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Halong Mining Is the First Bitcoin Mining Hardware Producer to Implement Overt AsicBoost

Halong Mining announced today, March 7, 2018, that it is embedding AsicBoost in its DragonMint mining hardware. Halong Mining is able to do so because it joined the Blockchain Defensive Patent License (BDPL), giving them access to the patent-pending technology, which utilizes a trick called “version rolling.” With AsicBoost, the DragonMint machines should be up to 20 percent more energy efficient than they would otherwise be.

“We have produced and will continue to produce a significant amount of version-rolling AsicBoost enabled miners, enough to incentivize other manufacturers to follow suit, which they are now freely able to do if they join the blockchain defensive patent initiative to help protect the industry from patent aggression,” the hardware producer writes in its announcement.

As far as publicly known, no other mining hardware producer has implemented the overt version of AsicBoost in its application-specific integrated circuit (ASIC) chips so far.

AsicBoost

AsicBoost was invented by former CoinTerra CTO Timo Hanke in 2016. The technology takes advantage of a quirk in Bitcoin’s proof-of-work algorithm, which lets miners take a sort of “shortcut” to find a new block. This can be done both overtly as well as covertly — though the latter variant is currently not as effective on Bitcoin and has negative side effects, such as an incentive to limit the total number of transactions that are included in a block.

“Unlike covert forms of merkle grinding, [overt AsicBoost] has no incentives to create smaller blocks, nor does it interfere with upgrades to the Bitcoin protocol,” Halong Mining writes.

The Halong Mining announcement is the latest in a series following the introduction of the BDPL, an open initiative to share patents between licensees. Last week, California-based Little Dragon Technology LLC, the current holder of the pending AsicBoost patent,eBits its intention to join the BDPL. This was followed yesterday by aneBits from Bitcoin mining pool Slush Pool that its pool software is now AsicBoost compatible. According to Halong Mining, mining pools ckpool.org and Bitcoin India have since enabled AsicBoost support as well.

“After Little Dragon Technology LLC acquired the patent from the original inventors, we negotiated a license to use AsicBoost in our miners on the understanding that AsicBoost would be opened up to everyone to use, under some form of defensive patent license, in the hopes it can help protect decentralization of Bitcoin mining,” the Halong Mining announcement states.

Regarding the timing of the announcement, Halong Mining said, “Whilst this was being arranged, we were unable to announce our intended use of AsicBoost technology until the patent holder fully opened the patent for all to use under defensive licensing terms which occurred on March 1, 2018.”

Patent Controversy

While AsicBoost has been subject to mucheBits in the past, most of that controversy surrounded the patent on the technology — which could skew competition by state enforcement — and the alleged covert use of it. By making the technology equally available to any company that joins the BDPL, Little Dragon Technology hopes this controversy will come to an end.

Halong Mining shares this sentiment:

“It’s been a long road, but we believe overt version-rolling can create the right incentives for other patent holders in the industry to join the BDPL and create a strong, defensive pool of patents in exchange for access to the technology for energy efficient optimization of the Bitcoin mining process.”

Furthermore, both Little Dragon Technology and Halong Mining said that they hope the Blockchain Defensive Patent License, with AsicBoost now included, will provide a strong incentive for all other mining hardware manufacturers to join the initiative. This would require competing hardware manufacturers to share any patents under the same license, potentially rendering mining hardware patents altogether obsolete.

“The more widely deployed version-rolling is used, the stronger the incentives will become, since version-rolling is the most efficient form of AsicBoost and will deliver efficiency gains in addition to any hardware optimizations or silicon process node,” Halong Mining stated.

BtcDrak, the pseudonymous Bitcoin developer eBits Halong Mining, also proposed a Bitcoin Improvement Proposal (BIP) on the Bitcoin development mailing list referencing AsicBoost. The proposal itself is more generic, however, as it creates a future-proof space for mining optimizations that miners may come up with in the future.

While overt use of AsicBoost does not require a Bitcoin protocol change, it may interfere with the established soft fork activation process. More specifically, AsicBoost interferes with how some software clients interpret potential soft fork activation on the network, which could result in false positives. To mitigate this risk, software clients might need to be updated to allow for fewer soft fork upgrades simultaneously.

“I apologise for the inconvenience in advance, but this is the unfortunate result of restraints while negotiating to get the patent opened and licensed defensively in the first place,” BtcDrak wrote.

