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Honeyminer Signs Up 50K Users for Easy Crypto Mining App

Honeyminer, the crypto mining app that lets users earn bitcoin with laptops, is fast gaining traction.

Revealed exclusively to CoinDesk, the startup’s user base has swelled to almost 50,000 since launching in June. A third of the new customers are located in emerging markets and 5 percent hail from Africa, the company said.

In the startup’s Telegram channel, one such user in Kenya responded to a survey saying he is using Honeyminer to acquire his first bitcoin stash.

“I’ve had an interest in bitcoin, cryptocurrencies and blockchain but I never quite understood what they meant,” wrote the user, Steven in Nairobi. “I am trying to raise money to buy a more powerful gaming desktop in the future where I can earn an average of $3 – $4 per day. So far I am one happy miner.”

Other developing nations with thousands of users flocking to download Honeyminer include India, Indonesia and the Philippines, co-founder Noah Jessop told CoinDesk.

He said:

“We’ve stumbled into something that was far bigger and more international than we imagined.”

This flood of users is proving the mining pool software can work on computers with 1,100 different types of graphics processing unit (GPU) cards, according to Honeyminer co-founder Larry Kom. Honeyminer converts mining rewards from GPU-mineable cryptos such as ether and zcash into bitcoin and then deposits it directly in users’ digital wallets.

Kom told CoinDesk the sheer diversity of insights users have provided about GPU mining with various hardware types is invaluable. Jessop said he has also been inspired by the variety of new miners.

“I’ve been so struck by people who are trying to get a rig set up,” Jessop said. “We’re coming up on 10,000 folks that are running homemade rigs, or even industrial-type rigs.”

Image via Honeyminer

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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How to Fight the ASIC Mining Threat

Michael J. Casey is chairman of CoinDesk’s advisory board and a senior advisor of blockchain research at MIT’s Digital Currency Initiative.

The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.

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Cryptocurrency advocates are constantly trying to convince non-experts of the advantages of permissionless blockchains, typically by explaining how a decentralized system of consensus-based record-keeping produces an immutable, censorship-resistant ledger.

But this doesn’t exactly square with reality.

There’s a strong argument that first bitcoin, and now other permissionless cryptocurrencies, have become less decentralized over time, even as their value has grown.

The culprits, many believe, are application-specific integrated circuits – the expensive, super-fast hashing chips known as ASICs, the engines driving the rigs in giant mining farms. They have so affected the market structure of blockchain networks that they are now the source of much division within their communities, stirring debates over potential forks in the code and exposing the need for blockchains to resolve one of their other core challenges: governance.

The reason many crypto purists have a problem with ASICs is that individuals like you and I, using comparatively sluggish PCs or even more powerful graphics cards, can’t compete with the ruthless efficiency with which the ASIC mining farms carry out the proof-of-work consensus test and win bitcoin rewards. If the little guy can’t participate, they argue, the result is re-centralization.

What’s more, there’s a dependency on a dominant chip manufacturer, Bitmain, creating a kind of vulnerable, trusted third-party relationship.

Not everyone sees ASICs as a negative. There’s a security argument, for example, that all that expensive, efficient hashing power makes for a more formidable expenditure barrier for a potential “51-percent attacker” to overcome.

But the sense that ASICs are a danger to the decentralized dream of cryptocurrencies is widespread, which is why creators of different altcoins have made various engineering efforts to stave off the perceived threat.

Short-lived fixes

They’ve designed “ASIC-resistant” proof-of-work algorithms, altering them to require extra memory-based computing tasks beyond the basic hashing function. The idea is that this more complicated, multi-faceted workload depletes the singular advantage of ASICs – which are really just very fast one-trick ponies – and renders it worthless for chipmakers to expend capital developing them.

But in many cases, this is now looking like a temporary fix, as chipmakers seem to be increasingly designing ASICs that can carry out all the tasks assigned by these “memory-hard” algorithms.

These developments are sowing divisions within blockchain communities. Miners working with pre-ASIC devices – mostly graphic processing units, or GPUs – are supporting hard fork measures that would make new ASICs worthless again. But anyone who has invested in the new products is opposed to these anti-ASIC measures. Developers seem split between those who hold an ideological aversion to ASICs and others who support an expansion in network hashing power and efficiency.

This brings us to governance.

It would seem the ideal time for a particular cryptocurrency community to set up its plans for dealing with ASICs – which almost certainly means planning for a hard fork – occurs well before even the prospect of one of the fast chips being created for their particular coin.

In bitcoin’s case, it’s far too late to do anything with the Core code. Even though one part of the community is so obsessed with decentralization that they fought a block-size increase on those grounds, there are such entrenched stakes in ASIC mining that it would be impossible to launch an ASIC-resistant code upgrade.

