Slush Pool is one of those names in Bitcoin industry which, as it might seem, has been around forever. Based in Prague, Czech Republic, it was launched back in 2010 and not only was the very first mining pool in existence, but also paved the way for plethora of other pools, essentially laying the foundation for one of the core segments of Bitcoin industry.
The pool’s founder Marek ‘Slush’ Palatinus was the mastermind behind the very concept of pooled mining – a system where individual miners join forces to pool their resources and share profits proportionally.
Eventually he co-founded SatoshiLabs, another Prague-based bitcoin startup known for its Trezor hardware wallets, where he now serves as the CEO. His brainchild, however, lives on, and today Slush Pool is one of the top mining pools – with around 13 percent of the entire network’s hash rate, it fiercely competes with the likes of BTC. com, Antpool, BTC.TOP and F2Pool.
Interestingly enough, Braiins, the operator of Slush Pool, makes no bones about its ambitions – somewhat in a sort of stealth mode until recently, it not only wants to be the leading force when it comes to mining, it is also working on other projects targeting the cryptocurrency industry in general. One of them is Braiins OS, described as the “very first fully open-source, Linux based system for cryptocurrency embedded devices.” Released in alpha mode in September this year, currently Braiins OS is targeted on mining devices, however the company insists that “its features can be extended in many directions,” including running Bitcoin Core and Lightning nodes.
In an exclusive interview with ForkLog, Jan Čapek, Slush Pool’s co-founder and current CEO of Braiins, tells more about this and other products the company plans to offer, shares his views on the current state of the industry and reveals what other cryptocurrencies beside Bitcoin Slush Pool intends to support in the future.
Today Slush Pool’s share of the entire Bitcoin network hash rate is somewhere about 13 percent, growing at least twice from 2017. What factors can you attribute to this growth?
We like to believe that the long-term quality of our service is the main factor. That said, some external factors probably played a role too. The most important ones being:
- The Chinese government became more and more involved in Bitcoin, to the displeasure of many Bitcoin miners and enthusiasts. It is reasonable that of those, some definitely saw Slush Pool as the independent, trustworthy global alternative.
- During the so called block size war, we stayed neutral, letting the miners voice their opinion via our voting system, not making any premature decisions.
Current market decline is one of the hottest topics for the community. How severely does it affect the miners’ profits? There are varied opinions on the issue, but where is the true break-even point for miners?
The true break-even point has to be computed for each individual total cost of operation for each kWh used for mining. It can include other operational costs, infrastructure maintenance etc. The current market decline thus puts out of business mining operations that have higher cost (e.g. above $0.08/kWh) and cannot/don’t want to speculate on quick price recovery.
What could be the worst case scenario if the prices continue to drop? Is there a threat of mass exodus of miners and what consequences will it have for the network?
The hashrate always follows price. The network difficulty adjusts. Technically there could be trouble if a massive amount of hashrate would disconnect at the beginning of the retarget period. The network would slow down in transaction processing until the next retarget period which is 2016 blocks to mine.
How has the current situation affected your own profits since the beginning of the year? What steps will Slush Pool take if you are forced to look for additional ways of monetizing your business?
Price corrections have been natural part of growing Bitcoin ecosystem since our foundation in 2010. Therefore we have experienced almost all of them and they helped us to enhance our money and risk management practices over the years. Current situation to some extent limits our ability to grow faster but does not pose any serious threat to our financial health. Currently, we are expanding our operation into other promising alt coins to open additional revenue streams and further stabilize our financial health.
Going back, how did it all start for Slush Pool? Was it hard introduce the idea and get people onboard?
We started the pool in December 2010, promoting it mainly on the BitcoinTalk forum. At that time, difficulty started to rise considerably and solo mining quickly became troublesome. Our pool was there to solve an already existing problem so getting miners on board was not really that hard. During the first four months, we were the only pool in existence and gathered about 30 % of network hash rate.
Initially Slush Pool started with SatoshiLabs being the parent company, right? As we know, today Marek is SatoshiLabs CEO, so what’s the current situation with Slush Pool’s ownership?
Slush Pool was never part of SatoshiLabs, it was only marketed together with other SatoshiLabs projects, sharing Slush as a common denominator. Since 2013, Slush Pool has been developed and operated by Braiins with Slush taking on more of an advisory role.
And what about your team, how big has it grown since the inception of Slush Pool?
