Future of Zcash mining (circa 2019 and 2020)


#1

Folks: after extensive study, consultation with other people in the industry, and public discussion on this forum and many other places, the Zcash Company has decided we’ll support a new version of our zcashd software which implements changes to mining.

When?

Nothing will change soon and nothing will change without extensive advance notice (like, a year of advance notice). In addition, once we do make a change that would affect currently existing mining hardware, we’ll make sure that the effect sets in gradually instead of bricking them overnight, or else we’ll make sure there’s enough advance notice and transition plan to make everything go smoothly for everyone.

Here is our current sketch of our development priorities for the next two years (which is the duration of the remaining first Dev Fund — 2% of the coins taken out of the original Founder’s Reward which is 20% of the coins):

We’ve done two Network Upgrades so far — Overwinter that activated in June and Sapling that is about to activate in a couple of hours!

We’ve decided that the next Network Upgrade that we’ll support the software for will activate in the fall of 2019 (perhaps even one year from today on October 28, 2019!). And, that it will activate some change to Zcash mining.

Why change mining?

Our goals are:

  • Preserve and increase network security and stability. Zcash has succeeded so far at maintaining network security and stability, but the 51% attacks that have been executed successfully, and other threats to stability and security, require us to improve the protocol to better protect the users. How to achieve this goal is contentious, because people have different opinions about what contributes to, or undermines, security. But, it is a central goal. The whole point of Zcash is to let users transact safely without having to rely on a central third party.
  • Increase the number and type of people who can acquire Zcash by mining. This goal is not necessarily achievable (because economic factors like Economies of Scale cannot be solved by computer protocol hacks), at least not long-term, but we are going to try (again) to make it more effective and more widespread for more different kinds of people to acquire Zcash by mining. I often think of my 14yo son, who used to mine Zcash on his gaming rig (when he wasn’t playing Fortnite PugBee). I think it would be really great if Zcash could be more accessible to more 14yo gamers. Also Venezuelans, who sometimes mine cryptocurrencies on their GPUs (https://www.caracaschronicles.com/2018/10/22/the-crypto-talk-why-the-world-needs-digital-cash/).

What are the details?

We’ll work out and post more details soon. Right now we’re all focused on a safe and stable rollout of Sapling — the biggest Zcash upgrade ever. I just wanted to get this heads-up out there so that everyone knows we are not committing to “status quo” on mining throughout 2019 and in fact we’re committing to making changes to mining, which changes will start kicking in before the end of 2019.


Stop ASIC mining for Zcash
Let’s talk about ASIC mining
Mining t adress
#2

Although I understand and don’t think that it’s a bad decision in itself, I was, personally, looking forward to having others improvements.

Bitcoin has been in this mining debate for a few years in advance and everything worked out alright so far. Sure, there were some bumps in the road, but I don’t think anyone would criticize Bitcoin’s security in relation to others cryptos.

If we were to aim to tweak with that, I’d very much appreciate a larger approach, maybe developing new consensus protocols or working on a Proof of Stake solution - if that evens works at all, which I’m not sold on. I don’t think tweaking with mining aspects is the optimal solution to bring value to the protocol.

It’s my personal opinion that the time and money would be best spent researching new scalabiliy / features. Perhaps succint blockchains, token issuances, payments channels, and others. Basically new features/ideas and optimizations so we can build the best decentralized cash possible.


#3

I am wondering if it is possible to integrate Coda and/or BOLT within the next 2 years in addition to mining changes. I doubt a mining change would be the only feature of the next network upgrade. Hopefully ProgPoW will be one of the possibilities and not just a parameter tweak. I guess we will see what happens with BTG and ETH in the meantime.


Let’s talk about ASIC mining
#4

While i think it’s a good thing to make future plans i personally think this one will absolutly fail. I can see the valid logic behind the thoughts but it lacks forseeing the future in my opinion.

Here some points that make me sure it will fail if the change is related in anyway going GPU POW again:

  • by October/Novemember 2019, mostly the time when ETH will introduce POS GPU mining will be no more giving any profitablity for any private personal miner that hasn’t access to cheapest electricity. The ETH POS change will free up so much gpu hashpower and shift this haspower logically to the other still profitable coins that i would call it even flooding what’s going to happen. ETH announced that the upgrade period changed from 6 to 8 months these days, means if Constantinople goes online in February 2019 there is a good change POS will coming 8 months later, thus October 2019.

  • Transaction Speed. ZEC with POW is still one of the slowest coins, just limited obviously due POW minig. Seriously, it’s a pain to send slow coins somewhere at the moment compared to really fast ones. Going POS too would fix this issue.