But even with less-established communities, such as zcash and ethereum, the mere prospect of forthcoming ASICs is prompting divided views, as Rachel Rose O’Leary’s reporting in CoinDesk shows.

Vertcoin’s model

What may be needed is something along the lines of what vertcoin has achieved.

Not content to simply build a proof-of-work algorithm that includes tasks  favoring GPUs over ASICs, the vertcoin community has also informally agreed upon a kind of pact to fork the code if and when a vertcoin ASIC appears.

So far, the system has worked, perhaps because the mere threat of action by the vertcoin miners is enough to scare off would-be ASIC developers. That threat is backed by the fact that vertcoin has already smoothly forked twice to address issues separate from the ASIC threat.

What I like about the vertcoin solution is that it recognizes effective governance is not just technical. It’s not something you just embed in lines of code. You need that human component.

Until now, this has kept the vertcoin mining community more or less solely using GPUs, which as lead developer James Lovejoy explained during a debate about ASICs at MIT with sia lead developer David Vorick, is a great equalizer.

This is due to the fact that GPUs are relatively inexpensive and have uses beyond monolithic cryptocurrency mining. Whether to run a gaming solution or to mine a different coin, GPUs have a life after crypto, and that mitigates the cost of capital expenditure for all.

But Vorick countered that this solution is far from perfect. Eventually, he argued, the economics of GPU mining could become so profitable that it would attract a dominant player, reintroducing third-party risks.

Social compact

What’s needed is what Lovejoy terms “generalized commodity hardware,” a greater degree of availability for a form of GPU mining equipment anyone can use.

But how does one achieve that goal if the tendency is toward monopoly powers and dependence on a single company, whether it’s a GPU producer like Nvidia or an ASIC maker like Bitmain?

This, too, is where human governance matters.

At the extreme end would be government intervention, such as anti-trust regulations. But that kind of defeats the purpose of cryptocurrencies. A better approach would be for communities to develop self-organized models of internal regulation and market structuring.

Drawing again from the vertcoin example, miners and users could, say, agree to steer funds into mining equipment built on open-source standards or committed to commodity-like status.

Whatever the solution to achieving decentralized mining, it appears to lie in combining on-chain software rules with another set of rules based in off-chain agreements.

In other words, combining the protocol layer with the human layer.

Bitcoin mining farm image via Shutterstock.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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War On Miners? Maybe Not On This $2 Billion Blockchain

One of the world’s largest cryptocurrencies could soon put out a welcome mat for more controversial miners – that is, if one of its core developers has his way.

Indeed, amidst what has been broadly called a “war on miners,” with cryptocurrencies including ethereum, monero and siacoin taking aggressive steps to limit the effectiveness of certain types of hardware, developer Cody Burns has published a proposal that would alter ethereum classic’s underlying algorithm to accommodate the technology.

If accepted, the change would make ethereum classic something of an anomaly among major cryptocurrencies, whose communities have largely viewed the powerful mining machines in question – application-specific integrated circuits (ASICs) – as a threat to maintaining an open competition for the rewards on their respective blockchains.

But if there’s a general fear over how ASICs could upset the balance of major cryptocurrencies, it’s not without good reason. In the minds of many crypto enthusiasts, the concerns aren’t just speculation, they’re an inevitability based on historical data.

Case in point is the bitcoin blockchain, which saw less expensive, and less effective, graphic card mining eclipsed by not just ASICs, but by a few large companies that came to dominate their creation, marketing and delivery.

As such, the argument among many developers is that the release of ASICs is so problematic, it’s worth updating the software just to avoid them. (Monero’s developers, for example, went so far as to ask all software users to install new code earlier this month that would resist ASIC mining.)

But Burns sees another way, finding issue with a prevailing view he believes has turned the successful companies that today secure and process cryptocurrency transactions into boogeymen.

Burns told CoinDesk:

“The chief complaint I hear most often is not that ASICs are themselves bad, it is that Bitmain is the sole source of the ASICs.”

And, he believes, the only way to increase competition in the ASIC manufacturing space and keep centralization at bay is by allowing ASICs to run rampant.

As such, his proposal, ECIP-1043, looks to remove a mechanism by which ethereum classic’s algorithm creates random variances in its memory storage requirements, code originally put in place to reduce the effectiveness of ASICs.

Good for GPUs too

But if that sounds controversial, Burns thinks it’s still possible to win support for the idea.

For one, not only will the change allow for ASICs to mine ethereum classic, but as it decreases the need for extra computer storage, it should also lower the cost of GPU mining – something likely to win over existing miners who are reluctant to pay for new and improved hardware.

To do this, Burns wants to delete ethereum classic’s so-called “DAG” function.

