A group of Burstcoin developers has been accused of merge mining Bitcoin HD without the consent of miners, refusing to give them the Bitcoin HD earned from merge mining, despite using their equipment. The developers say this was done to attack Bitcoin HD.
On Dec. 17, the Proof of Capacity Consortium (PoCC), a semi-official group of Burstcoin developers, began to merge mine Bitcoin HD (BHD). This was announced to the public on Dec. 20 — only after a miner posted on Reddit that they were upset about the unannounced merge mining.
Reasonable attempts to reach representatives of PoCC for a response to the allegations were unsuccessful.
A statement released by PoCC on Dec. 24 said that Bitcoin HD was the specific coin being merge mined.
This situation seems unfair for miners and perhaps could be considered theft since most miners were completely unaware that they were merge mining for at least a week.
To placate the miners, PoCC made a donation of 150,000 BURST ($600) to the Burstcoin Marketing Fund. It also temporarily waived the negative balances some miners had due to a previous pool error.
PoCC acknowledges that merge mining Bitcoin HD increases energy usage by 30 to 50 percent.
The PoCC said it will use its pool, which is comprised of the mining power of independent miners, to mine other chains as it deems fit. It indicated that miners will not receive any profits from merge mining Bitcoin HD even though it costs more electricity.
“A word on Bitcoin HD,” The PoCC also said in the statement. “… It is a pyramid scheme, it has quite a lot of conceptual and security implications – which many participants seem to know about, yet still do not care ‘as long as the price/quick buck is right.’ This is a mindset we have observed even with long-standing veterans in the Burst community. Because of said pyramid scheme concept (you have to buy in to earn) BHD maintains a price point way beyond a realistic valuation. Greed devours the brain. We are currently interfering with this network to secure our position, which means BHD miners will continue to observe an ever increasing network capacity.”
Specifically, the PoCC is saying it is consuming a large fraction of the mining revenue from Bitcoin HD — which weakens the Bitcoin HD mining community — and dumping it for Burstcoin development.
The Bitcoin HD (BHD) CoinGecko chart indicates that volume for BHD spiked to near $1 million right before Christmas, well above the average of less than $100,000, and simultaneously with the beginning of a price crash from near $4 to $2.80.
That being said, there was similar volume and a similar price crash in early December before PoCC deployed Bitcoin HD merge mining, so it’s not that unusual. Part or most of the pre-Christmas price dump could have been speculators catching wind of the PoCC’s threats and dumping Bitcoin HD. It is not possible that PoCC mined anywhere near $1 million of Bitcoin HD in such a short amount of time.
A Bitcoin HD dev responded to the PoCC threats, saying “If some of you continue to attack BHD and do not distribute the earnings from mining BHD to the users, compared with the current capacity, BHD’s 400PB and Burst’s 200PB, … we might attack Burst by the advantage of 51% of the capacity. You should understand what this means.”
The PoCC responded “First and foremost, we are not attacking BHD. This is a very serious allegation for which there is no evidence… As we do not attack BHD and according to your own words help to strengthen the BHD network, we are confounded with the threats you formulated. Let it be known that as we do not attack BHD, we certainly would feel any moral right to answer any attack against Burst accordingly”.
This response to the Bitcoin HD dev is contrary to the PoCC saying that it is interfering with the Bitcoin HD network in the same Reddit thread. PoCC is not 51 percent attacking the Bitcoin HD network. That’s what they mean when they say they are “not attacking.”
In fact, Bitcoin HD has a far greater mining capacity than Burstcoin (BURST), so a PoCC led 51 percent attack is not even possible. However, taking away most of the revenue from the Bitcoin HD mining community and then dumping it all to weaken Bitcoin HD’s price is an attack.
The Bitcoin HD dev team has taken the high road to put an end to the PoCC-induced network interference. Instead of a 51 percent attack on Burstcoin, they decided to fork Bitcoin HD on Jan. 3, 2019 to prevent merge mining.
To summarize, the PoCC, which is a semi-official Burstcoin development team — but certainly not the only Burstcoin developers — initially began to merge mine Bitcoin HD without permission from the miners in the PoCC pool.
PoCC acknowledges that the merge mining was done to divert resources away from the Bitcoin HD mining community to weaken it. Those resources have enriched PoCC, despite the fact that miners on the PoCC pool were unknowingly participating in this scheme and losing money because of it.
Now, a significant fraction of the Burstcoin community feels betrayed, and the PoCC has lost reputation and trust. Since Burstcoin is decentralized, it will eventually recover from this, but the weeks and months ahead could be very turbulent as the full details of this merge mining saga are exposed. Ultimately, this could result in a change in Burstcoin (BURST) community leadership.