08062106358untitled(1) (2).pdf

Crypto Consultants

Business Plan & TechnicalDocument

DavidHancock,LawrenceRosenfeld&

Crypto Consultants cJuly 2014

Contents

1 Executive Summary 31.1 Digital Currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.2 Mining Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.3 Company Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.4 Company Location and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

2 Products and Services 52.1 Pooled Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.2 Server Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.3 Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.4 Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.5 Alternate Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

3 Sales and Marketing Plan 73.1 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73.2 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83.3 Distribution to Regional Supercomputing Grid N8 . . . . . . . . . . . . . . . . . . . 83.4 Expansion to other Institutions with HPC/idle Computation . . . . . . . . . . . . . 83.5 Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83.6 Revenues and Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

4 Management and Organization 94.1 Ownership Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.2 Internal Management Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114.3 External Management Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114.4 Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

5 Action Plan 11

6 Financial Plan 126.1 Finance Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126.2 Initial Startup Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136.3 Ongoing Costs - Power Consumption of CPUs . . . . . . . . . . . . . . . . . . . . . 136.4 Cash Flow of Mining Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136.5 Projections of Revenue based on N8 Specs . . . . . . . . . . . . . . . . . . . . . . . . 136.6 Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

A Financial Forecasts 16

B Technical Appendix 16B.1 N8 feasibility study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16B.2 HPC Scheduler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

C Hashing 23C.1 Public Key Encryption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23C.2 Hashcash (Proof-of-Work) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23C.3 Cryptographic Hash Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

D Network Protocols 25D.1 Pooled Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25D.2 Stratum Mining Protocol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26D.3 Block Rewards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

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D.4 Merkle Tree and Mining System Security . . . . . . . . . . . . . . . . . . . . . . . . 26D.5 Common Algorithms used in Cryptography and Cryptocurrencies . . . . . . . . . . . 27D.6 CryptoNote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

E Glossary of Terms 29

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1 Executive Summary

We assist Universities in converting idle processing power at their data centres into generatingdigital currencies that are converted to British Pounds effortlessly. Thereby we mitigate the highcost of running a data center with low utilisation, without any impact on normal operations.

A prototype of our solution on Sheffield Icebergs High Performance Computing (HPC) clusterindicates that 860 per week 100 with 95% confidence can be created at N8 data centre witharound 5300 computer cores at fair levels of utilisation. Following the future expansion of N8, thisis going to increase to 7,200 per week within a two year period. This is possible through recentadvances in cryptography technology on which next-generation digital currencies are founded.

Crypto Consultants is a Sheffield based digital currency consultancy founded by three SheffieldUniversitygraduates,DavidHancock,LawrenceRosenfeldand .

Crypto Consultants has been developing digital innovations for cryptocurrencies since March 2014.Our company has expertise across a broad range of scientific, computational and economic fieldsof work. The directors of our company have research and industrial experience collaborating withworld class institutions. We are an established partnership

1.1 Digital Currencies

Cryptocurrency (CC) is a decentralised digital monetary system that has become increasinglypopular since the first cryptocoin (Bitcoin) was created in 2008 [1]. Bitcoin is exchanged by theUS government among others and has a market capitalisation of $8 Billion. Now a huge number ofalternative cryptocurrencies exist, all offering different services and solutions to problems faced inthe financial and business world. There are over 300 active cryptocurrencies at the exchanges, thetop 50 having a cumulative market capitalisation of over $500 Million. They enable the exchange offunds between anonymous individuals at a fast speed with very low transaction costs. The lifebloodof any CC is its network. This network is based around a cryptographic protocol which governs thetransactions. Network users supply computational resource to run a secure ledger of transactionsin return for fees and a chance of discovering tradable new coins (see Appendix D).

More specifically to make a transaction, one attains the unique address of the receiver and sends thedesired amount directly to their wallet (account). To secure this transaction, it is processedby a cryptographic hash function specific to the protocol used in that particular coin (seeAppendix C). The functions generated can be solved by anyone to verify the transaction; thepeople that do so are called miners. As an incentive the miner receives a small fraction of thetransaction value as well as a subsidy of newly created coins known as a block reward. Thisserves the purpose of disseminating new coins in a decentralised manner and also as motivatespeople to provide security for the system.

The total supply of a CC is controlled, this is done automatically. The number of coins generatedslowly decreases over time 1. The result is that the number of coins in existence will never exceedthe number set by the developer of the CC. The cryptocurrency mining protocol is designed to havean adaptive difficulty, so that the minting of any one crypto coin occurs steadily as the networkworkload changes.

Making significant profit from mining requires either:

A large scale mining computer with high computational power.1For a deflationary CC. More uncommon are CCs that are inflationary and the number distributed over time is

not bounded.

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Figure 1: A graph showing the total market capitalisation of the Bitcoin (BTC) in Billions of USdollars and the total number of Bitcoin in circulation. The price of an individual Bitcoin is valuedat 343.79 as of 29/07/2014 valued at http://www.bitstamp.net.

The ability to predict a coins success prior to its maturity, thereby mining it when thedifficulty is low.

Specific types of hardware are more efficient at mining than others depending on the protocolthat governs a particular coin. Many organisations own such hardware and do not take advantageof the times it is not used. It is this underutilisation that can be pointed toward the mining ofcryptocurrency to generate significant revenue.

1.2 Mining Software

The software developed runs effortlessly alongside the Sun Grid scheduling system for HPC facilities.Our product oversees the current jobs running and ensures that mining only takes place when thereare no research jobs waiting in the queue. Furthermore it has been programmed defensively sothat the necessary fail safes are in place to ensure that the system does not become flooded withjobs.

Another software solution currently in development is the desktop computer miner. This productis aimed at businesses who have many desktop PCs which remain turned on. The software forthese clients will monitor the core CPU usage and only activate the mining protocol when the CPUutilisation drops below a defined level.

Our products will be significantly superior to any current competitor due to the continual refinementof our clients and servers. Using our in-depth knowledge of the cryptocurrency markets we canensure that the most profitable cryptocurrency is mined and revenue generation is maximised forthe hardware running the software.

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A pooled mining server has been set up online that connects to various cryptocurrency networksand distributes the transaction verification work load to selected worker units. This is necessaryfor implementation in HPC clusters and desktop computer hardware. It allows the generation ofrevenue more frequently, reducing the time between block rewards.

