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Report: Stealth Crypto Mining Much More Prevalent In Higher Ed Than Other Industries

Both intentional cryptocurrency mining and cryptojacking is becoming more prevalent on college campuses than in any other industry, according to a blog post published March 29 by cyber attack monitoring firm Vectra.

Vectra analyzed five industries where crypto mining – which the blog post defines as “an opportunistic attack behavior that uses botnets to create a large pool of computing power”, incorrectly combining crypto mining and cryptojacking into one use case – has occurred from August 2017 to January 2018, finding that “higher education” sees more mining than the other four industries combined.

Top 5 Industries with Bitcoin

Universities are not able to monitor their networks as strictly as corporations, “at best advis[ing] students on how to protect themselves and the university by installing operating system patches and creating awareness of phishing emails, suspicious websites and web ads,” leaving college campuses more open to cryptojacking schemes. The blog post notes that given the “free source of power” provided by universities to their students (meaning free of charge to students, not free of charge in essence), “[l]arge student-populations are ideal pastures for cryptojackers.”

Students, rather than malicious cryptojackers, taking advantage of this “free power” are “simply being opportunistic as the value of cryptocurrencies surged over the past year,” Vectra’s blog post writes.

Joey Dilliha, a student at Western Kentucky University, told financial news site MarketWatch that he mines crypto with a Bitmain Antminer in his room with his school’s “free electricity”:

“I believe more people should be doing it. It’s a super fun, and cool cheap way to be introduced to the market of mining.”

Dilliha adds that because the mining rig is actually a banned item in his dorm – due to it being a fire hazard – he has to “turn it off and put a blanket over it” during “dorm room check days,” adding that his “RA loves to come in and talk about it with me.”

 In January of this year, Stanford University had posted a warning against crypto mining on campus, as school resources “must not be used for personal financial gain,” as well as citing the school’s chief information security officer:

“Cryptocurrency mining is most lucrative when computing costs are minimized, which unfortunately has led to compromised systems, misused university computing equipment, and personally owned mining devices using campus power.”

Vectra also notes the problems with cryptocurrency mining and crypto jacking as “creat[ing noise that can may [sic] hide serious security issues; […] impact[ing] the reputation of an organization’s IP address […] ; [allowing] cybercriminals [to] buy access to compromised computers to launch targeted attacks against universities.”

Vectra’s blog post, which has already several times confused crypto mining and cryptojacking, then goes into detail about the mechanics of cryptojacking, mentioning Coinhive and the CryptoNight algorithm-based Monero as common ways for cryptojacking to take place.

Cointelegraph recently reported on the ethics of cryptojacking, citing both cases where permission was asked before taking over a computer’s processing power to mine (like Salon.com) as well as malicious or unknown use cases (like Showtime and Telecom Egypt).

In conclusion to their blog post, Vectra writes that

“Cryptojacking and cryptocurrency mining are profitable, opportunistic endeavors that will likely increase as they replace ransomware and adware as the de facto method for individuals looking to make a fast buck.”

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Monero and SiaCoin Reject Bitmain’s ASIC Miners, Who Could Be Next?

On March 24 the creators of Monero made an unprecedented statement – the project devlead, Riccardo Spagni, warned that the coin’s protocol would be changed every six months to make the cryptocurrency less appealing to application-specific integrated circuit (ASIC) miners.

The measure was initiated after Bitmain announced a new super powerful Antminer X3 ASIC miner designed specifically for calculations based on the CryptoNight algorithm, which is the basis for such cryptocurrencies as Monero (XMR), ByteCoin (BCN) and AeonCoin (AEON).

The dominance of Bitmain shook the reputation of industry giants AMD and Nvidia, whose shares fell sharply after Wall Street firm Susquehanna reported that Bitmain’s new Ethereum miner would increase its competitiveness on March 26.

Manufacturers of miners monopolize the market

Today, when the cryptocurrency market becomes stagnant, mining may be the only way to earn profit. This forces the largest manufacturers of video cards and specialized ASIC chips to bring new, more productive models of devices to the market. ASIC-based miners overtop competitors’ CPUs and GPUs, creating a real threat of mining concentration between the largest players provided with the most powerful equipment.

Some in the Blockchain community are concerned about such kind of centralization that could damage network security. Actually decentralization based on the miners’ competition helps to defend the system and its participants, protecting the network from intruders. That’s why the token developers are forced to create artificial obstacles to the use of ASIC equipment.

Due to the present monopoly on the production of ASIC miners and the expansion of its positions in the mining equipment market as a whole, according to Bernstein analysts, Bitmain earned about $4 bln last year, the same amount as Nvidia. It is noteworthy that Bitmain achieved this level six times faster than Nvidia, who took 24 years to achieve these levels of profits.

