Bitcoin Network Speed Breaks 1 Petahash per Second

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The bitcoin network reached another historic milestone milestone today, achieving an estimated total computational speed of 1 petahash per second (1 PH/s = 1,000,000 GH/s). The current speed is 40x faster than where we began the year, faster than 79% of the bitcoin community expected as of just seven months ago. The path to this point goes back to the genesis block itself and offers insight into the foundations of the world’s first digital currency.

In the Beginning

After Satoshi mined the genesis block on January 3, 2009, the first difficulty increase took nearly a full year, occurring on December 30. Bitcoin automatically adjust the difficulty in mining blocks to maintain an approximate 10 minute block time. The faster the total network gets the more difficulty it becomes to find blocks. At the time, CPUs were the de facto hardware used as the bitcoin community began its initial growth. While eventual advances in hardware technologies were all but inevitable by nature of the economic incentives, the initial use of CPUs was implemented by design of Satoshi.

By making mining profitable with a CPU, attracting new users would be easier than if customized or expensive equipment were required. The utility of GPU mining was recognized relatively early on, but intentionally delayed for the good of greater proliferation. While almost impossible to imagine now amidst the current ASIC bitcoin mining boom currently underway, the directive to remain with CPUs came directly from bitcoin’s creator:

“We should have a gentleman’s agreement to postpone the GPU arms race as long as we can for the good of the network.  It’s much easer to get new users up to speed if they don’t have to worry about GPU drivers and compatibility.  It’s nice how anyone with just a CPU can compete fairly equally right now.” – Satoshi Nakamoto, December 12, 2009.

Difficulty adjustments

 

2010 – Year of the GPU

Network Speed
January 1: 9 MH/s
December 31: 120 MH/s
Bitcoin Price    
January 1: $0.01
December 31: $0.30

As the calendar rolled over into a new decade and both bitcoin’s community and value increased, the inevitable overtaking of ideology by economics became more prevalent in May 2010 when software for mining bitcoin with a GPU began to surface. GPUs can offer roughly 100x the hashing output of CPUs, depending on specific hardware specs. Additionally, mining with GPUs can be coupled with CPU mining on the same machine offering even greater total and taking advantage of advanced hardware that many in the community already had.

As the bitcoin economy continued its newly-formed arms race, optimizations of GPU mining software became increasingly valuable. As modifications to the open-sourced code were created, developers saw a new opportunity for profits. An early optimization that increased GPU hash rates by approximately 25%, depending on hardware specs, was introduced in September 2010 and offered for a 5 BTC commission of each block mined using it (10% of each 50 BTC block found). Bitcoin evangelists ultimately pushed for open sourcing of the software for the benefit of the community. Jeff Garzik, one of bitcoin’s core developers, paid 10,000 BTC – approximately $600 at the time) to have the software open sourced. Naturally, high end graphics cards saw a sharp increase in demand among the bitcoin community, with top-of-the-line AMD cards achieving up to 700 MH/s.

Later in 2010, the first pooled mining operation was created by Marek Palatinus, often referred to as ‘Slush’ in the bitcoin community. Bitcoin mining pools combine the hashing power of pool participants for a fee. By combining efforts the pool finds a greater number of total blocks which it divides proportionally among the contributors of hashing power in the group, offering a more steady and dependable payout schedule than if each miner (more info here). Slush’s pool found it’s first block on December 16, 2010, forever changing the structure of the bitcoin network.

2010 landmarks

2011 – Specialized Hardware Takes Shape

Network Speed
January 1: 120 MH/s
December 31: 9 TH/s
Bitcoin Price    
January 1: $0.30
December 31: $4.72

By mid 2011, total networks speed had grown to 2 TH/s and field programmable gate array (FPGA) bitcoin mining hardware was introduced. FPGAs are generic hardware that can be configured via firmware updates after manufacturing, offering significant advantages to repurposed CPUs and GPUs.

The first FPGAs were initially announced on the bitcointalk forums and offered 100-400 MH/s. At the time FPGAs were first introduced, the cost/benefit was questionable with top-end GPUs able to run at 700 MH/s, but they did offer additional benefits. Notably, a single computer could run stacks of FPGA miners, compared with just a few GPUs under normal conditions.

fpga_farm

The introduction of FPGAs happened to coincide with bitcoin’s first major price boom. Bitcoin traded above $1 for the first time in February 2011 and climbed to $30 by early June, while network speed grew from 170 GH/s to 7 TH/s over the period. Price quickly fell back down to the $2 range by October of that year, but the majority of the network speed was maintained, falling only briefly at the end of 2011.

2011 landmarks

2012 – Rise of the ASIC

Network Speed
January 1: 9 TH/s
December 31: 25 TH/s
Bitcoin Price    
January 1: $5.27
December 31: $13.51

By mid-2012 the price of bitcoin had again climbed to $10, sparking greater interest in mining and making viability of application-specific integrated circuits (ASIC) a reality. Bitcoin ASICs are custom hardware specifically built to calculate mining hashes. The now-infamous Butterfly Labs began taking orders for the first ASIC mining rigs in June which, at 5 GH/s, were poised to offer significant profitability to customers. Just a few months later in September, Avalon announced an alternative ASIC solution. The company would sell chips which could be mounted by either the customer or a third party vendor.

2012 landmarks

2013 – The ASICs Arms Race

Network Speed
January 1: 25 TH/s
Current: 1 PH/s
Bitcoin Price    
January 1: $13.30
Current: $137.89

The tremendous growth in bitcoin’s network speed this year is directly attributable to the worldwide growth in ASIC mining units. Avalon shipped its first batch of ASIC units in January, putting custom bitcoin mining hardware in consumer hands on a broad scale for the first time. ASICMiner began its hashing with units paid for by investors who have reaped remarkable dividends since then, as well as selling hardware for consumer use. Even Butterfly Labs shipped their June 2012 pre-orders. There are now a dozen different companies offering consumer ASICs, as well as others offering investment opportunities for hosted mining.

For more info about recent events, see our mining section. If you’re considering a mining hardware purchase, be sure to consider all options.

2013 landmarks

Considering a bitcoin mining hardware purchase? Make a more informed decision with TGB’s Bitcoin Mining Dashboard.

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