One of the aspects that ethereum classic still shares with its rival ethereum is that every 100 hours – or what’s called an “epoch” – the DAG adds random data to the blockchain, which in turn causes the storage requirement for mining chips to grow.

In order to mine ether or ether classic, then, mining hardware must contain sufficient memory, or RAM, to store this graph, as well as backup storage, as the memory requirement increases.

“The thinking behind it was, it is costly to add RAM to an ASIC so we will keep the RAM requirement a moving target,” Burns told CoinDesk. “Anyone developing an ASIC will be creating equipment that will become obsolete very quickly.”

In this way, the DAG on ethereum and ethereum classic has grown from 1 GB to 2.5 GB, which according to Burns, has become a burden on GPU miners as well. And because of the way the DAG is programmed, this burden will only get worse as time goes on.

With the DAG and the memory requirements of the blockchain itself, GPU miners need about 4 GB of memory in order to cope with the data set.

Burns told CoinDesk:

“That is a huge overhead in cost for a card that may or may not last one year.”

While ethereum has always seen miners as a “necessary evil that will be chopped off if possible,” he continued, ethereum classic has allowed miners an opportunity to comment on design choices, since they are viewed as a long-term security measure.

As such, setting up an architecture that might harm miners – like blocking ASICs or keeping the DAG requirement – is considered a bad thing in ethereum classic developers’ eyes.

ASIC risks

But convincing all ethereum classic users to go along with the proposal might not be so easy.

For one, the ethereum classic community, which kept operating an early iteration of the ethereum code abandoned by its original developers, has been steadfast about its driving mantra: “code is law.” As such, it’s questionable whether those transacting over the software would want to change that law now.

Further, the move, if accepted, won’t come without its risks. As it would require a system-wide upgrade, or hard fork, in order to activate, it would need to have unanimous support from the mining community to prevent a split.

Furthermore, because resetting the DAG would encourage ASIC development, there are concerns that the more efficient hardware could overtake the network and make GPU mining obsolete.

Yet, Burns said that, in the long-term, because ASICs are more efficient than GPUs, it might be the better choice for the proof-of-work blockchain.

“If proof-of-work is the long-term goal of ethereum classic, systems need more energy-efficient mining equipment. ASICs are the long-term answer to that need,” he told CoinDesk.

Burns summed up the situation, saying:

“It is less a case of being ASIC resistant as being ASIC competitive.”

Mining equipment image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Motherboard Maker ASRock Confirms Plan to Sell Crypto Miners

ASRock is planning to sell four graphics cards (GPU) specifically geared for cryptocurrency mining.

The company unveiled its Phantom Gaming Series last week, based on AMD’s RX series. An ASRock America employee confirmed to CoinDesk that four of the cards – all of which are versions of the RX570 series – are “for mining only.” A fifth RX570 8G OC version, the employee added, is the gaming-oriented version of that product.

The confirmation comes after a presentation screenshot was posted on Twitter late last month by highlighting the planned products.

The move signals that ASRock – which released a mining-specific motherboard back in 2013 – is looking to capitalize on the demand for GPUs by miners, who use the tech in the energy-intensive mining process. That demand has led to companies like AMD and Nvidia to see growing sales (though both firms have said that cryptocurrency miners only form a small part of their customer base).

According to a report from PCGamer, which covered last week’s reveal, the RX570 series will run AMD’s Radeon Software Adrenalin Edition. That’s a notable detail because just prior the announcement, AMD updated the same driver to better handle cryptocurrency mining processes, as CoinDesk previously reported.

The confirmation came the same day that Bitmain, the world’s largest maker of bitcoin mining hardware, unveiled a new application-specific integrated circuit (ASIC) dedicated to cryptocurrencies like ethereum and other ethash-based coins. The Antminer E3, which is expected to ship in July, quickly sold out after the China-based company started accepting preorders.

Cryptocurrency mining rig image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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AMD: GPU Business Could Take Hit If Crypto Miners Stop Buying

A drop in demand for graphics cards (GPUs) by the world’s cryptocurrency miners could ‘materially’ impact AMD’s chip business, the company disclosed this week.

In its most recent 10-K annual filing, AMD – one of several firms to ride the recent wave of demand for GPUs (which are needed for the energy-intensive mining process) – highlighted how “the rise of cryptocurrency prices and the introduction of new cryptocurrencies created a demand for our GPUs in 2017.” While the company offered no specific figures, the disclosure, published on Feb. 27, is in line with past predictions from AMD, which suggested near the end of 2017 that its GPU business was getting a lift thanks to crypto-miners.

That state of play might not last forever, however.

In the 10-K, AMD indicated that several factors could change the environment on the GPU front, highlighting market and regulatory risks that could lead to a decline in the number of GPUs being bought by cryptocurrency miners.