  • Transactions per second. Again a huge limitation due POW. Currently we are on average 17 transactions per second. Nowadays this is a joke to be honest. My personal view is that everything below 1000 in future won’t be of any interest when talking about mass adoption and real use cases. Damn, 17 transactions, lol, we are at the end of the list with this transaction per second number only beaten by Bitcoin and some others. Again, currently only POS (POS like) conensus would improve this as well, but not POW.

  • Geographical centralization. Every project staying with POW will suffer from low electricity cost region centralization. Just logical. The majority of the Asic coins by now are only mineable in such regions, same goes allready for a lot of GPU coins allready and ones ETH goes POS this will as well favour the huge GPU mining farms with access to cheap electricity and of course private miners that luckely life in such regions, hence why i call it geographical centralization. That’s just the logical future of POW in generally. For example just ask how many miners are left in Germany with at average 0.30 USD/kw/h electricity costs??? With some expectations in east europe and iceland whole europe has very high electricity costs. Again POS would be a better solution as it doesn’t require electricity costs to run. While the move away from Asic is a good one it wouldn’t fix this problem. This factor would be eleminated for sure with a given POS design.

  • Security: , staying on POW still has a security risk, being from mining pools or from mining facilities doesn’t matter at all. Again, once ETH hashpower gets released we don’t know how this huge shifting of hashpower would affect another POW gpu algo used by ZEC than. Eventually nicehash ability to rent hashpower would than be a real threat again having in mind that x times the hashpower of ZEC gets released on a free market due the ETH POS switch. Same for mining pools. These 51% issues don’t get fixed at all, maybe with a new algo they get improved somehow, but not fixed. Again POS would eleminate them both, the 51% attack and the miningpool issue, instantly. From a security point of view POS (POS like) design would fix these issues best.

  • Venezuelans as you mentioned, these guys in a poor country have access to the cheapest electricity worldwide. While i’am all for helping them i’am not sure that giving them the best POW mining access is fair at all having in mind that 99% of the world has way higher electricity costs than venezuela.

  • FIAT: Why the hell rely on something that needs to be paid with FIAT? No matter if Asic or GPU, POW mining hardware is paid in FIAT. Money and Capital that could be used for directly investing into ZEC instead of driving out money from Cryptospace into FIAT. I would agree to the “gamers” argument if POW would still be on a CPU, but unfortunatly it’s not, hence the view gamers doesn’t play a role at all when it comes to mining.
    Millions and Billions of FIAT have been paid for hardware and other Millions and Billions are still being paid in FIAT for electricity. That’s money that could be used directly in giving projects, direct investments into projects. Currently we invest MORE into hardware companies, electricity companies and even pay taxes and VAT for all this. This is a devils circle with POW. We have to mine and sell (soon or late) the reward to reverse it to FIAT to pay for hardware and electricity and at the end even to pay taxes (again in FIAT) in case we still made a profit. The current POW mining state isn’t establishing crypto at all, it fixes us miners to FIAT. Instead of people bringing in capital with POW we force it out. Again currently only POS like design fix this issue because everybody invests directly in his coin not wasting anymore FIAT for hardware, electricity, facilities, working hours whatever!!! Actually i think this is the strongest argument in POS even not many seem to realize it.

Rich get richer: While controversal here compared to POS it’s for sure a given fact for POW mining. The big pockets have cheap access to electricity, get cheaper hardware, maintain them cheaper and and and. This with the mentioned bevor geographical centralization issue is as well a major fact that in the long run only the big mining facilities with access to cheap electricity, maybe cheap working hours, countries that subsideize crypto mining are in the best position. Of course in POS you have a similar issue with the big pockets able to buy the biggest stake but than again:
a.) there are at least some mechanisms available to reduce this gap like maximum stake, reduced rewards after given stake amounts, penalty for bigger stakes, random factors and and and. So at all there is whole spectre the POS design would allow this gap to be smaller while in POW there is nothing to prevent this.
b.) actually here is even a security factor involved, as the bigger stake has no interest in whatever bad intention as he is liable with his stake.
c.) Sell pressure with a POS design would be removed if someone doesn’t need to sell constantly for covering electricity and hardware. This alone would close the gap a lot between the richer and the rest. In POW mining the rich with cheap electricity mining farms mines a ZEC for example way cheaper than we private miners. With POS the price would be equal for both. In best case the rich has gets just a minor discount, compared to his current POW advantages just a minor issue at all, hence again a mechanism to close the gap with POS.

