathematical race, thus loss of mining fees.
The growth is pushing manufactures reacting and to adapt to
this new growing trend that is building a new market.
The proliferation of new products on the market is creating
new challenges about how to invest into this industry. One
solution in place is performance and quality measurement,
pulling some metrics who are common to current hardware in
place. The most important metrics regarding these aspects are:
Volume of hash processing (1), Energy efficiency (2), and
Power consumption (3):
(1) Mhash/s
• Millions hashes per second (also GH/s G for Giga
or TH/s T for Tera)
• Double sha256 raw speed performance
(2) Mhash/J
• Millions hashes per joule (also GH/j G for Giga)
• If 1 joule of energy is 1 watt during 1 second:
1 J = 1 W x s
(3) W
• Watt
• Maximum power consumption, i.e. energy per unit
of time: 1 W = 1 J/s
A. Specialized architectures
At first, miners used their central processing unit (CPU) to
mine, but soon this wasn't fast enough and it bogged down the
system resources of the host computer. Miners quickly moved
on to using the graphical processing unit (GPU) in computer
graphics cards because they were able to hash data 50 to 100
times faster and consumed much less power per unit of work.
During the winter of 2011, a new industry sprang up with
custom equipment that pushed the performance standards even
higher. The first wave of these specialty bitcoin mining devices
were easy to use Bitcoin miners were based on field-
programmable gate array (FPGA) processors and attached to
computers using a convenient USB connection.
FPGA miners used much less power than CPU's or GPU's
and made concentrated mining farms possible for the first time.
Today's modern and best bitcoin mining hardware are
Application-specific integrated circuit (ASIC). Miners have
taken over completely. These ASIC machines mine at
unprecedented speeds while consuming much less power than
FPGA or GPU mining rigs. Several reputable companies have
established themselves with excellent products.
ASICs are bitcoin mining hardware created solely to solve
Bitcoin blocks. They have only minimal requirements for other
normal computer applications. Consequently, ASIC Bitcoin
mining systems can solve Bitcoin blocks much quicker and use
less electricity or power than older bitcoin mining hardware
like CPUs, GPUs or FPGAs.
The core part of Bitcoin mining is performing a double
SHA-256 hash digest and comparing the result against the
target. In 2013, the first Bitcoin ASIC miners appeared on the
market. Since then, mining ASIC technology advanced both in
terms of the manufacturing technology (the node) and in terms
of design, to achieve greater hashing rates, lower power
consumption and lower cost.
ASIC miners are now being designed and manufactured for
the 16 nm CMOS semiconductor device fabrication process.
However not much is known about the design optimizations
and trade-offs each company has applied to the design in order
to be competitive. That information is probably confidential.
New designs stretch to several optimization techniques
such as pipelining, delay balancing, loop unrolling, the use of
Carry-Save adders (CSA), Carry-Lookahead Adders (CLA),
and Hierarchical CLA. Nevertheless, is seems that there after
2 years of advances there is little room to improve Bitcoin
ASIC designs and so the industry will reach the same limits as
state-of-the-art microprocessor manufacturing and further
improvements will rely solely on Moore’s law. But this is
incorrect.
The majority of the Bitcoin mining industry is making the
false assumption that Bitcoin mining relates to computing a
cryptographic hash function of a message. Cryptography is
based on number theory, where there is no room for computing
errors. In many cryptographic schemes, such as in digital
signatures, hardware faults that end up with the generation of
incorrect signatures may fully compromise the security of the
private keys.

10. There are several attack techniques that exploit this extreme
reliance of cryptography on accurate computing in order to
steal secrets. Standard public key cryptography is also based on
number theory, and so there is little room for mathematical
approximations, nor tolerance for faults in computation. But
Bitcoin mining is a trial and error procedure: computations that
do not lead to a block solution are discarded. Once a block
solution is found, the solution is generally verified by software,
firmware or hardware to check its correctness, so a small
failure rate in the hardware does not lead to any catastrophic
money loss. Hardware failures, at controlled rates, does not
pose any risk to mining.