Our team are well connected within the cryptocurrency mining community. Through several com-munication channels, it is possible to keep track of new profitable coins to mine, trending currencies,influential market developments and learn how the evolving markets move.

1.3 Company Formation

Crypto Consultants are a registered partnership, which will allow easy changes of ownership inthe future, as well as certain tax advantages. The firm will be managed initially by 3 executivesrepresenting administration, marketing, sales and finance. These executives bring to the companya large degree of experience.

metDavidHancockwhowas lookingto startaBitcoincommunity inSheffieldto fostercollaboration as he has been actively involved in the crypto community scene. Lawrence Rosenfeldwho had been involved with previous mining projects joined as an additional member. The idea toperform currency generation on grid computers at Sheffield University was proposed by the teamin June following the success of a new generation of coins made for CPU processing (see AppendixD.6).

David Hancock has been a well known community member and expert in the digital currency scene.He has been making a living from analysing the strong and weak points of new proposed currenciesand investing in them accordingly. Lawrence Rosenfeld maintains the mining pool connected tocryptocurrencynetworksandpredictsprofitabilityofvariouscurrencies. hasextensivesoftware engineering experience and modelling simulations on grid computers.

The company is going to be owned with equal shares among the founders with a five year vestingperiod.

1.4 Company Location and Facilities

The company will be founded in Sheffield at the University of Sheffield Enterprise (USE), with aview to relocate offices to a commercial space during the first year of operation. The company willbe registered at: Enterprise Zone, 210 Portobello, Sheffield, South Yorkshire, S1 4AE shortly.

2 Products and Services

We offer a service to solve underutilisation problems at large data centres, in particular related toUniversity research computing. Current utilisation of Sheffield Iceberg is around 60% and the N8HPC is around 78% [17, 18]. Much of the cost of running a data centre is fixed, including staffingcosts and maintaining power supply to computers turned on. When not utilised, computers runin empty cycles without any benefit to the University or researchers. We aim to convert thisinefficiency into revenue generation for the University by using the spare computing cycles toperform hashing for a digital currency network, for which the network rewards us with payments.The University gets a share of the revenues as royalties. This helps to considerably mitigate thecost of data centre maintenance.

Cryptocurrency is a new industry with lots of possibilities. We are among the first to bring digitalcurrency mining to large University data centres, as the technology has only become available in

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the first quarter of 2014. In the future, the company can expand to other data centres managed byUniversities, companies or the government in order to solve underutilisation problems. With oursolution, utilisation can be maximised at 100%, with absolute protection of the primary need forresearch jobs to run. Our service is performed at the lowest priority, meaning it does not competewith research jobs for resources.

2.1 Pooled Mining

One can choose to either solo mine or mine as part of a mining pool. Pooled mining takes thecurrent block in the blockchain and divides the problem into smaller ones. The smaller problemsare distributed amongst miners in the pool and once a block has been solved a proportion of thereward is allocated based on the amount of work each miner has achieved. A prototype mining poolweb server has been setup for use with mining clients. This pool has options to mine many uniquecryptocurrencies with several algorithm variants. This website is used to distribute the reducedproblems for the current block to the N8 supercomputer and all other companies who wish to minewith us. We will upgrade to an Amazon EC2 high performance server when the traffic for the poolis large enough. There is a possibility of opening the pool for public use, meaning members of themining community contribute to the block our pool is solving, for which we would take a small feefrom their earnings.

2.2 Server Management

The web server profit switching management will be automated once it has been configured online.A program has been written to change between the most profitable coin, automatically changingthe mining protocol at the clients end. Manual management of the website security and changesto current range of cryptocurrency will be part of the ongoing development of our company. Theserver will require addition and deletion of cryptocurrencies. New promising coins will need tohave the wallets installed and updated, whilst old unprofitable coins will be removed from theserver.

2.3 Industry

At present, the digital currency mining industry is unregulated and its use on high performancecomputing hardware is allowed. Typically GPU hardware has a significant advantage over CPUhardware for the mining protocol, however recent developments in the cryptocurrency markets haveled to the production of coin algorithms where the asymmetry between the two hardware types isreduced. Producing significant revenue using CPUs for currency mining has only been availablefor a few months, due to the advent of CryptoNote algorithm and the currencies that have forkedfrom it. See Appendix D.6.

2.4 Markets

We primarily focus on data centres at University for our main customer base. This market segmenthas committed growth, the North England Regional Cluster is set to receive a 10 million invest-ment in the near future. In addition, the digital currency market is also growing at an exponentialrate, given that its community is one of the largest ones on the Internet and the value of oneBitcoin increased from virtually 0 to up to 700 in a 4 year time scale. Innovation is happeningat a fast pace with new digital coins appearing every week with active developers and eager earlyadopters.

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Our target audience is mid-top level business managers and developers at data centres seekingto partner with industry, as well as technical leads that could verify the implementation of oursolution. Our first customer is going to be the N8 cluster. We had talks with the Sheffield branch,both with the University of Sheffield high performance computing team and the commercialisationteam. They have given positive feedback and at present we are proposing the project to N8representatives.

2.5 Alternate Products

PowerNap: Eliminating Server Idle Power (Meisner et al 2009) is the current state of the artmethod to mitigate waste caused by idle processing power in University data centres. Currently,data centres are one of the largest consumers of electricity around the world [2]. The authors quotethat much of the energy is simply wasted in the idle state of processing units, which draws around60% of their peak electricity usage. It was estimated in 2011 that US data centres consumed at least100 billion kWh at a cost of $7.4 Billion. PowerNap seeked to minimise load at a rapid responserate in order to mitigate cost of every fraction of a second of idleness.

Our approach is superior to PowerNap due to the fact that we seek to maximise server load atall times instead of trying to control electricity usage at low utilisation levels. Adaptive currencymining is a scalable and robust alternative which results in a profit for the operator even at peakpower consumption. This fact justifies its use as an eliminator of electricity waste in data centres,thereby saving considerable costs in data centre operation. Should the profitability of a digitalcurrency mining drop, our algorithms automatically switch to the most profitable currency at anygiven time.