Mass adoption: Yes, everybody is talking about it, but how many really do something for it??? I’am well aware that every miner (Asic/GPU) will say that mining helps mass adoption, mostly because they want to make profit with the hardware they invested in. But, if we really think honestly about it, how mass adopted can it be to use specialised high end mining hardware? Whose relatives really want to deal daily with mining pools, stratums, setups, special command in mining software and investments in hardware? That’s not mass adoption. Mass adoption is something that easly could be setuped and used by really everybody without hadware and technical knowledge restrictions. Just readed yesterday about a new project where the wallet is intregrated in the browser and another one an email wallet. Here a huge advantage of POA for example, mining with your ioT devices, be it a TV, a fridge or whatever has ioT. Or of course POS, installing an easy design POS wallet on your laptop, old PC or even cell phone should be an easy task. Even your grandma should be able to to so compard to setting up the stratums on the linux software, lol.

Decentralization: Each of the points above as well includes a portion decentralization improvement compared to POW in favour of a POS design. But the main issue here is that i think that with POS a real fair voting on proposals could happen. For example every 10 ZEC have 1 vote through the POS system. If i remember right in the last proposal their have been 65 voters, but would this be compared to 10.000’s of voters? This would be an easy task to implent in my opinion with a POS design and POS wallet.

Actually this brings me to the next point, the wallet issue with ZEC, not directly related with the topic, but still. How many do you really think can use these current wallets? Damn, it’s even mega hard for me as a miner to use them and i prefer the exodus intregration of ZEC as it’s just a hit button solution which i favour more than the privacy issue. How about you guys work on a top notch easy to use windows wallet. From all wallets i have installed so far (over 150) the ZEC and PASCAL wallets are the worst i have encountered so far when it comes to easyness. Just my personal view on the wallet issue and maybe i missed something.

Back to mass adoption. Want mass adoption? Than use something easy that everybody is interested in, everybody can use and everbody can handle and of course, everybody can afford. A POS design would way improve this issue providing even access to further developement like cellphone staking, ioT staking and and and. With about zero interest worldwide on bank savings this would even attract even normal people if they see they could get let’s say 3% of interest for their ZEC holding if staked. Just a thought.

This said i think currently ZEC is the best privacy coin around with Monero of course. But my fear is that we lose ground when it comes to adoption, easyness, scalability, transaction speed, transactions per second, security, whatever. I even think that too much resources are wasted on things that do not really improve the issues that need to be improved.

In my opinion POW’s days are counted expect for Bitcoin which is anyway by most only used as a store of value and the counter exchange part to all other crypto currencies. This together makes me wonder why continue with POW with so huge limitations and flaws and not investing resources to go eventually with a POS design or something totally new and even better or a mix of a new POS/POA/dPOS/ and if some kind of POW is really needed add some notarize to Bitcoin or Kommodo or whatever.

Edit: I’am well aware this pro-POS post won’t get much likes as it opposes the biggest 2 mining groups in ZEC, the Asic miners (me too) and the gpu miners. Both groups have naturally other interests than supporting a POS design as profitability and ROI of their investments are of course a huge factor for them. However, these groups will realize that with POW they have to invest more and more to make less and less. Even by now it makes more sense to buy directly a given coin as a private personal miner than to mine it, what’s left in future…


#5

I am not happy with sticking around with ASICS for another year and THEN switching back to being GPU friendly coin gradually. Either do it soon or find another solution (like research PoS alternatives).

GPU mining profitability has been dropping steady, and its all thanks to major coins being ASIC friendly. All GPU miners are left with are scraps, and most of them will shut down their mining operations by end of 2019 if this continues. I say most but not all as big farms will still have GPU cards ready to do big mining as they pay electricity much cheaper than your average home miner, and then what do you get? Centralized mining again. Please @zooko either act now or don’t act like you care.


#6

GPU mining profitability has been dropping steady, and its all thanks to major coins being ASIC friendly.

These have no correlation what so ever. You can legitimately blame ASICs for a lot of things but you can’t with any truth blame them for diminishing rewards on GPU mined coins. Bitcoin was being mined with ASICs while GPU-mined coins were just coming online and becoming profitable - which is evidence against this. The profitability of CPU, GPU or ASIC mining is completely determined by the market exchange rate (price) and the current difficulty. When mining is profitable, more miners get into the game, eventually reducing or removing that profitability.


#7

Difficulty was increasing on a lot of coins but gradually. With ASIC’s you have unnatural difficulty increase which leads to less and less rewards (and i am not saying in $$ terms but in terms of amount of coins you get). No matter what market rate for Zcash is, GPU’s can no longer compete with ASICs and have left the network forcing them to a handful of asic resistant coins thus reducing rewards on those coins.

We will see what happens to GPU miners when ETH reduces block reward to 2 ETH per block. If they also switch to progPoW it might compensate itself, but if not, its not looking good.


#8

So there will be a Second Dev Fund!!

Great study leading to no detail and no idea in post.

Reality: Nothing will change, just delay tactic. We think about mining. They think about Second Dev Fund.