Today, Braiins is a team of about 30 people with plans to expand further. As said, Slush is no longer involved in the daily operations, however, he remains a shareholder and an advisor. The long-term vision, which we believe goes largely hand-in-hand with the original philosophy, as well as the daily operations are largely conceived and executed by both of the Braiins co-founders – Jan Čapek, serving as Slush Pool CEO, and Pavel Moravec as Slush Pool CTO.
What financial incentives does Slush Pool offer to miners?
Our pricing is simple – we charge a flat fee of 2% for every coin we mine. It’s been stable from the very beginning. Having this type of fee structure in place enables us to continually work on pool’s infrastructure, security and other related activities, including selected features and functionality for selected miners.
Security is one of the most important questions these days. How does Slush Pool secure users’ accounts?
Users can enable two-factor authentication. We support the most common standard TOTP (Google Authenticator), as well as the advanced U2F using hardware tokens. For even better protection, there is a possibility to lock your payout address so it can be only changed in the future by a signed message from said address. As for the coins, we of course use dual setup with hot and cold wallets.
Will you tell us more about your infrastructure?
Our servers are located in Europe, North America (USA, Canada) and of course Asia (China, Singapore, Japan). Miners can of course pick which server location they want to use and we have a failover system in place – in case we experience issues or outages at the specified locations, miners are automatically re-routed elsewhere.
We also utilize multiple layers of proxy servers, primarily to protect our core infrastructure against DDoS attacks. And by the rule, to not put all our eggs in one basket, we use multiple data center space providers.
Back in March this year, Slush Pool had its first block mined using overt AsicBoost technology, and since then you went on to become one of the biggest producers of AsicBoost blocks. As of today, the overall percentage of those blocks is slightly over 4% of the entire network though. Nevertheless, with all the controversy that surrounded AsicBoost technology, that move did cause some questions within the community. At the same time, in one of the interviews, Slush Pool’s CTO Pavel Moravec said it would be better if everyone uses AsicBoost in the future and that the only reason not to use it would be a desire to engage in patent wars. It can sound very confusing to many of those who saw AsicBoost being described as ‘a flaw’ or even ‘an attack on Bitcoin’ in the past, and now it is effectively being positioned as an optimization to the entire cryptocurrency mining process. Will you shed more light on this issue?
There are two forms of AsicBoost. We support the overt (version-rolling) AsicBoost that only alters blocks nVersion field and other than limiting the actual block voting space has no negative effect on the network. On the other hand, the criticized covert AsicBoost is utilized by altering the merkle tree. And there is the problem – to efficiently alter the merkle tree, one has to mine either empty blocks or reshuffle transaction, which negatively interferes with standard bitcoin operation.
The reason why overt AsicBoost is good is because it allows energy efficiency be closer to its theoretical limit given by laws of nature. And therefore it creates space for an attack on the bitcoin network more costly and less probable.
You’ve mentioned the so called empty blocks. What’s the trick with them? Some bigger pools are accused of deliberately producing empty blocks, but if you look at the explorers you can see Slush Pool has them as well.
A certain small percentage (below 1%) of empty blocks is natural for Bitcoin and other proof-of-work based cryptocurrencies. A few seconds are needed to assemble the block (put the transactions in it) and distribute the work to all miners. Until the block is ready, we let miners work on an empty block so they don’t just sit there doing nothing. And sometimes, during this short time, a proper hash is found and empty block is born.
It is a completely different thing when certain pools are seen mining large amounts of empty blocks deliberately and the numbers support this notion. We are surely not amongst them so we cannot comment on their motives and intentions.
Do you see real danger of mining centralization with several big pools being affiliated with one particular company?
Mining centralization is an important topic. Some of the good questions to ask are: Who owns the hardware? Who has the ability to produce it and pick to whom to sell it? It’s no secret that Bitmain has been dominating this space, however, this is surely starting to change with several new players producing competitive ASIC hardware. The competition here is essential.
How do you see the overall landscape in Bitcoin mining and how will it change in the future?
Currently, there are not too many old players/pools in the game anymore. Starting a new pool requires quite a bit of marketing effort, not to mention the trust that any prospective mining operations would have to put into any new pool. The future is definitely in providing additional features like software stack extended towards the physical hardware (as we did with Braiins OS), custom features for larger operations, enterprise miner management software tightly integrated with the pool etc.