We expect the industry to gradually shift to digital currency mining as the primary way to utiliseidle power in the next 10 years. Controlling efficient management is still going to be important forother use cases, which means our competitors will be likely to remain in business. Our service maynot yield perfect 100% utilisation, but comes very close. This means PowerNap will still keep itsmarket share, though on a smaller scale.

3 Sales and Marketing Plan

3.1 Positioning

Our customers specific needs include the ability to turn idle processing into a useful profit genera-tion opportunity. Therefore the product is positioned as a business solution with a focus on max-imum utilisation. While PowerNap minimises energy usage, CC mining puts energy and existinginvestment in IT to the best possible use given the circumstances in high performance computing.At the same time, we also embrace new technology developed in cryptography for an anonymousdistributed payment system with view to maximising use of resources and profits. We are an earlyadopter of a technology endorsed by numerous human rights organisations around the world, aimingto protect civil liberties, privacy and freedom.

We give fast maintenance support and ensure that the integration with the job scheduler is as seam-less as possible. Our solution is also scalable which means that no matter how large infrastructurea data centre covers, we can still increase utilisation. There are no minimum startup costs or orderamounts with our product, our clients can start earning straight away, we do all the necessarywork.

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3.2 Sales

Acquiring new customers is done by first approaching them via email or phone, and setting upan initial meeting with a technical lead in order to perform a feasibility study on the hardwareand software requirements of a data centre. Following a feasibility study, negotiations start withthe commercialisation team of the industrial liaison branch of the data centre company, in orderto draft an operating plan and discuss revenue sharing. Once the negotiations have finished, auser account is opened on the data centre for our company where we have sufficient rights to runour programme to the satisfaction of the centre security manager. Note, our software works withstandard user account and requires no elevated privileges which may cause a security risk for thedata centre. Payments as stated in the contract are made on a monthly basis to bank accountsof the customer until the end of the contract, at which point the customer is given the choice toextend the contract for another year.

The sales process can take approximately 6 months from first contact until signing of the contract.We aim to respond quickly; however, sometimes seasonal under-staffing could result in a delay. Inthe first year, we aim to set up a contract with a single company, N8, then additional personnel willbe hired to approach other data centres. We aim to sign at least one additional contract per yearfor up to five years in addition to renewing our existing ones. Our solution is based on long termdevelopments in cryptocurrency. In case a currency becomes unprofitable or completely mined, weseek other new currencies to do computations for, and / or focus on providing service to existingcurrencies and gain revenue from transaction fees. A profitability study is continuously performedto this end.

3.3 Distribution to Regional Supercomputing Grid N8

Negotiations with the regional supercomputing grid, the N8 have been under way. A proposedcontract to manage the idle processing computing power at N8 (approximately 22% of the maxcomputing power) would yield a 50:50 split of the revenue generated. The mined currency will beconverted to fiat at regular intervals, with steady deposits into the N8 bank account.

The University of Sheffield / N8 technical manager expressed significant positive interest in theproject, since one of the main missions of N8 which is partly funded by the UK government andseveral universities through the UK, is to foster small and medium sized local business relation-ships. Our projects fits this criterion therefore it is welcomed by N8. The University of Sheffieldcommercialisation manager also judged our project favourably and referred it to evaluation to anN8 business developer.

3.4 Expansion to other Institutions with HPC/idle Computation

Sheffield based companies have already expressed an interest in the mining of cryptocurrenciesusing the idle processing power of computers within their institutions. Once we have an easyto use, robust, all-in-one package for the mining protocol, we intend to contact other universityinstitutions and businesses with either high performance computing or desktop computers, to useour idle processing miner product within their organisations.

3.5 Promotion

Promotion of the product is going to be performed through word of mouth advertising and throughsocial media. We will attend industrial and research workshops and conferences in high performancecomputing and demonstrate our product to potential customers interested in latest developments

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in the industry. Free promotional material will be distributed at these events. Follow-up discussioncan be held in order to probe whether a customer has problems with underutilisation of servers.There is an opportunity in a conference to give a talk about our product which will help spreadawareness and will result in future enquiries on our website.

At first, our business will provide a single product that addresses the main customer need ofsolving underutilisation. If a customer has renewed their contract three successive times, they willbe eligible for increased earnings. Likewise, we plan to reward referrals the same way. As an earlyincentive, customers may be given 90% of the profits for an entire week in order to experience theproduct first hand.

3.6 Revenues and Costs

The product will lead to a steady flow of revenue, but occasional hiccups may occur in the operation.Therefore, there will be periods where the cash flow is low. The customer receives their share ofthe earnings and we assume no responsibility for lower than expected gross profit margins. As analternative, the customer can request a payout on a time frame determined by them.

Even in the worst case scenario the customer will not suffer any damages as other users of the datacentre can still request resources for jobs. Since the opportunity cost of underutilisation at normaloperating levels is quite significant, our customer will be likely to gain revenue from currency miningfor any periods of time. Therefore, under no circumstances will the customer be worse off by signingthe contract with us than by not signing it. This means, our product comes with extremely lowfinancial risk.

Gross profit margins can be increased via predicting profitability in advance and mining a currencywhen the difficulty is low, then selling once it has matured.

4 Management and Organization

SWOT Analysis

Our strength is our expertise in all key areas. One member is an expert in digital currencies,another has programming experience and a third modelling experience. All the members of thecompany studied and graduated from the University of Sheffield and have formed good connectionswithin their subsidiary departments.

External opportunity is the fact that, in the wake of Bitcoins success, digital currency is on therise with staggering growth. Data centres are also becoming bigger with a 10M investment goinginto N8. Last, CPU friendly currencies have become available in the past few months.

Weakness of the organisation is that internal controls must be in place to safeguard funds and makesure the partners are protected from any liable action.

Threat to the business is that before expansion, progress depends on a first contract which cansometimes be timely. Time is the essence to exploit the unique combination of opportunitiesand digital currency mining is a competitive scene where profitability changes fast. Security isalso an issue and although the majority of the time it is safe, exchanges and networks have beencompromised in the the past.