Antminer X3 developers promise $4,500 profit per month

As stated by CryptoCompare, the new ASIC can give up to $4,500 in monthly profits to its owner, but its calculation process is based primarily on the involvement of devices in Monero network transactions, which may lead to disrupting XMR network functioning.

Antminer X3

Image source: CryptoCompare

Monero reaction

The developers of Monero, in their turn, published defamatory posts about the insolvency of Antminer X3. Monero devlead Riccardo Spagni noted on his Twitter page that it “WILL NOT work” for Monero, since Monero’s core development group (CDG) is going to perform regular updates of the hashing algorithm.

Moreover, the upcoming hard fork will be aimed at making significant changes to the Proof-of-Work (PoW) protocol in order to prevent potential threats from ASICs.

To prevent the centralization of mining, changes would be regularly made in the protocol, making it impossible to calculate Monero using the new high-performance devices. The first update, preventing XMR mining on any types of ASIC chips, has already been released.

Some experts expressed their support for the official devteam of Monero on the issue of updating the algorithm.

Antonio Moratti, co-founder of the GoByte platform, which uses the NeoScrypt algorithm, said that he “would do the same”. He told Cointelegraph:

“GoByte was X11 in the testing phase. And some users have already started mining with ASICs. And we decided for NeoScrypt. Even that the GPU temps are not so good compared to other algos. I think XMR will have a new algo. I would do the same.”

David Vorick, the founder of Siacoin, wrote on his Reddit post:

“Bitmain has historically been very greedy, and very willing to sacrifice the well-being of the community, of their customers, and of the ecosystem, if that means they can make a couple of extra dollars.”

Surge of hashrate

Monero’s steps to prevent potential threats from new Bitmain equipment could have been caused by the surge of hashrate up to 1,07 GH/s in their transactional network, which was observed in mid Feb. 2018, when the values of XMR tokens’ mining process soared.

Monero (XMR) Network Hashrate Chart

Image source: Coinwarz

Some users linked the surge to the subsequent Bitmain announcement to sell used devices. A month ago one popular Reddit user made a post where he suggested that Bitmain might “calculate very thoroughly when to announce and sell them [ASICs] so their customers will be (or think they will be) able to make some pennies”.

Here is how he describes what comes next – “dump their used equipment on the market by batches as the new version batches comes in freshly manufactured”.

Bitmain reputation: developers feel “anxiety”

Earlier, Bitmain had already acquired an ambiguous reputation before the start of sales of a new model. In January, amid negative rumors about the chance of extremely high network values, which could be created by the mass launch of Antminer designed for SiaCoin, the latter refused to support the algorithm at all.

Unexpectedly, Siacoin founder David Vorrick and his ASIC manufacturing company, Obelisk, fell into competition with Bitmain, which almost has a monopoly on Bitcoin mining equipment.

In his Reddit post Vorick expressed dissatisfaction, saying that the developers of Siacoin feel “anxiety”.

Later, SiaTech leader Zach Herbert gave an official green light to Bitmain and said they would “not invalidate A3 miners via soft-fork unless Bitmain takes direct action to harm the Sia project”.

Mine or buy?

Although Antminer X3 can contribute to the production of cryptocurrencies based on CryptoNight technology (DarknetCoin, AeonCoin etc.), the previous equipment for mining XMR usually did not bring a profit comparable to the potential profit from Monero’s trading circulation.

According to the analysis made by Reinisfischer XMR mining is “profitable, but not as lucrative as mining ether”, moreover “it would break even after a year of operations”.

For instance in December with $3,880 (the average price of 12 GPUs) one could earn about $1,940 in 10 days,

Monero Chart

Image source: Coinmarketcap

while CryptoCompare says mining with GPUs for the same price would bring only $325 per month.

Chart

Image source: Cryptocompare

Beyond the immediacy of security issues, in general, Bitmain’s activity does not affect the state of individual cryptocurrencies.

That’s what co-founder of GoByte platform, which works on the principle of decentralized mining – a potential competitor of the current technology, Antonio Moratti, said to Cointelegraph:

“I don’t think a privacy coin would want to gather a lot of attention. XMR can mature further on its own without any further PR scandal.”

Will CryptoNight algorithm be used?

The fundamental task of CryptoNight is to eliminate the gap in the production of tokens between users of standard PCs and owners of specialized ASIC devices. The algorithm technology is based on allocating a data block with an unpredictable sequence in the computer’s RAM, with the data temporarily stored in RAM and not calculated at each access.

Compared with the same Scrypt algorithm, the CryptoNight structure has a number of technical advantages:

  1. small time intervals between blocks (transaction speed less than 60 seconds),
  2. smoothly falling emissions,
  3. less central processing unit (CPU) and graphics card heating than when mining on other algorithms,
  4. use of CPU + GPU binding and thus achieving faster access to RAM, increasing the speed of transactions.

