Blockstream enters the mining services business with the launch of a mining colocation service and a mining pool. The influential Bitcoin-focused company has been running proprietary mining operations since 2017 but has now secured additional mining facilities and energy to launch its colocation service.
Quick take;
- Blockstream announced the launch of a mining colocation service targeted at institutional and enterprise clients
- Blockstream also announced the launch of a mining pool which will adopt the BetterHash mining protocol
One of the most influential companies in Bitcoin development made a huge announcement on Thursday the 8th of August. Blockstream launched a mining colocation service which will be initially targeted at institutional and enterprise clients. The service will be a turnkey solution that will source and provide both hardware and software to clients that will enable them to remotely manage mining hardware which will be based in mining facilities owned by Blockstream.
Blockstream Mining Hosting Services
Blockstream have had proprietary mining operations since 2017. Their proprietary mining operations are stated to currently represent approximately 1% of the hash rate deployed on the Bitcoin network. The energy of their proprietary operations is sourced from hydropower facilities in Quebec, which has become a popular location for Bitcoin miners due to low energy prices and a stable political environment.
Additional energy has since been sourced to provide hosting services along with mining facilities to host hardware. Blockstream currently has a facility ready which is based in Georgia USA and has more facilities in the pipeline. They note to have “over 300 MW of [additional] energy capacity secured” for the hosting services which are estimated to power up to 100,000 of the latest generation Bitcoin ASIC models. Blockstream counts the Fidelity Center for Alternative Technology and LinkedIn co-founder Reid Hoffman among the earliest clients of the mining colocation service.
While the service will initially be available to just large clients, Blockstream noted plans to include smaller businesses and individuals moving forward. Chief Strategy Officer of Blockstream Samson Mow (@Excellion) believes the colocation service will improve the level of decentralization on the Bitcoin network.
A Mining Pool with BetterHash
Blockstream also announced a new mining pool which will initially be available to clients of the hosting service. The mining pool has been running on testnet for over a year and will be the first pool to adopt the BetterHash protocol.
BetterHash is a mining pool protocol developed by former Blockstream developer Matt Corallo. The dominant protocol used by mining pools today is Stratum. While Stratum enables miners to connect to pools and benefit from payout variance reduction, it removes the ability for miners to run a full node and select transactions to add into blocks.
The BetterHash protocol gives these powers back to miners while also enabling them to connect to pools and benefit from the reduction in payout variance. The protocol is also more secure from external attacks such as BGP hijacking of hash rate. MinerUpdate recently interviewed Matt Corallo who delved into the intricacies of BetterHash and what makes it distinct from Stratum. Blockstream describe BetterHash as “an improved mining pool protocol that gives individual miners the ability to control which Bitcoin transactions to include in their newly mined blocks.”
Braiins, the company behind the mining pool SlushPool, have also recently released a prototype for a new mining protocol coined Stratum v2. Corallo noted in the MinerUpdate interview that Braiins had been working on making some changes to the BetterHash protocol.
Mining centralization has been a long-term topic of concern regarding the security of the Bitcoin network. Corallo identified the mining centralization and the mining pool protocols susceptibility to external attacks as some of the largest attack vectors on the Bitcoin network. With both Braiins and Blockstream implementing more secure mining protocols that more control to miners, we may be observing the first steps of a move towards a more secure and decentralized Bitcoin network.