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Team Members

is a currentPhDstudentat theUniversityofSheffield.Hegraduatedwitha4-yearMaster of Computer Science in 2012 after doing a degree in international business and economicsat the Corvinus University of Budapest. His Master thesis was in predicting Bitcoin trends usingstatistical machine learning on one of the biggest exchanges at the time. His PhD work focuses onfinancial market modelling with social media text. In 2013 his team came first place in the Ideas toEnterprise competition fordoctoral students. hasbeendoingexternal communicationwiththe University and N8, as well as working on the currency miners and analysing profitability.

David Hancock, a keen entrepreneur who graduated in 2013 from the University of Sheffield witha Bachelors degree in Physics, has been following the markets that govern cryptocurrency andestablishing networking connections with developers in the community. In his spare time he is theevents co-ordinator for Engineers Without Borders society for the University of Sheffield. He hasexperience planning and designing many of the outreach projects currently in operation.

Lawrence Rosenfeld is a recent graduate from the University of Sheffield and completed a 4-yearMasters of Physics in 2014. His Masters thesis involved performing computationally intensivesimulations to investigate the structure of quantum state spaces on the HPC facilities (Iceberg).He has further experience working with signal processing and communications engineering with aworld class team at the National Physical Laboratory in the Time Quantum and Electromagneticsdivision after successfully being awarded an Institute of Physics research grant. Lawrence has asubstantial portfolio in coding and mathematical computation alongside skills in web design andserver management.

Information Systems

At present, Google Docs has been used for discussion in addition to Facebook and Skype. In thefuture a shared code repository is going to be set up with Trello project management.

Support

Ongoing support is provided through University of Sheffield Enterprise Zone, through discussionwith colleagues and various members of the technical and commercialisation teams. In addition,close ties with the cryptocurrency community members play a big role in defining the future direc-tion of the project.

Initially the team will draw cost of living salary. The company has few overheads. Profits will bereinvested into development.

4.1 Ownership Structure

The company we intend to found will be a partnership. It will initially have a board of 3 partnerswho are all equal holders in the business. To suit predictions of future expansion there is room toadopt to a private shareholding structure with a review of this in the the first AGM. The allocationof roles will be the server manager, the client manager, the software developer and the day trader.The employment of more staff will be initiated if there is sufficient demand for technical supportor consultancy on our products.

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4.2 Internal Management Team

Management of the server is essential to the businesss success since the addition of new cryptocur-rencies and the deletion of old unwanted ones will be key to ensuring that the most profitable coinis mined. Additionally, security of company assets will be managed by director Lawrence.The management of the client software and the updates that will be distributed in new revisionswill bedirector .Further responsibilities includemanagingcompanybankaccountsand liais-ing with a company accountant.Assessing new currencies and finding out developments within the community will play a key partin the amount of profit made by the company. Other responsibilities such as customer outreachand contract management will be handled by director David.

4.3 External Management Resources

Management of the assets within other institutions will become necessary once the size of thecompany has increased beyond consulting the N8 regional grid. Developing a management softwareto keep track of the revenues and hash rates of the mining pool will ensue once the company hasbeen started. Employment of additional staff for external technical support and maintenance willbe considered if there is sufficient revenue and communication from clients.

4.4 Operations

The company is located at an excellent place where it is registered at the University of Sheffieldenterprise zone, right next to a local N8 branch. Facilities include computers used to connect to thedata centre and high speed intranet and internet. In terms of providing the service, much of theoperations will be automated through computer software. Some actions will need to have humanconfirmations, such as exchanging crypto currencies to fiat. In addition, safety checks will be inplace to make sure the software behaves in a predictable manner.

We need a programmer, a modeller and community member to operate the business. The program-mer needs to have good programming skills with high performance computing and general purposeweb programming and server management. The modeller should be apt at predicting mining prof-itability with simple calculations or mathematical models. The community member should havecontacts in the cryptocurrency community to ensure support with implementation. He should alsokeep in touch with clients and promote the business to data centres.

Selling can begin immediately, and revenue generation can happen shortly afterwards. Most cus-tomers should be able to sign a contract once a feasibility study has been performed. We will beable to sell a new contract at least once a year, with a conversation rate of 50% which means abouthalf of our clients will turn into a customer given a positive feasibility study. The average sale valuewill be 860 revenue per week, which is 430 per week for the company via a 50% royalty share ofthe block reward. The cryptocurrencies are shortly converted to pounds after they are mined in afew days, which means the cash flow is fairly good with short turnovers.

5 Action Plan

The current action plan for the company over the next 6-12 month time frame is as follows:

Developing the all in one mining platform that runs off idle power for Windows, Mac, Linux.

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Hosting a lightweight flexible mining server that has automated profit switching to the mostprofitable coins for a given algorithm on Amazon EC2 server.

Negotiation of a preliminary year long contract with N8 regional supercomputer. Explore expansion to other HPCs and organisations with idle computing power. Promotion of mining pool through social media platforms: Facebook, Twitter, Reddit, Bit-

coinforum etc.

6 Financial Plan

6.1 Finance Forecasts

Forecasting profits is especially difficult in the cryptocurrency markets as the rate of change of thesystem is rapid. There is no way to predict what developments will occur (ie. developer changesto a coin and say other organisations adopting a currency are not predictable). It should be notedthat forecasting mining profitability is a problem within the community, and a risk taken at theexpense of the person(s) buying the hardware, however early adopters have the greatest successrates out of all miners.

We decided to model our financial forecasts using the following assumptions:

No office rental costs: remain registered at USE. No power costs: our clients are aware that their share of the royalties must cover electricity. Bitcoin markets remain stable and the value does not devalue. We expect a 50% royalty share of the block reward from mined currency. Assume implemented idle 22% utilisation of the N8 HPC and 40% of Iceberg. We expect to mine around 860 of cryptocurrency per week (based on the last two weeks

average revenue from period 13/07/14 to 27/07/14 for Monero coin) for the first 9 months(20 server rental cost / month), 1720 for the next 8 months (40 server rental cost) and7200 for the following 8 months (150 server rental/month for first 3 with upgrade to 200for the next 5).

Paying 1000 a month salaries to all of the directors (3 members). Eligible for the 20% corporation tax band for companies earning less that 1M. Find another HPC client by 01/05/15 willing to allocate idle processing to cryptocurrency

mining.