The firm wrote:

“The cryptocurrency market is unstable and demand could change quickly. For example, China and South Korea have recently instituted restrictions on cryptocurrency trading. If we are unable to manage the risks related to a decrease in the demand for cryptocurrency mining, our GPU business could be materially adversely affected.”

The prediction that volatility could alter the pace of demand is shared by others in the space, including rival GPU maker Nvidia.

During an earnings call in early February, Colette Kress, Nvidia’s chief financial officer, said it was “hard to quantify” how much of its GPU revenue came from cryptocurrency miners, adding that “cryptocurrency trends are likely to remain volatile.”

Still, the inclusion in its most recent filing serves to highlight how AMD is among a growing list of companies – primarily financial institutions – to acknowledge the impact that cryptocurrencies and blockchain technology will have on their bottom lines.

AMD Ryzen GPU image via Joerg Huettenhoelscher / Shutterstock

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Nvidia CFO: Crypto Mining Demand Beat Expectations in Q4

Fourth-quarter demand from cryptocurrency miners for GPU maker Nvidia’s products was bigger than anticipated, the company’s chief financial officer said on an earnings call today.

“Strong demand in the cryptocurrency market exceeded our expectations,” CFO Colette Kress said, issuing the remarks as the company unveiled its fourth-quarter earnings for 2017. The company banked $2.91 billion in revenue during that period, an increase of more than 34 percent compared to the same time a year prior.

That said, Kress stressed that the demand the company has seen in months past could shift, depending on the fortunes of the cryptocurrency market.

Kress commented:

“While the contribution of cryptocurrency mining to our business is hard to quantify, it is likely to have been higher than in previous years. However, we remain committed to our gaming demands as cryptocurrency trends are likely to remain volatile.”

Nvidia’s leadership, including CEO Jen-Hsun Huang, have struck bullish notes on the boon of cryptocurrency mining for its bottom line. Elsewhere, the company has indicated that it anticipates mining to ultimately form a small part of its overall earnings picture.

The company did not plan for or expect increased profits from cryptocurrencies, an analyst later said on the call. In response to a question about how Nvidia modeled cryptocurrencies, he responded that they “modeled crypto approximately flat.”

“There’s a lot of dynamics going on in gaming,” the analyst continued. “One dynamic is there’s a fairly sizable pent-up demand going into this quarter, but I think the larger dynamics that are happening relate to just the amazing games that are out right now.”

Image Credit: Matthew Corley /

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Cryptocurrency Price Surge Could Boost GPU Sales, Says Wall Street Analyst

Prices increases in ethereum, monero and other cryptocurrencies could spark a sales boost for makers of graphics cards (GPUs), according to one Wall Street analyst who covers the market.

In a research note to clients over the weekend, Mitch Steves of RBC Capital Markets argued that recent double-digit percentage increases in prices for some cryptocurrencies could drive more miners to enter the market, as well as drive established miners to expand their capacity by buying new GPUs.

Mining – an energy-intensive process by which new transactions are added to a blockchain – has already resulted in notable sales boosts for companies like Nvidia and Advanced Micro Devices (AMD), as previously reported by CoinDesk.

“We are flagging this now, as the payback period has decreased materially which may lead to continued strength in GPU sales related to cryptocurrency mining,” Steves wrote, adding:

“For illustrative purposes, when the price of ethereum was at $300 the payback period was approximately 9.4 months; today it is now approximately 5.6 months – a change we view as material.”

After bottoming out as low as $286 in early November, ethereum surged to $453 – a 58 percent increase – over the weekend. Monero has nearly doubled in value over the course of the month from $82 to $161, while zcash has surged 49 percent from $213 to $318 during November.

A resurgence in mining demand would be noteworthy because many observers – including Nvidia and AMD, the primary manufacturers of the GPUs used in mining – were predicting just weeks ago that the cryptocurrency mining boom – and thus GPU sales – was beginning to tail off after posting eye-popping sales figures and exhausting inventories in the first half of the year.

In its third-quarter earnings report, Nvidia noted that mining-related GPU revenues were down from $150 million in the second quarter to just $70 million and predicted that trend to continue. Lisa Su, AMD CEO, similarly told investors on her third quarter conference call that “there will be some leveling-off of some of the cryptocurrency demand.”

According to Steves, that outcome may not be so certain anymore.

While noting that it’s still too early to assess the market’s long-term sustainability, Steves said that it is likely due to a confluence of technology improvements and more traditional investors taking interest in mining.

He concluded:

“The ‘cat is out of the bag’ so to speak and we wouldn’t be surprised to see more and more institutional money and high-net-worth individuals invest in the rapidly growing space.”

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Zcash Company, the for-profit entity supporting zcash’s development.

GPUs image via ezphoto/

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at