Because of the confusion and diffusion properties of the
SHA-256 hash function, the intermediate values, the SHA-256
state, tend to behave as a uniform random variable: algebraic
relations within the inputs are destroyed and statistical bias is
reduced after each SHA-256 round. Because of this, an
approximate adder that deterministically fails on some simple
additions (such as 0xFFFFFFFF+1) does not pose any
particular risk.
In computing, higher hardware failures are a trade-off for
lower power consumption, higher clock rate, a reduced number
of logic gates in circuits or shorter critical delays in circuits. In
SHA-256 miners, the most components that consume the
higher area are adders, often implemented as CLAs to reduce
the critical propagation delay. Also the number of additions
performed is low compared with the number of additions
required in mining script based cryptocurrencies like Litecoin.
A canonical SHA-256 round design, as proposed by Dadda
et al. [12] would use 3 CLAs (and 8 CSA) in each round, so a
full double SHA-256 core would perform 384 CLA additions.
What if we replace each adder by an approximate adder,
allowing a controlled failure rate, so that the total probability of
failure is still kept small?
A candidate that stands out for approximation for which we
can control the failure rate is the carry propagation. We can
gain some performance exploiting the facts that a high
percentage of die area is required by addition circuits and low
number of additions are actually performed so the cumulative
error probability can be kept small.
The propose of a new type of adder: a Carry-Reduced
adder. A carry reduced adder does not propagate the carry from
every significant bit to every more significant bit. Propagation
longer that a certain length is ignored. When a carry should
have been propagated, but was not, we said there was a carry
propagation failure (CPF).
These failures are expected by design and incorrect results
produced by failures must be detected and discarded afterward
if they lead to a supposed block solution. An adder that suits
well to be carry reduced is the CLA. A typical n-bit CLA
consist of the Sigma blocks (which computes the P
(propagation) and G (generation) signals) and the Carry
Lookahead Generator block (CLG) which computes the n
carries. In SHA-256 the last carry is unused and only (n-1)
carries are computed.
The CR-CLA overall design also mimic this structure, but
at least one CLGs is replaced by a carry reduced CLG (CR-
CLG). A CR-CLA generates a correct output with high
probability if the two are independent random variables, but
uses less gates and have less delay than a standard CLA.
Extensions of the CR-CLA design to hierarchical designs
can be naturally created in a similar way of hierarchical CLAs.
The CR-CLG block of the CR-CLA adder can be placed at one
level and another CR-CLG at higher level. Also a standard
CLG can be placed at one level and CR-CLG at higher levels.
A (k,n)-CR-CLA adder is a n-bit CLA where the carry at bit
c(i) is computed using the propagation (P(j)) and generation
(G(j)) signals of the at most k contiguous bits of lower
significance adjacent to the bit i, where 0<k<n. The case k=n
would be a standard n-bit CLA. The reduction in the number of
inputs used to compute each carry (the carry generation logic)
allows the saving of logic gates and the reduction of the delay.
Figure 1 shows a (4,5) CR-CLA with input carry. Each carry
takes into account no more than 4 previous carries.
A carry propagation failure (CPF) as the event where a
(k,n)-CR-CLA gives an incorrect value as result compared to
the mathematical addition. For n=32, k=13, the CPF
probability computed by simulation is 0.027%. For k=16, n=32
and 386 additions, the rate of failure of the whole double SHA-
256 core is approximately 2.2%. The reduction in die area by
reducing CR-CLG levels should allow more than 2.3%
additional cores to be added, and so the resulting chips is more
efficient.
Fig. 8. Carry Propagation Failure
A standard CLA (or mostly any other kind of adder) that is
not given enough operation time (a reduction in the clock
interval) to adequately propagate the carry signal behaves
similar to a CR-CLA to some extent. It could behave better or
worse depending on the gate placing, temperature, nearby
wires, electromagnetic radiation, wire length, capacitance, load
and other factors. For example, in a standard 32-bit ripple
adder we can assume it will have a delay of 16 gates, instead of
32 gates, and allow a failure rate. If the node technology allows
it, we could overclock at 2x a SHA-256 ASIC that uses ripple
adders, and get achieve a better mining rate.
Other adders, such as parallel prefix adders (Ladner-Fischer
adder, Kogge-Stone adder, Brent-Kung adder, Han-Carlson
adder) could can also be reduced in carry propagation by
removing unnecessary dependencies on the associated graph
structures.