Halong Mining told eBits.Co it expects to start shipping DragonMint machines before the end of March 2018.


For more background and information on the Blockchain Defensive Patent License and Little Dragon Technology’s decision to join the initiative, read eBits.Co’s cover story for this month:eBits.

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Mining

Butterfly Labs Corrects Record on Settlement With FTC and Future Plans

Butterfly Labs Inc. has spoken out to eBits.Co for the first time since reaching a settlement with the Federal Trade Commission and denies using customers’ Bitcoin mining machines for their own profit.

As a Bitcoin mining company, the last 18 months haven’t been easy for Butterfly Labs. Until recently, the company had remained silent over allegations that it had kept upfront payments from customers’ even when it failed to deliver the hardware and that it had been using customers’ Bitcoin mining machines before shipping them.

Now, though, after signing a court order on February 25, Butterfly Labs says it wants to set the record straight as it begins the long journey of getting the company back up and running.

“Before the FTC came in we were a serious business [with] a very clear picture of where the business was going,” Jeff Ownby, Butterfly Labs vice president of e-commerce and marketing told eBits.Co. “We had a clear understanding of where the refunds were and the refund liability, [and] we had a clear understanding of the shipping liability that we had, [which] we were tracking very meticulously throughout.”

It had previously been reported by eBits.Co that Butterfly Labs had reached an out-of-court settlement with the FTC amounting to $38.6 million.

That figure was incorrect, as the orders contain partially suspended monetary judgements.

Against Butterfly Labs and co-founder Sonny Vleisides, there is a suspended judgment of $38,615,161. The judgement that Butterfly Labs has agreed to pay is $15,000 and Vleisides $4,000. The suspended judgement only becomes operative if the judgement figures placed against them are not paid. It was alleged that Darla Drake, Butterfly Labs general manager, used machines from the company to mine bitcoins, which caused her to receive a judgement of $135,878. This, however, would be suspended once she surrendered the cash value of the bitcoins the government says she attained.

Butterfly Labs has stated that the allegation that Drake used machines from the company or customers to mine bitcoins is wrong. The company went on to say that this was the smallest machine the company made and was given to Drake, as well as other customer service agents so they could become familiar with them, after the completed delivery of the 65-nm line of equipment as they were unshippable due to the fact that they were under performing. Butterfly Labs said that employees received these machines as gifts to understand how they worked.

“She only mined a total of four bitcoins as at the time it was easier to mine,” Ownby said. “I have no idea why they came up with that amount, but she settled to get them out of our business, so we can try to fix this mess.”

The settlement of $15,000 and $4,000 were agreed upon by both sides so that Butterfly Labs could end the case.

“The company, with the FTC action, was decimated. This settlement was done to avoid any further legal action and to try and preserve any assets we had left,” said Ownby. “We agreed to that settlement only because we didn’t want to deal with this anymore. We were trying to look to the future, so that’s why we agreed to it.”

Nor is there any merit behind the allegation that the company spent millions on saunas and guns, he said.

“We had a massage person come in every two weeks for the employees as an employee benefit,” said Ownby. “It’s these kind of things that get overblown that we kept getting hammered with, and it was ludicrous.”

According to the Federal Trade Commission, Butterfly Labs was taking orders and charging as much as $30,000 for specialized hardware, but very few orders were being shipped to customers. The FTC alleged that Butterfly Labs failed to disclose to customers that they were “using the machines for themselves before delivering them,” and “failed to deliver the computers until they were practically useless, or in many cases, did not provide the computers at all.

Butterfly Labs told Bitcoin Magazine that allegation was untrue, stating that all equipment needed to be tested before shipment in order to reduce the return rate if there was an issue with the hardware, thus taking away the customers’ ability to mine Bitcoins.

“All the equipment has to be tested, [which] made our return rate less than 5 percent, which is great,” said Ownby. “Any piece of electronic equipment that goes out the door is tested before it’s shipped, and that’s all we were doing. Burn testing typically took less than two hours and in rare cases as much as two days, if necessary. To say that we mined with customers’ equipment is ludicrous.”

So how did Butterfly Labs get itself into this situation in the first place?

The Bitcoin industry is a tricky industry to understand. As a relatively new space that is gaining popularity many, such as the FTC, believe that it needs looking into, particularly when a company grows at a fast pace, which was the case with Butterfly Labs.

