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Bitcoin secures its network by forcing miners to solve a cryptographic puzzle who's difficulty increases based on the total hashing power of the network. If someone were to develop an algorithm that enables them to solve this puzzle say 1,000 times more efficiently (faster) than anyone else on the network they would be able to mine most (or a good portion) of new Bitcoin for pennies on the dollar. Assuming the person only uses his knowledge to mine Bitcoin at a much greater speed/efficiency compared to other miners (and does not hack anything or attempt to double spend etc) would the network be able to detect that something like this is happening?

I suppose not, because the hashing power of the network is not something that is known explicitly. It is something that is implicitly calculated based on the assumption that there is no possible way for a single individual to solve the cryptographic puzzle more efficiently than anyone else.

Is my assessment accurate?

Thanks

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Market laws suggest that if said person would use his 1000x more efficient miner in any non-trivial scale, he would push other miners out of the market. The difficulty would steadily increase and other miners would be operating at a loss.

So I guess the answer is yes, other people would notice if such thing happened.

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  • thanks for your reply. How would the other miners conclude that in fact this person has succeeded in breaking some level of encryption as appose to simply assuming someone purchased (or manufactured) more mining equipment? That is the gist of the question. I agree that by mining at 1000x efficiency "he will push other miners out of the market" as their loss will now exceed their profit by a huge margin. But the question is how can other miners conclude that it is due to 1000xincrease in mining efficiency vs. a rapid increase in the natural uptick of hashing power we've seen over the years?
    – S.O.S
    Jan 19 at 0:02
  • let's also assume the person is not a fool and increases his "share" of mining power over the course of months (and maybe years)
    – S.O.S
    Jan 19 at 0:06
  • Because if everyone else is mining at a loss it means that someone must be mining with a profit (due to a more efficient miner)
    – Mike D
    Jan 19 at 1:43
  • Let me give an example. Say you run a mining farm with the most efficient miner on the market and you can turn 1000$ worth of electricity into 1200$ worth of bitcoin. Now say that your profits suddenly start to diminish significantly and are now to the point that you only get 200$ worth of btc for 1000$ of electricity. The only rational explanation is that you no longer have the most efficient miner out there.
    – Mike D
    Jan 19 at 14:13
  • I agree. However, since there are so many variables at play (cost of mining hardware, cost of electricity etc) the person mining at 1000x efficiency could use his knowledge to exclude all miners that are not running at 100% efficiency. Those miners will conclude that they simply need better hardware or cheaper electricity to compete. I think most of the network isn't mining with 100% efficiency because of the big fluctuation in electricity cost around the world.
    – S.O.S
    Jan 19 at 17:48
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Average interblock times is 10 minutes. Every 2016 blocks (2 weeks if the hashrate is constant) difficulty is readjusted. If you start mining much quicker, the interblock time of these two weeks will be less than 10 minutes and the difficulty will increase. The opposite is also true.

The total hashrate is estimated using the average interblock times in a time interval and the current difficulty.

The units of hashrate is hashes per second. Whether you found a more efficient mining method or added more computers to the network doesn't matter to the rest of the network.

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  • thanks for your reply but I don't see how this addresses the question. The question is if something like this did occur are there ways for the network to prove it with a relatively high confidence level..
    – S.O.S
    Jan 19 at 0:04

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