The software used in bitcoin mining is getting its first big makeover in more than a decade — here’s what’s changing
Employees work on bitcoin mining computers at Bitminer Factory in Florence, Italy.
Alessandro Bianchi | Reuters
Software used in bitcoin mining just got its first upgrade since late 2012, and a coalition of companies including payments giant Block (formerly Square) is trying to help push the open-source protocol forward to become an industry standard.
The move could help open bitcoin mining to more participants by supporting lower-quality internet connections, as well as improving security so miners get properly compensated for their work.
Bitcoin operates on a proof-of-work mining model, meaning that miners around the world run high-powered computers to create new bitcoin and validate transactions. Mining requires professional-grade equipment, some technical know-how, a lot of electricity and a special kind of software.
Rather than directly accessing the bitcoin protocol, the vast majority of miners today work through an intermediary protocol called Stratum, which facilitates communication between the bitcoin network, miners, and the mining pools that combine the hashing power of thousands of miners all over the world.
Miners use Stratum to submit their work and to collect a reward if they successfully complete a new block of transactions.
On Tuesday, a coalition of bitcoin developers is releasing version 2 of Stratum under an open-source license for the mining industry to evaluate and test.
It will take some work to convince the mining industry to adopt the new protocol, so Spiral — a subsidiary of Jack Dorsey’s payments company Block (formerly Square) — is teaming up with bitcoin mining company Braiins to launch a group to test and fine-tune the open-source software before they push mass adoption.
What the upgrade does
Steve Lee, the lead at Spiral, tells CNBC there are several significant benefits to the upgrade, including cutting down on the use of data.
Currently, it is common for each mining rig in a large farm to directly connect to a pool. This setup wastes a lot of energy. Lee says that Stratum V2 supports a proxy that aggregates all the connections and only establishes one connection with the pool.
The process of sending that data is also changing to a more efficient method.
“All told, much less data needs to be transmitted between miners and pools, and this could help miners in remote regions of the world with poor internet,” noted Lee.
The upgrade is designed to improve security, as well. Today, it is possible to steal hash rate from a miner, which can lead to some miners losing money. Hash rate is a term for the collective computing power of the bitcoin network. To resolve this, Lee says Stratum V2 introduces a standard security mechanism with authentication and encryption between miners and pools.
The version being released Tuesday is for initial testing, and in early November, a more robust version will come out that supports additional functionality, including job negotiation — a “feature that represents a historic shift in the censorship-resistant mechanics of bitcoin mining by replacing a pool’s responsibility of assigning work to miners with the ability for miners to select their own work,” according to a joint statement released by Spiral and Braiins.
There are orders of magnitude more miners than pools, so if miners select transactions it is far more decentralized than just a handful of pools, Lee explained.
“Working for industrywide adoption of the upgraded Stratum protocol is one of the most important developments in improving the decentralization and censorship resistance of bitcoin’s architecture,” Lee said.
As for timing, the pilot and integration testing will happen this fall, and next year, the upgraded protocol will likely see greater adoption once miners and pools are confident it is working well.
“I’d anticipate a gradual increase in hash rate in 2023,” Lee told CNBC. “Reaching 10% hash rate by the end of 2023 would be a great success,” continued Lee.
Lee added that it will likely take several years to see the latest version of Stratum replace the original.
“Miners know the benefits of upgrading to Stratum V2 very well, but pushing the entire mining industry over some of the remaining development and adoption hurdles is a big task,” said Jan Capek, co-founder of Braiins.
“Universal standards for running and building Stratum V2 and the efforts of this working group to push the industry forward will provide the momentum bitcoin needs to finally upgrade from a version of its mining protocol that was built a decade ago,” continued Capek.
Similar to the Lightning Network, which is a technology built on top of bitcoin’s base layer to make payments more efficient, there will be different implementations of Stratum V2. However, the open-source version released Tuesday will make it easier to collectively test out the technology. It will also ensure that the various projects can interact with one another.
Block jumping into mining
Tuesday’s announcement is part of Block’s larger push into the bitcoin mining industry.
On the sidelines of the Bitcoin 2022 conference in Miami in April, digital assets infrastructure company Blockstream and Block announced that they were breaking ground on a solar- and battery-powered bitcoin mine in Texas that uses solar and storage technology from Tesla.
Tesla’s 3.8 megawatt solar PV array and 12 megawatt-hour Megapack will power the facility.
Block is also independently working on a project to make bitcoin mining more distributed and efficient.
The idea of making the mining process more accessible has to do with more than just creating new bitcoin, according to Block’s general manager for hardware, Thomas Templeton. Instead, he says the company sees it as a long-term need for a future that is fully decentralized and permissionless.
