Siacoin developer: ASICS are "money printing machines" for manufacturers

David Vorick, from Siacoin, knows more than most when it comes to cryptocurrency mining.

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In addition to overseeing the development of the decentralized SIA file storage currency, which uses a PoW work test algorithm, Vorlick operates its own ASICs manufacturing company, Obelisk.

The company was founded about 18 months ago, and, with its first ASICs scheduled to ship in eight weeks, Vorick has decided to uncover his thoughts on the industry. "The State of Cryptocurrency Mining" is a revealing blog post that does not go around the bush.

In it, the leading developer of Siacoin repeats the claims that he heard that "Bitmain plays dirty". It is alleged that Vorick was told that Bitmain would use its power to prevent other ASIC companies from manufacturing in China.

Despite making great efforts to conceal Obelisk's participation in such deal, the Chinese manufacturer suddenly withdrew, in a move that allegedly cost Obelisk US $ 2 million. There is no evidence that Bitmain has supported the manufacturer, but David Vorick leaves no doubt about his suspicions.

The ASICS are money printing machines

The most explosive part of Vorick's blog refers to complaints from manufacturers of ASICs that secretly extract new units before selling them to the public once they are no longer profitable.

These claims are not new, and can be traced from Butterfly Labs and its ill-fated mining ASIC. David Vorick is the most important and well-connected figure in the mining industry to make these accusations public, when he writes:

"In the case of Halong's Decred miner, we saw that US $ 10,000 equipment was sold out of an unknown lot. After that, it was observed that more than 50% of the mining rewards were being collected in a single direction that was known to be associated with Halong, which means that they did keep most of the hashrate and profits. "

Vorick continues: "Our research on the mining equipment strongly suggests that the total cost of manufacturing the equipment is less than US $ 1,000, which means that anyone who pays US $ 10,000 for it was paying a massive profit premium to the manufacturer. , giving them the ability to make 9 more units for them. "

It has been alleged that, before Bitmain sent its Monero Cryptonight miners this year, an unknown entity had been operating with them for months. Vorick agrees:

"My sources say that they had been mining in these secret ASICs since the beginning of 2017, and they obtained almost a full year of mining before the discovery. The ROI in those ASICs was massive, and gave the group more than enough money to try again with other coins resistant to ASICs. "

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By the time the Cryptonight ASICs became public knowledge, a war of words broke out between Bitmain and the Monero figures. Fluffypony wrote that the great leap in Monero's hashrate in 2017 had originally been attributed to botnets that used hijacked computers to extract XMR. This claim had been revised after Bitmain revealed his Monero specific X3.

David Vorick adds fuel to the fire and writes: "It is estimated that Monero's secret ASICs accounted for more than 50% of the hashrate for almost a full year before the discovery, and during that time, nobody noticed. In that same period, a large part of Monero's issue was being centralized in the hands of a small group, and a 51% attack could have been executed at any time. "

ASICS secrets

Bitmain made a profit of up to US $ 4 billion last year It is rumored that there are secret ASICs that have the power to attack the existing hashing algorithms much more effectively than any other on the market.

David Vorick is convinced of this, and if he is right, these units are the mining equivalent of a zero-day, highly lucrative and highly protected exploit. It speaks of "mining farms that are willing to pay millions of dollars for exclusive access to specific crypto-currency designs" and "an informal clandestine industry" that has sprung up around secret mining.

Because no entity, be it a mining group or hardware manufacturer, is going to put their name to that activity, it is very difficult to provide concrete evidence of these allegations. What is out of the question is that ASICs are money printing machines for those who manufacture them to scale.

Vorick concludes: "At the end of the day, cryptocurrency mining manufacturers are selling money printing machines. A profit-maximizing entity with sufficient funds will only sell a money-printing machine for more money than they expect to be able to print themselves. The buyer must understand why the manufacturer is selling the units, instead of keeping them and exploiting them. "

Source: news.bitcoin.com