In 2013, the FTC received around 300 complaints from customers who were not happy with the service from Butterfly Labs. At the time, Butterfly Labs was a pre-order industry, which was a time when the market was shifting and could have played a factor in customers getting nervous about their hardware, thus sending in complaints to the FTC. Ownby says that a clear message was posted on the website about pre-ordering in a changing environment.

“We were very clear, in very bold print saying that if you are uncomfortable with waiting for this product, do not order. This was something that was very clearly printed on our website. It said: “If you’re uncomfortable waiting until the development is complete and the product is shipped, do NOT pre-order this product.”

That, however, did nothing to stem the number of complaints to the FTC. This chart illustrates that the complaints Butterfly Labs started receiving came in when shipment of the 65-nm line of equipment was increasing in 2013. In 2014, 93 percent of all complaints were resolved.

“This was our fourth product line, so we had already taken orders for, developed, and shipped out three or four previous product lines,” said Ownby. “This was not a secret; it was out there. People had received our miners. Most of our customers that were in our 65 nanometer queue, as well as our 28 nanometer queue, were repeat customers.”

He said it came as a surprise to Butterfly Labs when the FTC put out a press release calling the company “bogus” and “scammers,” obtaining a court order in 2014 to shut down Butterfly Labs and freeze its assets. As a result of the three-month shutdown, a temporary receiver was put into place that cost Butterfly Labs more than a million dollars that had to be paid from customers’ money. Not only that, but FTC legal bills and actions came from customers’ money, too, while the company lost sales as a result of the FTC press release.

Despite this, Butterfly Labs was reopened in late 2014 after the U.S. District Court rejected a request by the FTC for an injunction, asset freeze and appointment of a receiver. Judge Wimes ruled that the FTC was unlikely to succeed in their arguments. (Docket 201 Case No. 4:14­CV­00815­BCW). According to Butterfly Labs, this shutdown is what caused customers not to receive a refund or get an order from Butterfly Labs.

“The FTC kept coming and decided that they were still going to have their case against us. They had unfettered access to everything within our facility,” said Ownby. “They had everything they needed to form a case against us, and after three months of being shut down, the judge basically told them that they don’t have a case anywhere.”

Butterfly Labs does admit, though, that there were legitimate complaints about being late.

“Every single hardware manufacturer in the Bitcoin mining space was late,” said Ownby. “Every single Bitcoin mining hardware manufacturer in the U.S. had some sort of court action against them and went bankrupt.”

So what is the future of Butterfly Labs?

Despite the company experiencing a setback, it believes there is still a Bitcoin market and upcoming blockchain revolution it wants to be part of.

“The FTC punched us in the back of the head, and then we were in defensive mode for the next year and a half,” said Ownby. “Unfortunately, the mischaracterizations that they put out there just stuck and we weren’t able to defend ourselves. It’s not going to be an easy thing to come back from, we know that, but we’re going to try our best and see what we can do with this.”

For now, though, the company says its top priority is to get back up and running and allocate the revenue they make to customer refunds.

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Mining

Bitpay Breaks Daily Volume Record with Butterfly ASIC mining release

Butterfly Labs had just unveiled their latest addition to their line of specialized Bitcoin mining computers: the Bitforce SC Single. Butterfly Labs already provides some of the most powerful and economical Bitcoin mining hardware available – its currently most popular SHA256 Single product provides a mining hashpower of 832 megahashes per second ($3 per day under current network and market conditions) for a mere $599, or $719 per GHps, a higher ratio than any other FPGA on the Bitcoin wiki’s mining hardware comparison list. Its electrical efficiency is not unmatched, but nevertheless impressive, managing 10 megahashes per joule (the ZTEX USB-FPGA module beats is with 22), but the difference is not a great one; at 10 cents per kilowatt hour electricity costs consume about 6.5% of SHA256 Single’s revenue. The SC Single, however, will put even these figures to shame; when it comes out in October it will provide a staggering 40 gigahashes per second for $1299 ($32 per GHps), paying for itself in eight days if the rest of the network were to remain constant.

