The Unreasonable Fundamental Incertitudes Behind Bitcoin Mining
Nicolas T. Courtois, Marek Grajek, Rahul Naik

TL;DR
This paper analyzes the cryptographic and economic uncertainties in Bitcoin mining, reformulates the mining process mathematically, estimates its costs, and discusses the potential for technological and protocol changes impacting miners' profitability.
Contribution
It introduces a new formulation of Bitcoin mining as a CISO hashing problem, estimates the process's cryptographic cost, and critically examines the protocol's economic and technical vulnerabilities.
Findings
Estimated the cryptographic cost of mining process as at most 1.86
Showed energy efficiency improvements have been significant and will continue
Highlighted fundamental economic uncertainties and protocol inflexibilities
Abstract
Bitcoin is a "crypto currency", a decentralized electronic payment scheme based on cryptography which has recently gained excessive popularity. Scientific research on bitcoin is less abundant. A paper at Financial Cryptography 2012 conference explains that it is a system which "uses no fancy cryptography", and is "by no means perfect". It depends on a well-known cryptographic standard SHA-256. In this paper we revisit the cryptographic process which allows one to make money by producing bitcoins. We reformulate this problem as a Constrained Input Small Output (CISO) hashing problem and reduce the problem to a pure block cipher problem. We estimate the speed of this process and we show that the cost of this process is less than it seems and it depends on a certain cryptographic constant which we estimated to be at most 1.86. These optimizations enable bitcoin miners to save tens of…
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Taxonomy
TopicsCryptography and Data Security · Chaos-based Image/Signal Encryption · Blockchain Technology Applications and Security