Recently you announced the release of Braiins OS. Apart from what we know from the official press release, what more can you tell us about it? For example, there is a rather interesting reference to Antbleed when you talk about users being able to have full control of the hardware without worrying about some “hidden features”.
Braiins OS is an open-source operating system that falls in line with the “Don’t Trust. Verify” approach which we are fans of. If you use closed source firmware, you cannot really know for sure what is going on behind the scenes. With Braiins OS, you can review and compile the code yourself if you wish. We believe that opening mining firmware is also one of the important pieces to the whole “Bitcoin decentralization” game. At the same time, we aimed for a much higher quality target than that of the current level.
Lately, we have come out with a brand new release of Braiins Wolfram which is the second version. It allows S9 miners to utilize overt AsicBoost which save miners about 13% in energy costs and therefore can bring unprofitable farms back to economic life. Another popular and widely used feature is voltage and frequency control per hashboard. It boosts the device hashing power and therefore profits even more.
The idea of running the same software for miners and Bitcoin Core or Lightning nodes sounds rather interesting. How are you going to make it possible?
Braiins OS is a generic OpenWrt based Linux distribution. The idea is to provide support/integration packages specific for devices from cryptocurrency domain while reusing the rest of the capabilities of the distribution, e.g. availability of various precompiled packages that come with the standard OpenWrt distribution.
Earlier this month, you invited users to participate in a closed beta testing program for Slush Pool 3.0. Is this about the new revamped website only, as the announcement reads, or there is more than just that? When do you plan to make it public?
We know that majority of our users like the interface, so we kept the good stuff and mostly focused on making it more contemporary and fully usable on mobile devices. Speaking of the interface, the most favorite dashboard overview is now customizable, allowing users to move panels around.
Of course, there are also some functional updates like access profiles, updated API (also newly available for Zcash), longer history for hash rate graphs and many more tweaks. We would really like to launch the public beta around our eight birthday (December 16).
In April 2017 you added Zcash support and recently even improved the infrastructure. What were your reasons behind you choosing Zcash and are there other coins you consider supporting in future?
In late 2016, we wanted to explore the altcoin mining opportunities and Zcash was the new “cool” thing just coming up. We also liked the focus on privacy and the new technology behind it so we decided to go forward with Zcash.
While we are sort of Bitcoin maximalists ourselves and Slush Pool will always be firstly a Bitcoin pool, we are not against all altcoins and find some of them are quite interesting. So besides Zcash, we plan to start mining Monero, Litecoin and Ethereum in the coming months.
What’s the situation with RSK merged mining? A while ago it was not showing on user’s dashboard despite Slush Pool’s FAQ page saying you are supporting the project. Will this situation eventually change?
We are merge mining RSK to support the project, however, at this stage we would rather spend our time working on other improvements than fully integrating RSK, because the rewards from RSK mining are negligible. We are of course ready to dedicate more time and effort to RSK if this changes.
You’ve been in the industry almost from the very start. Looking back to the past, what changes that can be observed in the industry today do you find the most positive? Are there things you don’t like or would have prevented from happening if you had such the ability?
We would definitely appreciate much stronger competition among hardware vendors. This has harmed the whole bitcoin space a lot. Even if you look at pool competition, it is not ideal too. If we had the power in the past we would have stepped into the hardware manufacturing segment providing extra diversity in bitcoin mining equipment.
We find very important the wide adoption of Segregated Witness and transaction malleability fix as aside effect of segwit. Both are paving a solid way for level 2 protocols like Lightning Network.
And finally, what do you personally expect from Bitcoin in the long term? What role will it play for society, and what technological advancements do you find the most exciting?
With regards to money, Bitcoin can be a great tool for people to discover and understand their personal freedom and strongly related responsibility. These and others core principles behind Bitcoin are very important much more broadly and society would benefit from following them even outside of Bitcoin space. The more widespread Bitcoin is, the larger the number of people will be to see a different use for it.
From the currently envisioned technological advancements, we’re really excited from the momentum behind Lightning Network and related improvements. We understand it as a key enabler for Bitcoin’s broader adoption. There is a lot of work to be done yet, but we’re happy to see the drive in this space. Then all work put in direction of greater coin fungibility and in general privacy is exciting too.
Jan Čapek was interviewed by Andrew Asmakov
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