The technology that Butterfly Labs is using to attain such a high hashrate is known as application-specific integrated circuits, or ASIC. In simplest terms, ASIC is simply the next step along the progression toward more and more specialized hardware for Bitcoin mining. The first miners ran on ordinary computers and relied on the computer’s central processing units, or CPUs, general-purpose hardware which runs all of the software applications that we use every day. Then came graphics processing unit, or GPU, miners, still using ordinary computers, although now only a subset of them, but relying on specialized hardware chips designed to make very similar computations millions of times very quickly by doing them in parallel – a function originally intended for applications such as playing movies and making the vector computations needed to run modern 3D games, but just as usable for the repeated hashing proof of work process employed in the Bitcoin mining protocol. Next came field-programmable gate arrays, or FPGAs, which are essentially arrays of basic components called logic blocks the interconnections between which can be programmed by the user to efficiently perform a specific function. The next step, application-specific integrated circuits, are the highest level of specialization: chips that are manufactured specifically to serve one function and one function only. Within ASICs, there are further gradations of specialization: an intermediate stage called structured ASICs, which benefit from standardized manufacturing like FPGAs but are “programmed” by the manufacturer using masks, and full custom ASICs, which use a layout built specifically for the task down to each individual transistor. The reason why Butterfly is able to so vastly outstep its present competition is that Bitcoin mining is currently at the FPGA stage, but Butterfly managed to skip structured ASIC entirely and create a solution that is built using the full custom approach.

Of course, Butterfly Labs’ current monopoly on this new type of hardware will not last long, and in time more and more miners will begin to use ASIC technology to increase their mining output. The result will be a massive increase in the Bitcoin network’s hash power, as a single unit of Butterfly’s SC Mini Rig, the most powerful computer that will appear in the SC line, will be able to match the current hashpower of 8% of the Bitcoin network, exceeding all but the largest three mining pools, for a mere $30000, as well as a continuation of the present shift in the breakdown of Bitcoin mining costs away from electricity and toward capital expenditure.

The SC Single’s release also represents a milestone for Bitpay. The leading Bitcoin payment processor had been experiencing rapid growth since March, increasing its monthly volume from $11,000 in March to $40,000 in April and $170,000 in May, quadrupling every month, and the release has brought Bitpay yet another record: over $250,000 processed in a single day. Orders came in from 17 different countries, including Belgium, Russia, Finland, Poland and the Philippines.

Bitpay CEO Anthony Gallippi is certain that the fundamentals behind his business will ensure its continued growth. In a press release announcing the new daily record he states: “Our payment service is unique in the marketplace. Using BitPay, an internet merchant can accept a payment from any country on the planet, instantly, with zero risk of fraud. No other payment processor can do this. American Express cannot do this, PayPal cannot do this, Mastercard cannot do this. BitPay can.” Bitpay has the disadvantage over plain Bitcoin transactions that it takes a 0.99% fee for every transaction, but it distinguishes itself with its ease of use as well as the possibility of automatic conversion and deposits into the merchant’s bank account, including insurance against sudden fluctuations in the Bitcoin price. Gallippi is currently advertising his service to credit card and Paypal using merchants and consumers maligned by chargeback fraud and identity theft, stating in a venture capital pitch last month that identity theft claims over 10 million victims per year. Although Bitpay is far ahead of its competition in market share for now, that may later change; MtGox has recently come up with a checkout system of their own which is “completely free” and very easy to use; all it takes is creating a standard MtGox account, pasting the HTML code for the checkout button onto your webpage, and editing your server-side code to handle the POST request that the button sends whenever a payment is successfully made. It remains to be seen how much market share MtGox will be able to capture with this alternative.

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Mining

BFL Confirms 65nm Process for SC Lineup

Aiming for longevity and efficiency of their products, Butterfly Labs (BFL) has confirmed their new SC chips will be using a 65nm process, the same transistor size as was used for Intel’s wildly successful Core 2 Duo and Core 2 Quad processors.As BFL’s main competitors, Avalon and bASIC, are reportedly built on 110nm and 90nm processes respectively, BFL should be able to hold the position of market leader in mining efficiency for some time to come.

BFL’s soon-to-be-released SC product lineup includes the Jalapeno ($149 for 4.5GH/s), the Little Single SC ($649 for 30GH/s), the Single SC ($1,299 for 60GH/s), and the Mini Rig SC ($29,999 for 1,500GH/s).All of these products will utilize BFL’s full custom ASIC 65nm chips, expected to run at 1 watt per GH.

Josh Zerlan, a BFL representative, expects to have chips in hand by the end of November and begin initial shipments shortly after.The number of units to be shipped in the first batch has not yet been determined. Josh also released new photos of the heat sinks for our viewing pleasure.

eBitseBits

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