N8 Research Partnership renews contract after the 1st year preliminary period. The N8 HPC facilities receive an upgrade by 01/01/2016.

The projected figures for our company are as follows (see Appendix A for breakdown).

Year Net Profit

1 12,160 970 (95% confidence)2 92,240 2,880 (95% confidence)

It should be noted that the financial forecast has been based around revenue that would have beenmade between 13th-27th of July, this is because the coin exhibited turbulent behaviour before these

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dates (see Figure 3), this was due to a large rise in the coins price leading to a large interest inmining it. Since then the price/market has stabilised and therefore the data is more appropriatewithin the time period selected.

Whilst these are quoted as a guideline figures for the business, it is worth bearing in mind that thevolatility of the cryptocurrency markets could lead to a significant variation of net profit revenuesobtained after the first year of trading.

6.2 Initial Startup Costs

The business does not require initial investment, only permission to operate.

The costs of starting the business are very small since only the rental of a server to host the onlinemining pool is required for the company to generate revenue. There is a possibility of agreeing tohost the pool servers on the University of Sheffields high performance servers. Other startup costswill be general founding costs such as registering the company name and employment of a companyaccountant.

6.3 Ongoing Costs - Power Consumption of CPUs

The power costs of running a CPU for the mining protocol increases the energy consumption onaverage at around 35% for large data centres [3]. The extra power consumed would be evaluatedfor each institution since the power costs of the computing will be the responsibilities of our clientsand not our own. As we will not be paying for electricity for the mining protocol the costs to ourcompany will be essentially nil.

6.4 Cash Flow of Mining Revenue

In terms of mining the method of releasing the funds is relatively straight forward. The time takenfrom when a block is found to it being stored as a fiat balance is between 12-50 minutes; it it shouldbe noted that due to some exchanges occasionally having problems with synchronising with thenetwork, the transfer period can extend to hours (does not occur on larger exchanges and is not afrequent occurrence). The fee the network charges for a transaction is very small and can usually beignored, the BTC network charges 0.04 and the Monero

Block found Reward transferred

to wallet.

Reward sent from wallet to exchange

1-10 minute transfer time

Assumptions XMR is being mined BTC/FIAT exchange is outside the UK but

within the EU Mintpal is used to trade XMR-BTC Bitstamp is used to trade BTC-FIAT


XMR is traded for BTC

BTC sent to exchange 0.15% fee XMR/BTC


BTC traded for fiat Fiat withdrawn to

company account 0.5% fee BTC/FIAT

Funds distributed to employees and clients.

15 sepa transfer 5 Bank fee

1-3 day transfer time

0.0001BTC fee

0.005XMR fee 0.005XMR fee

Figure 2: Diagram of cash flow, from the crediting of the block reward into the wallet to thecrediting of the clients bank account.

Figure 3: A graph showing the mining difficulty and projected revenue generated per day in USDfor Monero Coin over June and July assuming that 100% of the N8 regional clusters computationalpower is allocated to mining.

14

6.6 Risks

One risk is that the scheduler software could go bad and crash the data centre with overflowingof jobs. This can be mitigated by defensive programming, and by having a protective schedulersystem in place. If this happens, the bug is fixed and the data centre and scheduler is restartedafter an investigation. Another risk is that the funds must be safeguarded against attacks. Forthis, other companies are consulted that deal with client funds directly in cryptocurrencies. Onesolution is to use cold storage to keep funds secure.

In case no clients sign a contract with us, we will market the product to the general public. Bydiversifying income channels, we can mitigate the risk on relying too much on one revenue channel.For example, the mining pool can be open to the public which would pay a percentage fee toaccess it. In case the currencies are no longer profitable to mine, we switch to another currency.If all currencies are not profitable to mine, we investigate the hardware requirements to producebetter profitability. In addition, we research ways to predict profitability in advance before othercompeting miners adapt to changing market conditions. Finally, a percentage of the revenue isgoing to be reserved as a contingency fund.

Investment Opportunity

There is the possibility to invest money in our company through means of a contract by which theinvestment is returned with a percentage of the profits deducted for the labour, monitoring andmaturing of a particular investment into a cryptocurrency.

15

A Financial Forecasts

Figure 4: A spreadsheet showing the 2-year financial forecast of Crypto Consultants.

B Technical Appendix

B.1 N8 feasibility study

A prototype mining software was deployed to the Iceberg cluster in order to measure the hashingpower of the hardware. The software is available open-source and it was precompiled before de-ployment. It ran without any root access, only with normal user level privileges. Specifications ofIceberg and N8 were retrieved from the official web pages[4, 10] using real time live feed informationand historical data [17, 18]. We used live feed in case the specifications listed on the website wereoutdated.

It can be seen from the results that the total hashing power of the clusters amounts to 220 Kilo hashper second, the bulk of which comes from the N8 cores. This generated a total of $14,830 in the lastmonth. It must be noted that due to not yet having access to an N8 account, the hashing powerfor N8 cores is a conservative estimate based on measured Iceberg Intel core hashing power. Givenupgraded hardware at N8, the hashing power is likely going to be significantly higher. In addition,the reason AMD nodes have a relatively lower hashing power is because of the lack of availability ofAES-NI (Advanced Encryption Standard - New Instructions) on those nodes. These calculationsfurthermore assume full utilisation, therefore given a percentage of idle time, the resulting profitscan be easily derived. Detailed historical profitability for Monero coin (XMR) is included below.This was calculated with publicly available historical data [11, 12, 13]. We measured historicalprofitability of Monero, given the hashing power available at Iceberg and N8 as a proportion of thetotal historical network hashing power for Monero.

B.2 HPC Scheduler

The first version of the scheduler works with the data centre scheduler together. Iceberg and N8 usethe Sun Grid Engine High Performance Computing framework. The algorithm for the scheduler is

16

Figure 5: Monero (XMR) historical profitability given Iceberg and N8 hashing power (1/6).

as follows:

1. Set parameters of job

1.1. Set priority to low

1.2. Set time length to short

2. If job for user account is in queue waiting

2.1. Sleep for an hour

2.2. Go to step 1.

3. Submit job

This algorithm makes sure that if a job is already in the queue waiting and is not yet run by thedata centre scheduler, that means resources are needed for other jobs at the moment, therefore wedo not do anything. On the other hand, if we do not have any jobs in the queue, that means eitherwe have no jobs running at the moment in which case we should submit one, or that all our jobsare running which means that data centre has idle resources available. Due to the fact that jobs aresubmitted with a delay and with the shortest time length, resources are continuously being freedup as our jobs finish one after another, and thus the data centre scheduler can retake control ofthose resources for effective management. The miner uses CPU processing mostly while memoryusage is low and network usage is moderate.