#9

You should read more things about Zcash


#10

Basically saying its got to be mineable with a cell phone and as safe if not safer/secure (obvs)
way more people have cell phones then people have computers WITHOUT high-end graphics cards


#11

You forget that GPUs are actually ASICs. The Innosilicon and Bitmain ASICs are just more specific to mining.

With ASIC’s you have unnatural difficulty increase which leads to less and less rewards

The Zcash difficulty changes happened over many months and were not very drastic, but this change percentage is algorithm dependent for each coin. There are still GPU miners on the Ethereum network alongside ASICs. I was mining alongside ASICs up until it became (very) unprofitable - but this has to do with the exchange rate value of zec. If the price were still around $700 it would still be profitable to GPU mine zec.

forcing them to a handful of asic resistant coins thus reducing rewards on those coins

The majority of profit-seeking GPU miners were already auto-switching between coins. For many GPU models, Zcash was not the most profitable coin to mine anyway. This caused the network to have decreased security depending on the exchange rate. GPU mining also caused a single pool operator to have around 65% dominance, which was an unhealthy mining situation. The gradual release of ASICs into the market ended up rebalancing miner distribution across pools.

Mining is always changing. Nothing is ever guaranteed. That’s why I’ve been against acting rashly towards changing the mining algorithm, because things can change very quickly. E.g., changing to ProgPoW only to find that a new ASIC for it is on the way would probably hurt Zcash.

Further, changing to ProgPoW would be great for users who have GPUs, but it would be bad for users that bought ASICs. I don’t know what percentage of users bought ASICs to help secure the network, but I think giving those users time to profit by acting slowly is smart. We shouldn’t move quickly just to be unpredictable with the result of hurting users financially. In the medium-long term that might decrease security overall.

Distributing coins as fairly as possible is important. I’m 100% onboard with GPU-only mining if we can introduce it in a way where ASICs can be prevented over the long term and I’m hopeful that a proper solution will be found over the next 6 months to be implemented this time next year.

Addition: I agree with a lot of @boxalex’s points. I think there are pros and cons to a PoS system. It might be the case that we end up with a less-than-ideal PoW mining situation for the next few years until PoS systems are shown to be stable and a considerable advantage.


#12

I’m probably going to spend a week or so back tracing all of those ideas discussed and re evaluate them


#13

Why not just make ASIC miners more consumer friendly? Z9mini is easily usable at home, low noise, small. Lets make heaters out of ASICs. Removing ASICs from the network lowers security and the efficiency to get to that level of security, even is Algo is changed, people will create ASICs for it, that is inevitable. ASICs got bad rep because of Bitmain, but they are really the only way to go no matter what, eventually all cryptography will be processed by ASICs, very very very efficiently, a lot more efficiently than any GPU could ever dream of even if Moore’s law was not curving as dramatically as it is for generic purpose hardware (CPUs and GPUs). It’s a matter of time, not a matter of chance.


#14

@001203948701234 Zcash has already had two rounds of funding. The total raised was only 3 millon (which is barely anything compared to many ICOs nowadays) for these 4 years of Developers salaries, testing, etc…


#15

Do The Math.

At market price, $115, today,

Over $120 MILLION has ALREADY been given to founders and company and foundation!

Second Dev Fund is GREEDY.


#16

Read the article I posted. The second round took place before Zcash launched. There is no “Second dev fund” other than the original Founders Reward that I know of.


#17

@shawn No, you are mixing things up. Read again.

First Dev Fund” means “Second” is coming.

original Founder’s Reward” means there is “New” founders reward coming.

Already miners give $120 Million and when end in 2 years, if same price of $115, will be $240 Million. That is QUARTER of a BILLION dollars. Is that not enough?!!


#18

You are jumping to conclusions. I have reached out to @zooko for clarification.


#20

It doesn’t matter if ASIC’s are more efficient. That just means you can buy more of them until profitability is even lower than it was with GPU’s. It is a zero sum game. The only thing you can do is to try to decentralize as much as possible. It is impossible to take money out of the equation. The people with more money will be a centralizing force.


#22

I’m sorry but if you have a “ASIC resistant” algo, someone will secretly make ASICs for that… That is inevitable because incentives are large enough, it makes sense to spend millions to develop ASICs for any and all algos used by the big coins. We could just accept that and push ASICs forward, as they are, by definition better at doing what they do than anything else, that is all ASICs are, specific hardware, being more efficient than everything else at this one job, and that is not a bad thing. I can promise one thing, If you go ASIC resistant suddenly FPGA will come along, and that is a whole different ball game as one a very few number of people know how to program those circuits for each task, and they will then have the upper hand. Why not push for competition and development of ASICs that are consumer friendly instead?