11. Many Tera-operations per second of hash-compute power
are being added to the network at the moment that months of
delay can render a machine practically useless. The difficulty
factor – some 65 leading zeroes – is now so high that even a
single TerraMiner machine might not provide a successful
result during its lifetime, according to the CTO of Cointerra.
The machines need to be deployed in bulk to guarantee
successful mining, which is why individual miners have
formed into collectives that divide up the work and the spoils.
Barkatullah said the company has shipped more than 5000
systems so far, representing about 4 per cent of the total
processing capacity on the Bitcoin network now.
One unusual aspect of a machine like this is that it needs
barely any external I/O – each new input arrives every few
seconds.
Fig. 9. Architecture of the Goldstrike ASIC
It's a different matter inside the chip. Internally, the chip
runs at 1GHz, with a central controller determining how values
are fed to an array of deep pipelines tuned for hash generation.
At any one time, a total of 128 nonce candidates are making
their way through the 16 'super-pipelines'. To support the clock
speed, Cointerra opted for the 28nm HPP process from
GlobalFoundries, using nine metal layers. To improve the
density of processors in the final system, four chips are put into
a single FBGA package.
B. Specialized products
As Bitcoin mining increases in popularity and the Bitcoin
price rises so does the value of ASIC Bitcoin mining hardware.
As more Bitcoin mining hardware is deployed to secure the
Bitcoin network the Bitcoin difficulty rises. This makes it
impossible to profitably compete without a Bitcoin ASIC
system. Furthermore, Bitcoin ASIC technology keeps getting
faster, more efficient and more productive so it keeps pushing
the limits of what makes the best Bitcoin mining hardware.
TABLE I. LIST WITH SPECIALIZED PRODUCTS
Miner Capacity Efficiency Price
AntMiner S1 180 Gh/s 2.0 W/Gh $299.00
AntMiner S2 1000 Gh/s 1.1 W/Gh $2,259.00
AntMiner S3 441 Gh/s 0.77 W/Gh $382.00
AntMiner S4 2000 Gh/s 0.7 W/Gh $1,400.00
AntMiner S5 1155 Gh/s 0.51 W/Gh $370.00
AntMiner S5+ 7722 Gh/s 0.44 W/Gh $2,307.00
AntMiner S7 4.73 Th/s 0.25 W/Gh $479.95
AntMiner U1 2 Gh/s 1.25 W/Gh $29.00
AntMiner U2 2 Gh/s 1.0 W/Gh $49.66
AntMiner U3 63 Gh/s 1.0 W/Gh $38.00
ASICMiner BE Blade 11 Gh/s 7.72 W/Gh $350.00
ASICMiner BE Cube 30 Gh/s 6.67 W/Gh $550.00
ASICMiner BE
Sapphire
0 Gh/s 7.59 W/Gh $20.00
ASICMiner BE Tube 800 Gh/s 1.13 W/Gh $320.00
ASICMiner BE Prisma 1400 Gh/s 0.79 W/Gh $600.00
Avalon Batch 1 66 Gh/s 9.35 W/Gh $1,299.00
Avalon Batch 2 82 Gh/s 8.54 W/Gh $1,499.00
Avalon Batch 3 82 Gh/s 8.54 W/Gh $1,499.00
Avalon2 300 Gh/s N/A $3,075.00
Avalon3 800 Gh/s N/A N/A
Avalon6 3.5 Th/s 0.29 W/Gh $499.95
bi*fury 5 Gh/s 0.85 W/Gh $209.00