17


Then once a job is run by the Sun Grid Engine system, the miner discovers the CPU cores avail-able, and connects to the company pool in order to request workload. It performs the hashingcomputations and submits the work back to the pool.

The miner has several modes in which it can run such that each mode corresponds to a currencymining algorithm which includes a family coins. Given the algorithm, the miner connects to thepool on a designated port with VARDIFF, which means adaptive difficulty level. The type ofalgorithm mined is going to be retrieved from a server in order to control the miners given theprofitability analysis. The algorithm for the miner is as follows:

1. Retrieve target coin to mine from server

2. Set algorithm to mine

3. Set target port to mine

4. Connect to pool

5. Discover number of CPU cores

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6. Start mining process.

The miner implementation itself is open source and currently industry standard. The miner canbe compiled for specific hardware architecture with AES-NI (Advanced Encryption Standard NewInstructions) technology enabled that achieves much better efficiency. At N8, all nodes are AES-NIenabled while on Iceberg the Intel nodes have it, but AMD nodes do not. In the future, mining onNvidia GPUs can be deployed.

19


20


21


Figure 11: Iceberg (left) and N8 (right) historical utalisation

22

C Hashing

C.1 Public Key Encryption

Public key cryptography is also known as asymmetric cryptography as there are two different keysused for encryption and decryption [5]. It is used all over the world by governments and banksto encrypt their data. The easiest way to visualise the concept is with a mailbox with a lock;when a message is delivered by the postman everybody on the street can see the mailbox and thepostman putting the letter inside. Only the person who has the correctly shaped key is able toopen the mailbox and retrieve the letter that was sent. In public key cryptography a large numberis generated, in many current state of the art encryptions prime numbers are used (RSA etc.), analgorithm generates two keys, a public and private key which are connected by a mathematicalformula that is kept secret.

In asymmetric cryptography, Alice sends Bob her pubic key to encrypt plaintext and uses her privatekey to decrypt the message. Most cryptocurrencies use a symmetric cipher that is establishedbetween users. If Alice is to send Bob a message they must first establish a unique shared key.First Alice broadcasts her public key to Bob, who in turn broadcasts his public key to Alice. Atthis point, both Alice and Bob have shared their public keys with each other and any adversarieslistening to their conversation would still be none the wiser. Alice and Bob combine their ownunique private keys with the other persons public key to generate a shared key which is identicalfor both users. Through using this method, Alice can now use the shared key to encrypt a messageto Bob who uses the same key to decrypt it. Anybody attempting to eavesdrop on their conversationis unable to reconstruct the original message since they have not got Alice and Bobs shared keyto decrypt the message.

Many cryptocurrencies rely on symmetric public key encryption; in order for a users wallet toreceive a cryptocurrency from other users in the network, it requires them to broadcast a publicaddress to transfer the funds to. Using techniques of public key encryption, it is possible for securetransactions between users of the cryptocurrency network.

C.2 Hashcash (Proof-of-Work)

Bitcoin uses the a Proof of work function as the mining core. All Bitcoin miners whether CPU,GPU, FPGA or ASICs are expending their effort creating proofs-of-work, which act as a vote in theblockchain evolution and validate the blockchain transaction log. Hashcash was originally designedas a mechanism to throttle systematic abuse of un-metered internet resources such as email, andanonymous remailers [6]. The hashcash CPU cost-function computes a token which can be used asa proof-of-work for a client. The algorithm is as follows: for bitstring s = {0, 1}, [s]i means thebit at offset i and [s]i...j is the bit substring between and including bits i and j. We define a binaryinfix comparison operator:

where b is the length of the common left-substring from the two bit-strings. The hashcash functionis defined as:

23

It incorporates an algorithm by which the client must attempt to find partial hash collisions onthe all 0 bits k-bit strings 0k. The idea of using partial hashes is that they can be made arbitrarilyexpensive to compute (by choosing the desired number of bits of collision), and yet can be verifiedinstantly. The fastest algorithm for computing partial collisions is brute force. There is no challengeas the client can safely choose his own random challenge, and so the hashcash cost-function is atrapdoor-free and non-interactive cost-function. In addition the Hashcash cost-function is publiclyauditable, because anyone can efficiently verify any published tokens. These are the ideas that wereadapted and used for the mining and verification aspects of the Bitcoin protocol.

C.3 Cryptographic Hash Functions

A cryptographic hash function is a hash function which is considered practically impossible toinvert, that is, to recreate the input data from its hash value alone. Cryptographic hash functionsare used in cryptocurrencies as they are computationally intensive to solve. If an attacker wants tocreate several hundred fake accounts to verify a transaction, it becomes computationally infeasiblefor the attacker to falsely verify transactions when the network hash rate is large.

For this we investigate a simple example of the conversion of a simple text string from plaintextto hexadecimal. Let h(y) be a fixed hash function (SHA-256, Scrypt, etc. . . ) where y is the inputargument, let l be a plaintext string such as hello world! and let x be an integer nonce that isthe suffix to the plaintext string. The aim of a miner in the cryptocurrency network is to appendthe nonce x to the end of plaintext string l so that the final output string is preceded by a seriesof zeros. Due to the chaotic nature of hashing functions, minor modifications of the input stringlead to changes in the output that are completely different, known as the avalanche effect. Thecharacter string such as Hello world!0 (x=0) which when represented as a hexadecimal stringbecomes:

h("Hello, world!0")= 1312af178c253f84028d480a6adc1e25e81caa44c749ec81976192e2ec934c64.

