A couple months ago, Spondoolies released their new SPx36 ASIC miner for Dash’s X11 algorithm, which its sheer power of 540 GH/s at 4400Watts per Miner and cost of $15,500.00 USD signals rising consumer and investor confidence in Dash.
Dash Force News chatted with Dash community member @DarkWater who did some very in-depth analysis of the new miner, its power, and what it means for the Dash network. Overall, the new miner creates a higher probability of Dash exchange price appreciation as miners will want to sell at a higher price to remain profitable and the already seen increase in hashrate creates a more secure network for consumers. @DarkWater conducted the following analysis to illustrate how the power of the SPx36 compares to top miners on other networks and how this translates to profitability based on current exchange prices.
Basically what this excel sheet is showing is a rough calculation based upon information that can be obtained publicly. We can observe the total network hash rate, which is the “Net Hash rate” (Dash is roughly 4PH at the moment). Dividing 4000TH by .540TH. If we were to assume every machine on the network was an SPx36, that would be equal to roughly 7400 Units. Take that theoretical total units and multiply that by the watts per miner, that gives us what an estimated level of power consumption would be if the entire network were mined by SPx36s.
At 15,500 USD per miner, each unit currently at this time of writing after paying 10 c/kW in hosting costs would generate 18.50 USD per day. That would currently be a 837 Day Return on Investment (We were used to 3-12 months for a long time). If Spondoolies successfully sells enough miners to displace previous generation equipment (7400 to equal current net hashrate), then you will have 114 Million USD competing for 51 Million USD worth of Dash rewards at $153/Dash.
@DarkWater further explained that producing and buying the new miners can be “considered an institutional grade investment given the risk exposure of new equipment coming to market within that 2+ year window of payback”. He added that this is a “big bet on future price appreciation for Dash to help make the ROI back if the miner was to hold their production till a future date”. He also compared this upgrade in miners to the previous leap from GPUs to ASICs illustrated by detailing how “one 384MH/800W Ibelink in 2016 was the equivalent of 128 R9 280X GPUs” and “to put this into perspective with the SPx36, 180,000 R9 280x’s = 1 SPx36”.
Impact on the Dash network
This major technical jump has significant impacts on the Dash network in multiple areas including mining pools, security, energy consumption, and exchange price. One of the most immediate impacts is the hashrate, which will and already has increased dramatically, and can also draw power away from large pools like AntPool. @xkcd, another Dash community member following the SPx36 miner development, carefully detailed how “Antpool’s mining dominance drop from almost 50% to 13% currently since the new mining pool(s) came online in early September”.
Now when this much hash power emerges all at once, a natural inclination is to worry about a 51% attack since it is conceivable that one person or a group could buy enough spondoolies before everyone else to quickly gain control of the network’s hashrate. The good news is that potential threat of 51% control appears to have quickly happened and then quickly dissipated thanks to the economic incentives of the Dash network.
@DarkWater explained how “50%+ was extracted between blocks 963,200 to 963,299” and @xkcd explained how this potential threat was actual not a threat at all.
“When Xhus4Yv5kAyj2JwwL1EZmmSHfoRKR2yRCD hit 51% it made the network vulnerable to the possibility that if this pool was also malicious they could tamper with transactions or provide ‘fake confirmations’ to try and get extra coins. Recognizing this risk and not being malicious in intent the pool, then split into three others avoiding this situation. A telltale sign of tampering with the blockchain would be long orphan chains and during this time there were none, so the network was never under any actual threat.”
@xkcd also added that this “means the pools operators are not malicious in intent and wish to play fairly and abide by the network consensus”. @xkcd also detailed how “Xhus4Yv5kAyj2JwwL1EZmmSHfoRKR2yRCD started mining on the 19th of September”, but “after reaching just over 50% of the DASH hashrate, the hashrate quickly fell and on Nov 1st these new mining pools appeared; XakyHr1BMvijuN3yMK9Zzj6d8eEKxqzUTk and XrLG7YxovHbWv2atsyWovotiMyN2Rbio2u“. @xkcd also analyzed that “the mined coins in pool Xhus4Yv5kAyj2JwwL1EZmmSHfoRKR2yRCD are sent to XtQrVu9AJWBdk7PAGYEYekwRwCzVNQVcLM and as of yet not spent”, along with the other two addresses. @xkcd then explain what this means for the Dash exchange price.
“This suggests they are not public pools, as in a public pool the funds would occasionally be distributed to the many participants. Instead this suggests a private pool and since the date of the creation of the first pool is so close to the announcement of the new SP miners and the rate of increase in hashrate is so steep, one can assume it may be Spondoolie themselves. Hoarding these funds is bullish for the price of DASH in the short term, it means this new player is not looking to sell at these prices, but mostly likely will sell at price levels at which mining is profitable (DarkWater did the calculations). By holding onto almost 50% of all newly mined DASH coins, supply on exchanges is restricted.”
However, the assumption that Spondoolies is mining would contradict with Spondoolies’ official statement on their website.
“We don’t engage in crypto-currency mining. We believe that to do otherwise, puts us in conflict with our customers. So, we leave the crypto-currency mining to our customers and focus solely on designing and selling miners”
Another additional benefit to the Dash network is that “the increased efficiency of these new mining devices means the energy use of the Dash network can be expected to further decouple from the hashrate, which helps alleviate environmental concerns”, according to @strophy who is also monitoring the situation. Overall, @DarkWater highlighted that these addresses and developments will require monitoring, which him, @xkcd, @strophy, and others will be tracking in the #markets channel of the Dash Talk discord server.
Dash poised for future growth
This development illustrates the significant investment that is going into the Dash network to not only mine Dash, but to develop technology around Dash and the great minds inside the Dash community monitoring the network. As the hashrate increases among more parties, the Dash network will become stronger and more secure, which will help instill even further confidence among users. Then, as @DarkWater and @xkcd pointed out, the now larger expense required to mine Dash, which causes miners to hold Dash and sell at higher prices, will further limit the supply of Dash on exchanges and will contribute to higher fiat exchange prices.
This development contributes to the other calculations by CoinFairValue that have found Dash to be significantly undervalued by the current market exchange price when evaluating based on core coin metrics and everyday usability. As more individuals invest more resources into the Dash network, this will signal rising confidence in the longevity of the network, and will enable consumer demand to rise.
Update: It was brought to the author’s attention that Spondoolies stated on their website that they do not mine. The article has been update to reflect the new information.