BFL SC 5Gh/s 5 Gh/s 6.0 W/Gh $274.00
BFL SC 10 Gh/s 10 Gh/s N/A $50.00
BFL SC 25 Gh/s 25 Gh/s 6.0 W/Gh $1,249.00
BFL Little Single 30 Gh/s N/A $649.00
BFL SC 50 Gh/s 50 Gh/s 6.0 W/Gh $984.00
BFL Single 'SC' 60 Gh/s 4.0 W/Gh $1,299.00
BFL 230 GH/s Rack
Mount
230 Gh/s N/A $399 (used)
BFL 500 GH/s Mini
Rig SC
500 Gh/s 5.4 W/Gh $22,484.00
BFL Monarch 700GH/s 700 Gh/s 0.7 W/Gh $1,379.00
BitFury S.B. N/A N/A N/A
Bitmine.ch Avalon
Clone 85GH
85 Gh/s 7.65 W/Gh $6,489.00
Black Arrow Prospero
X-1
100 Gh/s 1.0 W/Gh $370.00
Black Arrow Prospero
X-3
2000 Gh/s 1.0 W/Gh $6,000.00
Blue Fury 3 Gh/s 1.0 W/Gh $140.00
BTC Garden AM-V1
310 GH/s
310 Gh/s 1.05 W/Gh $309.00

12. BTC Garden AM-V1
616 GH/s
616 Gh/s 1.05 W/Gh $350.00
CoinTerra TerraMiner
IV
1600 Gh/s 1.31 W/Gh $1,500.00
Drillbit N/A N/A N/A
HashBuster Micro 20 Gh/s 1.15 W/Gh $688.00
HashBuster Nano N/A N/A N/A
HashCoins Apollo v3 1100 Gh/s 0.91 W/Gh $599.00
HashCoins Zeus v3 4500 Gh/s 0.67 W/Gh $2,299.00
HashFast Baby Jet 400 Gh/s 1.1 W/Gh $5,600.00
HashFast Sierra 1200 Gh/s 1.1 W/Gh $7,080.00
HashFast Sierra Evo 3 2000 Gh/s 1.1 W/Gh $6,800.00
Klondike 5 Gh/s 6.15 W/Gh $20.00
KnCMiner Mercury 100 Gh/s 2.5 W/Gh $1,995.00
KnC Saturn 250 Gh/s 1.2 W/Gh $2,995.00
KnC Jupiter 500 Gh/s 1.2 W/Gh $4,995.00
KnC Neptune 3000 Gh/s 0.7 W/Gh $12,995.00
LittleFury N/A N/A N/A
Metabank 120 Gh/s 1.42 W/Gh $2,160.00
NanoFury / IceFury 2 Gh/s 1.25 W/Gh N/A
NanoFury NF2 4 Gh/s 1.35 W/Gh $50.00
BPMC Red Fury USB 2.5 Gh/s 0.96 W/Gh $44.99
ROCKMINER R3-
BOX
450 Gh/s 1.0 W/Gh $200.00
ROCKMINER R4-
BOX
470 Gh/s 1.0 W/Gh $210.00
ROCKMINER Rocket
BOX
450 Gh/s 1.07 W/Gh $599.00
ROCKMINER R-BOX 32 Gh/s 1.41 W/Gh $65.00
ROCKMINER R-BOX
110G
110 Gh/s 1.09 W/Gh $88.00
ROCKMINER T1
800G
800 Gh/s 1.25 W/Gh $325.00
Spondooliestech SP10
Dawson
1400 Gh/s 0.89 W/Gh $2,845.00
SP20 Jackson 1.3-1.7 Th/s 0.65 W/Gh $248.99
Spondooliestech SP30
Yukon
4500 Gh/s 0.67 W/Gh $4,121.00
Spondooliestech SP31
Yukon
4900 Gh/s 0.61 W/Gh $2,075.00
Spondooliestech SP35
Yukon
5500 Gh/s 0.66 W/Gh $2,235.00
TerraHash Klondike 16 5 Gh/s 7.11 W/Gh $250.00
TerraHash Klondike 64 18 Gh/s 7.06 W/Gh $900.00
TerraHash DX Mini
(full)
90 Gh/s 7.11 W/Gh $6,000.00
TerraHash DX Large
(full)
180 Gh/s 7.11 W/Gh $10,500.00
Twinfury 5 Gh/s 0.85 W/Gh $216.00
Avalon USB Nano3 3.6 Gh/s 0.85 W/Gh $55.00
GekkoScience 9.5 Gh/s 0.33 W/Gh $49.97
C. Non-specialized products
Due to the rising hashrate of the bitcoin network caused by
the introduction of ASICs to the market, CPU and GPU mining
has decreased.
In computing, hardware acceleration is the use of computer
hardware to perform some more specialized processors such as
GPUs, fixed-function implemented on FPGAs. Due to the
rising hashrate of the bitcoin network caused by the
introduction of ASICs to the market, CPU and GPU mining
Bitcoins has lost competitive value.