“Mining needs to be more distributed,” Dorsey wrote in a tweet in October, when he first floated the idea. “The more decentralized this is, the more resilient the bitcoin network becomes.”
Toward that end, the company is solving one major barrier to entry: Mining rigs are hard to find, expensive and delivery can be unpredictable. Block says it is open to making a new ASIC, which is the specialized gear used to mine for bitcoin.
The project is being incubated within Block’s hardware team, which is beginning to build out a core engineering team of system, ASIC and software designers led by Afshin Rezayee.
Leading electric vehicle analyst, author, and industry thought leaders Loren McDonald and Bill Ferro stop by Quick Charge to discuss EV Adoption’s acquisition by Paren, the “crisis” of EV charging reliability, and the real state of the EV market.
Depending on who you listen, EVs are either driving brands to record growth and are about cross that critical 10% of the overall market nationwide, or the future is bleak, the market is down, and EVs just aren’t selling. What’s really going on? Loren and Bill (probably) have some answers.
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Chevy EV owners in Texas who have Reliant as their electric utility can now charge for free at night with renewable energy.
Over 150 Chevrolet dealerships across Texas are now offering the Reliant Free Charge Nights plan to new EV buyers. With Free Charge Nights, customers can offset their charging costs by receiving credits for electricity used between 11 pm and 6 am. The plan is powered entirely by renewable energy, thanks to the purchase of renewable energy certificates (RECs).
Rasesh Patel, president of NRG Consumer, says the plan is about making power personal: “We’re excited to help Chevrolet EV drivers offset the cost of charging their vehicle all while having access to a renewable electricity plan.”
This collaboration aims to make EV adoption more appealing by making charging cheaper and greener. GM Energy’s chief revenue officer, Aseem Kapur, emphasized that partnerships like this help build the ecosystem needed to support an all-electric future: “The Reliant Free Charge Nights plan is a great example of how an automaker and an energy company can work together to make EV adoption an easy decision.”
Existing Reliant customers can also sign up for the Free Charge Nights plan. To get started, Chevrolet EV owners need to designate their vehicle on the GM Energy Smart Charging Portal before enrolling in the plan.
Reliant Energy, a subsidiary of NRG Energy, serves over 1.5 million customers in Texas, making it one of the largest electricity providers in the state.
Read more: Texas to get 1 GW AI-powered virtual power plant, enough to power 200,000 homes
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Texas is about to get a major power boost – a new AI-powered virtual power plant (VPP) delivering capacity equivalent to 200,000 homes during peak demand.
NRG Energy is teaming up with Renew Home to bring nearly 1 gigawatt (GW) of capacity to the Texas grid by 2035, aiming to make it more resilient while helping residents save on energy costs.
The new VPP will rely on hundreds of thousands of smart thermostats and other connected home devices, making use of AI technology provided by Google Cloud. These devices, like Vivint and Nest smart thermostats, will be offered to eligible customers at no cost. By automating HVAC adjustments, they help shift energy use to when electricity is cheaper, cleaner, and less strained.
NRG and Renew Home have big plans for the VPP. Starting in spring 2025, the companies plan to roll out the program across Texas, installing these smart thermostats in homes served by NRG’s retail electricity providers. Eventually, they plan to add home battery storage and EVs to expand the power plant’s capabilities.
Texas has faced record-breaking energy demands, with peak usage hitting 85 GW in 2023. As the state’s population grows and extreme weather becomes more frequent, VPPs like this one could play a key role in stabilizing the grid. VPPs aggregate a lot of small-scale energy resources, from smart thermostats to home batteries, and use them to help balance supply and demand during times of high stress on the grid.
This nearly 1 GW VPP will be one of the largest of its kind in Texas. NRG’s president of consumer operations, Rasesh Patel, calls it a “pivotal step” for improving customer experience while making Texas’ energy infrastructure more sustainable and resilient.
In addition to Renew Home, NRG is working with Google Cloud to maximize the power plant’s effectiveness. Google Cloud’s AI and analytics tools will help predict weather conditions, forecast renewable generation, and optimize energy usage, all of which will help make energy management smoother for both customers and the grid.
Ben Brown, CEO of Renew Home, said:
NRG’s commitment to creating a more resilient and sustainable energy future while also making electricity bills more affordable makes them an ideal partner for co-developing this unique VPP program.
This initiative raises the bar for future-proofing our electricity infrastructure and delivering cost savings to customers.
Read: Chinese solar giant Trina sells its Texas factory a week after it opens
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Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisers to help you every step of the way. Get started here. –trusted affiliate link*
FTC: We use income earning auto affiliate links. More.
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