An increment our nonce by a single integer (x=1) results in the hexadecimal string:

h("Hello, world!1")= 9afc424b79e4f6ab42d99c81156d3a17228d6e1eef4139be78e948a9332a7d8,

which is entirely unrecognisable from the first character string above. This process of performingiterative appending of integer nonces and converting the result with a hash function is analogousto the computationally intensive process used in the Bitcoin (SHA-256) protocol. We find thatx=4250 generates the string:

h("Hello, world!4250")= 0000c3af42fc31103f1fdc0151fa747ff87349a4714df7cc52ea464e12dcd4e9

From this we can now see that choice of x=4250 generates an output string that satisfied ourconditions of preceding zeros. The work required to systematically try find x that satisfies our re-quirements effectively eliminates an attacker from falsely verifying transactions using fake accountssince the computational effort to flood the network with bots is too large to be possible. Theconcept of proof-of-work in the Bitcoin protocol essentially extends this concept to the header ofthe current block in the blockchain. The Bitcoin puzzle requires the header of the hash to be equalor lower than a target value for the block to be accepted by the network. The target is a measureof the network difficulty and the hash rate, it is automatically adjusted so that a block is releasedon average every 10 minutes.

24

Figure 12: A flowchart showing the pool-based Bitcoin mining workflow.

D Network Protocols

For Bitcoin the steps to run the network are as follows:

New transactions are broadcast to all nodes. Each node collects new transactions into a block. Each node works on finding a difficult proof-of-work for its block. When a node finds a proof-of-work, it broadcasts the block to all nodes. Nodes accept the block only if all transactions in it are valid and not already spent. Nodes express their acceptance of the block by working on creating the next block in the

chain, using the hash of the accepted block as the previous hash.

Most other cryptocurrencies will run this protocol or some sort of variation of this verificationprocess to make the transactions and network more secure.

D.1 Pooled Mining

Cryptographic protocols are widely used for secure application-level data transport. A crypto-graphic protocol usually incorporates at least some of these aspects:

Key agreement or establishment Entity authentication Symmetric encryption and message authentication material construction Secured application-level data transport Non-repudiation methods

Mining for cryptocurrency is can be approached two ways: Solo mining - Running the miningprotocol as a single user. Mining pools - Which are collaborative mining efforts used to addconsistency to the mining payout. Some mining pools can consume up to 30% of the total hashingcontributed to the network for Bitcoin. Benefits of pooled mining result in a higher probability ofcorrectly finding the nonce to solve the block. The hash of the current block can be fragmentedinto smaller problems for workers amongst the pool to solve. Typically in a pool, once a blockis found members of the pool receive a fraction of the rewards proportional to the computationalpower they have contributed to the network. In this way it becomes possible to generate revenuemore often than mining as an individual.

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D.2 Stratum Mining Protocol

When a miner wishes to use their computer to generate cryptocurrency, they must establish aconnection to the network as a solo miner or connect to a mining pool. The process of connectingto a mining pool to receive a less difficult distributed problem (block) amongst workers in the poolis known as the Stratum protocol. Stratum is a line-based protocol using plain TCP socket, withpayload encoded as JSON-RPC messages. The client simply opens TCP socket and writes requeststo the server in the form of JSON messages finished by the newline character. Every line receivedby the client is again a valid JSON-RPC fragment containing the response.

D.3 Block Rewards

With Bitcoin the rate of block creation is approximately constant over time: 6 per hour. The blockreward halves every 2016 blocks, the average hashrate during that period is measured, and thedifficulty is adjusted based on that. Therefore a large increase in the hashing rate of a particularcryptocurrency will cause the probability of solving a block to decrease. This is why it is importantto forecast a cryptocurrency that is not the most profitable at the current time. The informationfor the most profitable coin is publicly available and a large volume of miners will jump shipto this cryptocurrency. The trending nature of the network hash rates to profit switch results inreduced revenue due to increased difficulty.

D.4 Merkle Tree and Mining System Security

The process of mining bitcoins requires an up to date version of the blockchain, with each minerattempting to solve a unique hash. The hash that the nonce is appended requires the followingparameters for the Bitcoin network.

Field Purpose Updated when... Size (Bytes)

Version Block version number You upgrade the soft-ware and it specifies anew version

4

hashPrevBlock 256-bit hash of the pre-vious block header

A new block comes in 32

hashMerkleRoot 256-bit hash based onall of the transactions inthe block

A transaction is ac-cepted

32

Time Current timestamp asseconds since 1970-01-01T00:00 UTC

Every few seconds 4

Bits Current target in com-pact format

The difficulty is ad-justed

4

Nonce 32-bit number (starts at0)

A hash is tried (incre-ments)

4

Table 1: A table showing the components of the block to solved by each miner for Bitcoin. Notebetween different cryptocurrencies the sizes of the fields and data contained in the blocks willchange.

Since all of these fields except the hashMerkleRoot are not unique to the miner it would at firstappear that miners with more powerful hardware would always find a nonce that creates a hashlower than the target. The Merkle root provides a method to circumvent this problem. The Merkle

26

Figure 13: Showing a binary Merkle hash tree, where each parent is a hash of the concatenatedchildren.

root is a hash tree: A hash tree is a tree of hashes in which the leaves are hashes of data blocks in, forinstance, a file or set of files. Nodes further up in the tree are the hashes of their respective children.For example, in Figure 13 hash 0 is the result of hashing the result of concatenating hash 0-0 andhash 0-1. That is, hash 0 = hash( hash 0-0 + hash 0-1 ) where + denotes concatenation.

The Merkle root contains information about a users wallet address and transactions. It updates withnew transactions in the current block, a new unique hash for the current block in the blockchainis continuously generated for each user. For each user the first transaction in your block is ageneration sent to the unique Bitcoin wallet address. Since the block is different from everyoneelses blocks, you are effectively guaranteed to produce different hashes. The probability is so lowfor any two users to have the same Merkle root that each miner effectively hashes a unique series.This means each miner has an equal chance of solving the current block for every hash they perform.Once a nonce that is less than the target has been found for a specific user, they broadcast this tothe network who verifies that the current block hash and nonce are lower or equal to the target.The user who finds a soluton to the current block is the recipient of the block reward and thecorresponding funds are transferred to their wallet.