Next, is a list regarding the most common non-specialized
architectures:
TABLE II. LIST WITH NON-SPECIALIZED FPGA PRODUCTS
FPGA Mhash/s Mhash/J Watts
Butterflylabs Mini Rig 25200 20.16 1,250
KnCMiner Mars 6000 - 500
ZTEX USB-FPGA Module
1.15y
860 - 250
TABLE III. LIST WITH NON-SPECIALIZED INTEL PRODUCTS
INTEL Mhash/s Mhash/J Watts
Xeon Phi 5100 140 - 245
Core i7 3930k 66.6 - 130
Xeon E5-2690 (dual) 66 - 270
X. DEDICATED MINING FACILITIES
A. Data centers
Private equity and investment funds are permanently
monitoring for new opportunities to jump in and take a slice of
the crypto-currency mining industry. A company called
Bitmain Technologies Ltd.[13] said, if the weather holds out, it
could complete construction on a colossal (judging from the
pictures), 45-building solar-powered data center complex in
China’s Xinjiang autonomous region.
Fig. 10. Massive crypto-currency Data Center in China

13. A 135 MW complex, operating at full capacity, would
provide enough power to fuel 159,763 Antminers. With 45
buildings in the complex (which, from the 3D models, looks
somewhat like a solar-powered POW camp), that’s about 3,550
Antminers per building.
Each stripped-down Antminer’s awkward 5U form factor
should still be enough to seat 8 units in a tray that’s 5U tall.
You could conceivably pack 64 Antminers into one rack, and
leave room for a 2U power supply. . . if a standard 2U supply
could feed them all. A full-size 2U UPS probably delivers no
more than 3,200W, for a ratio of one UPS for every three
Antminers.
Assuming Bitmain has done its best to optimize each
Antminer’s power consumption, it might be able to squeeze
eight Ants into a kind of “module.” A full 5U of that module
would house the compute units, and you’d need 4U for about
6,400W of power. Each module being 9U tall, you could fit
five of them into a 45U rack.
With 3,550 Antminers to distribute throughout each
building at 40 per rack, that gives you 89 racks per building.
For racks alone, you’d need 2,670 square feet per building, or
120,150 square feet total. That’s not counting the additional
space consumption for power distribution, so for safety, let’s
round it up to 135,000 square feet. That would give you a
power density of about 1 kW/sq. ftIn order to find out Bitcoin
mining profitability for investing in facilities to host mining
capacity, some points require previous analysis.
The most relevant parameters such as electricity cost, the
cost of hardware and other variables, give an estimate of
projected profit:
Hash Rate – A Hash is the mathematical problem the
miner’s computer needs to solve. The Hash Rate is the rate at
which these problems are being solved. The more miners that
join the Bitcoin network, the higher the network Hash Rate is.
The Hash Rate can also refer to your miner’s performance.
Today Bitcoin miners (those super powerful computers talked
about in the video) come with different Hash Rates. Miners’
performance is measured in MH/s (Mega hash per second),
GH/s (Giga hash zper second), TH/s (Terra hash per second)
and even PH/s (Peta hash per second).
Bitcoins per Block – Each time a mathematical problem is
solved, a constant amount of Bitcoins are created. The number
of Bitcoins generated per block starts at 50 and is halved every
210,000 blocks (about four years). The current number of
Bitcoins awarded per block is 25. However soon enough the
block halving will occur and the reward will be downgraded to
only 12.5 Bitcoins.
Bitcoin Difficulty – Since the Bitcoin network is designed
to produce a constant amount of Bitcoins every 10 minutes, the
difficulty of solving the mathematical problems has to increase
in order to adjust to the network’s Hash Rate increase.
Basically this means that the more miners that join, the harder
it gets to actually mine Bitcoins.
Electricity Rate – Operating a Bitcoin miner consumes a
lot of electricity. You’ll need to find out your electricity rate in
order to calculate profitability. This can usually be found on
your monthly electricity bill.
Power consumption – Each miner consumes a different
amount of energy. Make sure to find out the exact power
consumption of your miner before calculating profitability.
