China's Powerful Bitcoin Miners Say Their Bandwidth Sucks

A proposed change in Bitcoin could mean miners with fewer resources will be shit out of luck.

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Jun 16 2015, 8:56pm

Screengrab: Motherboard's 'Life Inside a Secret Chinese Bitcoin Mine'

A major change is coming to Bitcoin, and debate is raging among developers and users about whether it will save the cryptocurrency or ruin it. Now, several powerful Chinese Bitcoin mining pools have just weighed in with a list of concerns centering around a lack of bandwidth in China.

Bitcoin developer Gavin Andresen proposed the change in May: a code update that would increase the size of the "blocks" of transaction data uploaded to the Bitcoin blockchain by miners. A hard cap on block sizes was set at 1MB by Bitcoin's creator, Satoshi Nakamoto, but as more people start to use the cryptocurrency, the network risks becoming congested with full blocks. Now, Andresen is going ahead with a plan to increase block sizes to 20MB with a "hard fork" that would split Bitcoin into two different versions.

The success of the new version will depend on both miners and everyone running a full version of the Bitcoin client moving over. The average user—people using lightweight Bitcoin clients that don't store the entire blockchain on their computers—won't be affected, but they also won't be part of the decision.

"Chinese outbound internet bandwidth is restricted"

A key issue with this plan has been, from the start, how it would affect miners. Miners compete with computing power to be the first to solve complex math problems in order to upload a block, receiving Bitcoins and fees as a reward. Bigger block sizes mean more computing power and more bandwidth will be needed to process them, a change that could mean miners with fewer resources—computing power and bandwidth—will be, basically, shit out of luck.

Five of China's biggest mining pools announced today in a statement sent to CoinTelegraph and posted to the /r/Bitcoin subreddit that they support a block size increase, but not to Andresen's proposed 20MB limit. Instead, they think 8MB is more reasonable because "Chinese internet bandwidth infrastructure is not built out to the same level as that of other countries," and "Chinese outbound internet bandwidth is restricted, which causes increased latency in connections to Europe and the United States."

Watch more from Motherboard: Life Inside a Chinese Bitcoin Mine

Right now, more than 50 percent of the Bitcoin network's collective processing power, or "hashing power," lies with the group of mining pools behind the statement: AntPool, F2Pool, BTCChina, BW Mining, and Huobi. A single Chinese Bitcoin mine, spanning six sites, that Motherboard visited last year held down roughly three percent of the network's total hashing power on its own. If these mining pools can't process blocks properly due to bandwidth limits, then that could seriously disrupt their business, and the Bitcoin network as a whole.

Even so, the miners realize that eventually—perhaps some day far off—a block size bigger than 8MB will be needed.

"There is no clear and definite block size to completely solve the transaction jam," Evan Mo, CEO Huobi's mining project, told CoinTelegraph. "8MB is therefore a good start for the improvement of the Bitcoin network, and at the same time a relatively mild solution. But it is undeniable that increasing the block size limit to 16MB or 32MB might be needed in the future."

Mo's statement will likely cause headaches for Bitcoin enthusiasts already trying to wrap their heads around Andresen's proposed 20MB change. After all, a hard fork is nothing to play around with, since it would split Bitcoin into two incompatible versions. A block size increase now is an exercise in biting the bullet, not nibbling away.