Every financial market has bets, some are bets on the availability of a certain product, the price of a certain product at a certain point in time and on productivity and all markets depend on supply and demand, in metal markets the supply is the amount of metal that was produced this year, in Bitcoin that amount is fixed so people can’t bet on it. What you can bet on is how much it costs to mine Bitcoin at a certain time, specifically the difficulty, as the difficulty rises miners need more powerful, and probably more expensive, machines to be able to compete.

For anyone wanting to enter the mining business, this is the biggest risk there is, and while commodity markets offer futures and options to hedge risks, currently Bitcoin doesn’t employ this.

That’s why developer Tamas Blummer suggested the OP_DIFFICULTY, an opcode to enable hedges without any 3rd party interference, settled on the blockchain.

Recently developer James Hilliard, known for his BIP91 proposal (segwit upgrade), discovered a vulnerability in Bitmain’s Antminer S15 firmware, this was then turned into an exploit by independent security researcher under the twitter handle of @00whiterabbit.

The vulnerability allows a malicious hacker to remotely access the miner with SSH, allowing the attacker to flash a custom firmware without ever being in physical presence with the device. Flashing a firmware could cause an array of problems like decreasing its hash rate by underclocking its processors, shutting it down or even modifying the payout address of the miner, leaving thousands of miners vulnerable to basically anything the attacker desires under certain circumstances.

Andrew Karamaoun proposed an idea to discourage selfish mining, which is to allow the block reward get determined by the peak hash rate.

For instance if \(p\) is the peak hash rate for 365 periods or 1 year, made up of 144 blocks, \(h\) the hash rate of the last 144 blocks (1 day period), and \(r\) the base subsidy or reward for mining a block, which is currently 12.5 bitcoin, the maximum block reward can then be calculated using the formula \(0.5r (1 + h/p)\) , the lowest possible block reward being \(0.5r\) . At peak hashrate, the miner gets the full 12.5 BTC reward, otherwise the reward is determined based on the hashrate.

This is summary for a submission by Ruben Somsen on bitcoin-dev on censorship resistant transactions.

Bitcoin transactions with light client wallets involve addition of transaction fees as incentive for miners to include the transaction to the blockchain through the process of mining. This creates a win-win situation.

First, without any specific conditions, miners get paid the fees provided the transaction gets included in a valid chain with the most proof-of-work.

Secondly, the user enjoys the benefit of his transaction being added to the blockchain. The fees also ensure the security of transaction on the network as miners cannot ignore the transactions or other miners will process it because it has a reward attached.

For the full node Bitcoin Core however, conditions for adding transactions to the blockchain are more specific, one of which is that transactions can only be added to a block with a block height that is one higher than the last.

A timewarp attack on Bitcoin allows malicious miners to game the timestamp system to allow them to increase the rate of block generation beyond what the blockchain meant it to be. This attack has been possible since 2012 and was demonstrated on the testnet.

This was dismissed as an unimportant issue for the past few years as it requires the majority of hashrate and is easily blocked once someone starts using it.

An idea was brought recently about creating a coin that benefits from the digital scarcity of Bitcoin transactions. The coin works by being created from transactions whose hash is close to the non zero portion of their block hash. A single coin is created for up to N closest transactions to the block hash.

One of the drawbacks of this idea is that it could incentivize transactions for other reasons than actually transacting, thus creating an “altcoin” market on the Bitcoin blockchain in which people transact and pay fees solely for the chance of getting this coin. This can cause the Blockchain to become seriously congested and wouldn’t allow legitimate transactions to pass.