This can be found easily with a quick search on the Internet or
through this list. Power consumption is measured is Watts.
Pool fees – In order to mine you’ll need to join a mining
pool. A mining pool is a group of miners that join together in
order to mine more effectively. The platform that brings them
together is called a mining pool and it deducts some sort of a
fee in order to maintain its operations. Once the pool manages
to mine Bitcoins the profits are divided between the pool
members depending on how much work each miner has done
(i.e. their miner’s hash rate).
Time Frame – When calculating if Bitcoin mining is
profitable you’ll have to define a time frame to relate to. Since
the more time you mine, the more Bitcoins you’ll earn.
Profitability decline per year – This is probably the most
important and illusive variable of them all. The idea is that
since no one can actually predict the rate of miners joining the
network no one can also predict how difficult it will be to mine
in 6 weeks, 6 months or 6 years from now. This is one of the
two reasons no one will ever be able to answer you once and
for all “is Bitcoin mining profitable ?”. The second reason is
the conversion rate. In the case below, you can inset an annual
profitability decline factor that will help you estimate the
growing difficulty.
Conversion rate – Since no one knows what the BTC/USD
exchange rate will be in the future it’s hard to predict if Bitcoin
mining will be profitable. If you’re into mining in order to
accumulate Bitcoins only then this doesn’t need to bother you.
But if you are planning to convert these Bitcoins in the future
to any other currency this factor will have a major impact of
course.
B. Cloud
For those not interested in operating the actual hardware then
they can purchase Bitcoin cloud mining contracts. There have
been a tremendous amount of Bitcoin cloud mining scams.
Hashflare: offers SHA-256 mining contracts for $1.20/10
GH/s. More profitable SHA-256 coins can be mined while
automatic payouts are still in BTC. Customers must purchase
at least 10 GH/s.
Genesis Mining: is the largest Bitcoin and script cloud mining
provider. GM offers three Bitcoin cloud mining plans: 100
GH/s ($26/Lifetime Contract), 2,000 GH/s ($499/Lifetime
Contract), and 10,000 GH/s ($2,400/Lifetime Contract). These
plans cost $0.26, $0.25, and $0.24 per GH/s, respectively.
Zcash mining contracts are $29 for 0.1 H/s $280 for 1 H/s,
$2,600 for 10 H/s

14. Minex: is an innovative aggregator of blockchain projects
presented in an economic simulation game format. Users
purchase Cloudpacks which can then be used to build an index
from pre-picked sets of cloud mining farms, lotteries, casinos,
real-world markets and much more.
Minergate: Offers both pool and merged mining and cloud
mining services for Bitcoin.
Hashnest: is operated by Bitmain, the producer of the
Antminer line of Bitcoin miners. HashNest currently has over
600 Antminer S7s for rent. You can view the most up-to-date
pricing and availability on Hashnest's website. At the time of
writing one Antminer S7's hash rate can be rented for $1,200.
Bitcoin Cloud Mining: Currently all Bitcoin Cloud Mining
contracts are sold out.
NiceHash: is unique in that it uses an orderbook to match
mining contract buyers and sellers. Check its website for up-
to-date prices.
Eobot: Start cloud mining Bitcoin with as little as $10. Eobot
claims customers can break even in 14 months.
MineOnCloud: currently has about 35 TH/s of mining
equipment for rent in the cloud. Some miners available for
rent include AntMiner S4s and S5s.
ACKNOWLEDGMENT
Blockchain technologies represent a fundamentally new
way to transact business. They usher in a hugely scalable,
robust, and smart next generation of applications for the
registry and exchange of physical, virtual, tangible, and
intangible assets. Thanks to the key concepts of cryptographic
security, decentralized consensus, and a shared public ledger
(with its properly controlled and permissioned visibility),
blockchain technologies can profoundly change the way we
organize our economic, social, political, and scientific
activities.
So, what will the Bitcoin world future look like? If new
security improvements continue to be added, the question of
"where do you store your funds?" will end; instead, the
question will be: "what are the withdrawal conditions of this
account, and what is the policy of each key?".
Consumer wallets will all be 2-of-3 multisig, sharing the
keys between either a low-security local-storage key, a high-
security key in a safety deposit box and a central provider, or
two central providers and a low-security key.