Among other advantages of this hashing algorithm there are adequate conditions for its use on CPUs, where even passive income is possible (for example, on some Intel Xeon E3 users steadily receive up to $2 per month by using CryptoNight).

Who’s next?

Bitcoin, Litecoin, Dash, Decred and Sia – one by one these cryptocurrencies have become “victims” of ASIC-miners. The miners could consider the cryptocurrency becoming more centralized after the appearance of specialized devices, although the practice has not yet proven this.

Monero can become the first of the leading cryptocurrencies that will launch a radical means of combating ASIC-miners through the update of CryptoNight hashing algorithm. The further events will show how much the algorithm will be modified and whether this will affect the sale of Antminer X3 models.

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Monero Devs Follow Through On Threats To Upgrade Algorithm To Maintain ASIC Resistance

After Bitmain’s announcement earlier this month of their new ASIC-powered Antminer X3 designed to mine Monero, as well as other cryptocurrencies based on the CryptoNight algorithm, the altcoin’s developers have released an update that will prevent the new device from being effective, according to Monero core developer Riccardo Spagni’s Github post from March 24.

The new Monero update, called Lithium Luna, is scheduled for April and states that it “slightly changes the proof-of-work algorithm to prevent DoS attacks by ASICs.”

When the Antminer X3 was added to Bitmain’s website on March 15, Spagni (@fluffypony) posted on Twitter that the device would “NOT work” on Monero. The privacy-centered, ASIC-resistant cryptocurrency had posted on their blog back in February that they would counter any crypto miner that threatened their ASIC-resistance by changing their Proof of Work (PoW).

Spagni’s original March 15 Twitter post has updated comments by the developer, who wrote on March 18 that any of the updates flaws are made up by preventing the effectiveness of the Antminer X3:

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Bitmain Announces New Monero-Mining Antminer X3, Crypto’s Devs Say Will ‘Not Work’

Bitmain’s just-released ASIC-powered Antminer X3, designed to mine the CryptoNight hashing algorithm used by Monero (XMR), may not be effective by its first release in May 2018, according to an article by The Next Web published yesterday, March 16.

The new Antminer, announced on Bitmain’s Twitter on March 15, comes at two price points: $11,999 for the first round in delivered May, and $7,599 for the second datch, delivered in June.

However, the project lead at Monero, Riccardo Spagni, linked to Bitmain’s Twitter announcement in his own tweet, stating that their new miner will “NOT WORK [sic]” for mining Monero:

Bitmain is also offering two additional batches that ship after the first two batches, but only to addresses in Hong Kong. The two new batches are priced at  $3,000 for shipping after batch 1 and $1,900 for shipping after batch 2.

Apparently following Spagni’s response, the sales pages for the two Hong-Kong bound Antminer X3 batches were updated to contain the following notice in the product description:

“One major cryptocurrency which is using CryptoNight hash function is about to change their PoW algothrim, and according to their public statement, it is purposely to brick ASIC mining rigs including X3. When you buying it, you are betting that they are wrong.”

The notice adds that there will be no refunds accepted.

In February of this year, in response to potential threats of new types of ASIC mining that would be able to mine Monero, the privacy-centered cryptocurrency wrote on their blog about their “intention to maintain ASIC resistance by swiftly reacting to any potential threat from ASICs and considering slightly modifying the PoW at every hardfork”:

“We strongly believe that it’s beneficial to preserve our ASIC resistance. Therefore, we will perform an emergency hard fork to curb any potential threat from ASICs if needed. Furthermore, in order to maintain its goal of decentralization and to provide a deterrent for ASIC development and to protect against unknown or undetectable ASIC development, the Monero team proposes modifying the Cryptonight PoW hash every scheduled fork, twice a year.”

The Next Web does note that the Antminer X3 is marketed for mining more than Monero, as it is also compatible with Bytecoin, Aeon, Dash, and several others, although the site adds the caveat that there is “no guarantee this will still be the case” by May and June.

Users on Reddit have quickly taken offense to Bitmain’s new Antminer. Reddit user KnifeofPi2 posted yesterday, March 16, an excerpt from a satirical press release alleging that Bitmain was entering the “doorstopper” business:

“When asked why a doorstopper had the word “miner” in its name, Jihan Wu, the CEO of Bitmain, stated that “The Antminer X3 looks, works and sounds like a cryptocurrency miner. It even has a built-in 550 watt heater that hashes an obsolete algorithm.”

Another Reddit user, hodlingvtv, took a more serious approach, writing that “Bitmain is currently performing a large scam”:

“tl,dr: Don’t buy bitmain’s x3. They asic mined monero and now that this will not be possible anymore they want to dump their machines on you.”

The normally secretive Bitmain made the news in late February, when a report showed that the four-year-old company had made profits between $3 and $4 bln in 2017, while American graphics processing unit (GPU) manufacturer Nvidia, founded 24 years ago, made $3 bln during the same time period.