In the long term, the Bitcoin multisig wallet story gets even
more interesting once cryptocurrency 2.0 technologies go into
full tilt. Next-generation smart contract platforms allow users
to set arbitrary withdrawal conditions on accounts; for
example, one can have an account with the rule that one out of
a given five parties can withdraw up to 1% per day, and three
out of five parties can withdraw anything.
One can make a will by setting up a account so that one's
son can withdraw any amount, but with a six-month delay
where the account owner can claw the funds back if they are
still alive. In these cases, multi signature transaction wallets
oracles will play an even larger role in the cryptocurrency
world, and may even fuse together with private arbitration
companies; whether it's a consumer-merchant dispute, an
employment contract or protecting a user from the theft of his
own keys, it's ultimately all a matter of using algorithmic and
human judgement to decide whether or not to sign a bitcoin
multisig transaction with a Bitcoin multisig wallet.
Regarding the open possibilities of becoming a miner,
doing so with a regular computer is possible. As an example,
for a regular Mac Book Pro with an i7-4770k CPU
At full power, around 24MMCs per day are possible to
obtain, which correspond to around $5-6, if the machine runs at
full power.
Mid power ( 4 cores instead of 8 ) which allows you to
work on the PC without even feeling a miner is on, will give
you half of that.
The most profitable coin/miner pair avaiable today is
MemoryCoin/M7k yamMiner.
One more option you can consider is mining Altcoins
instead of Bitcions. Today there are hundreds of Altcoins
available on the market and some of them are still real easy to
mine. The problem is that because there are so many Altcoins
it’s hard to tell which ones are worth investing your time in.
Some good examples for Altcoins are Litecoin, Dogecoin and
Peercoin.
In order to understand which Altcoins are profitable you
can find website indexes such as CoinChoose[14] that give you
a complete Altcoin breakdown. On CoinChoose you can see
the difficulty for each Altocoin, where can you exchange them
and what are the chances to profit Bitcoins by mining each
specific Altcoin
In the long run you could make a profit from Bitcoin
mining but only if you invest a considerable amount of money
in a good mining rig (e.g. Antminer s9) or take your time to
“hack” through making a profit with CEX.IO. I’d currently
stay away from Altcoins but that’s my own personal opinion. If
you don’t have the time or the money – stay away from mining
and just invest in buying Bitcoins for the long run.
REFERENCES
These are the references used to build this work:
[1] Andy Greenberg (20 April 2011). "Crypto Currency". Forbes.com.
Retrieved 8 August 2014.
[2] "All you need to know about Bitcoin". timesofindia-economictimes.
[3] Bitcoin-block-signing History, http://blockchain.info, 2 November 2016
[4] This is Huge: Gold 2.0 - Can code and competition build a better
Bitcoin?, New Bitcoin World, 26 May 2013
[5] "coinmarketcap.com". Retrieved 13 November 2016
[6] http://econpapers.repec.org/paper/netwpaper/1417.htm. Retrieved 13
November 2016

15. [7] 2016 Annual Report, https://www.treasury.gov/initiatives/fsoc/studies-
reports/Pages/2016-Annual-Report.aspx. Retrieved 13 November 2016
[8] "Introducing Ledger, the First Bitcoin-Only Academic Journal",
http://motherboard.vice.com/read/introducing-ledger-the-first-bitcoin-
only-academic-journal, Motherboard. Retrieved 13 November 2016
[9] https://www.bitcoinarmory.com. Retrieved 13 November 2016
[10] https://bitcointalk.org/index.php?topic=566627.0. Retrieved 13
November 2016.
[11] Wary of Bitcoin? A guide to some other cryptocurrencies, ars technica,
May 2013
[12] L. Dadda, M. Macchetti, and J. Owen. The design of a high speed ASIC
unit for the hash function SHA-256 (384, 512). In Proceedings of the
Design, Automation and Test in Europe Conference and Exhibition
Designers’ Forum (DATE), February 2004.
[13] Company Overview of Bitmain Technologies Ltd.
http://www.bloomberg.com/research/stocks/private/snapshot.asp?privca
pId=329243116 , 2 November 2016
[14] Coinchoose guide, https://www.coinchoose.com. Retrieved 13
November 2016.