D.5 Common Algorithms used in Cryptography and Cryptocurrencies

SHA: For more than 10 years, SHA-1 authentication has been used to effectively protect intellectualproperty from counterfeiting and illegal copying. As computer technology advances, customers areasking for an even higher level of security.

Bitcoin, the first cryptocurrency was designed using the well known SHA-256 algorithm (SecureHashing Algorithm). The SHA-2 family of hashing functions was developed and published by NISTin the USA. The hashing functions are now used in commerce and in government as the standardfor encrypted data.

Other common hashing algorithms used for cryptocurrencies are called:

Scrypt [14] X11 [15] NXT [16]

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CryptoNote [7]

D.6 CryptoNote

In Bitcoin and many other Proof-of-Work currencies an ordinary digital signature verification pro-cess is employed (see Appendix C) CryptoNote employs technology that is based on ring signaturesthis differs completely from the Bitcoin source code and as a result bares untraceable transac-tion capabilities and an improved solution to the double spending problem. Ring signatures workby requiring a number of different public keys for verification. By ring signatures we perceive agroup of individuals, each with their own secret key and public key. The signer of a given trans-action is an indistinguishable member of the group. The main difference with the ordinary digitalsignature schemes is that a verifier cannot establish the exact identity of the signer and that iswhere anonymity comes from. CryptoNote is not a currency but a technology used to create them.Bytecoin, Monero, Quzarcoin, Boolbery, Dashcoin are just some currencies that utilise CryptoNotetechnology.

Bytecoin was the first to introduce Egalitarian proof of work, which is essentially a voting systemwhere users vote for the right order of the transactions, for enabling new features in the protocoland for the honest money supply distribution. Therefore, it is important that during the votingprocess all participants have equal voting rights. This is an attempt at excluding the owners ofASIC (specialised mining hardware) designs from the mining process. CryptoNight (the hashingalgorithm that is used by CryptoNote to achieve miners equality), albeit as well relying on memory-intensive calculations, makes every new block dependent on all previous ones. This way, anyonewho tries to increase their mining capacity through stockpiling RAM will also have to increase thecalculation speed exponentially, which makes ASIC mining impossible as of now [9].

Further Contact Info

For further inquiry,pleaseemail at [email protected].

For further information about USE, visit http://enterprise.shef.ac.uk/about-us#sthash.cC8ESc2S.dpuf

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David Hancock [email protected]

E Glossary of Terms

Term Full Name DefinitionASIC Application Spe-

cific IntegratedCircuit

A device fabricated from the ground up to perform a specificcomputation protocol.

CC Cryptocurrency Decentralised digital currencies that use cryptographictechniques to exchanged and mined.

Cluster N/A A computer cluster consists of a set of loosely connected ortightly connected computers that work together so that inmany respects they can be viewed as a single system.

CPU Central ProcessingUnit

Computer hardware that carries out the instructions of acomputer program by performing the basic arithmetical,logical, and input/output operations of the system.

Difficulty N/A The ratio of the average time taken to solve the currentblock to the time taken to solve the first block. Is a measureof the target for current block header.

FPGA Field Pro-grammable GateArray

An integrated circuit designed to be configured by a cus-tomer or a designer after manufacturing, used for imple-menting complex digital computations. Predecessor to themining ASICs currently available.

GPU Graphical Process-ing Unit

Computer hardware designed to rapidly manipulate andalter memory to accelerate the creation of images in a framebuffer intended for output to a display.

Hash N/A A hash function is any function that can be used to mapdata of arbitrary size to data of fixed size, with slight differ-ences in input data producing very big differences in outputdata.

HPC High PerformanceComputing

Computational activity requiring more than a single com-puter to execute a task. Supercomputers and computerclusters are used to solve advanced computation problems.

JSON JavaScript ObjectNotation

An open standard format that uses human-readable textto transmit data objects consisting of attribute-value pairs.It is used primarily to transmit data between a server andweb application.

kWh KiloWatt Hour The amount of energy used when running a 1 KiloWattelectrical device for an hour.

Mining N/A The process of performing computations (hashing) to solvea block for a specific cryptocurrency.

RAM Random AccessMemory

Computer hardware that allows data items to be read andwritten in roughly the same amount of time regardless ofthe order in which data items are accessed.

RPC Remote ProcedureCall

An inter-process communication that allows a computerprogram to cause a subroutine or procedure to execute inanother address space (commonly on another computer ona shared network) without the programmer explicitly cod-ing the details for this remote interaction.

TCP Transmission Con-trol Protocol

A core network protocol used to check and verify a streamof 8-bit strings between computers in a local area networkor over the internet.

TX Transaction An exchange of currency in a cryptocurrency networkWallet N/A Software for cryptocurrency that allows users to view trans-

action history and send/receive payments. Stores the dig-ital credentials for your bitcoin holdings, allowing you toaccess your assets.

XMR Monero Cryptocurrency using the CryptoNote algorithm

29

References

[1] Satoshi Nakamoto, (2008) Bitcoin: a Peer-to-Peer Electronic Cash Payment System, LastAccessed: 25/07/14, Available: https://bitcoin.org/bitcoin.pdf

[2] D. Meisner, B. Gold and T. Wenish, (2009) PowerNap: Eliminating Server Idle Power, Pro-ceedings of the 14th international conference on Architectural support for programming lan-guages and operating systems, ACM New York, NY, USA 2009

[3] Xiaobo Fan, Wolf-Dietrich Weber and Luiz Andre Barroso, (2007) Power Provision-ing for a Warehouse-sized Computer Proceedings of the ACM International Sym-posium on Computer Architecture, San Diego, Last Accessed: 30/07/14, Avail-able: http://static.googleusercontent.com/media/research.google.com/en//archive/power_provisioning.pdf

[4] N8 Research Partnership, (2014) Facilities, Last Accessed: 19/07/14, Available: http://n8hpc.org.uk/about/facilities/

[5] C. Paar and J. Pelzl, (2010) Understanding Cryptography Springer-Verlag Berlin, Heidelberg,pp 342-352.

[6] Adam Back (2002) Hashcash - A Denial of Service Counter-Measure, Last accessed 26/07/14,Available http://www.hashcash.org/papers/hashcash.pdf

[7] Nicolas van Saberhagen, (2013) CryptoNote v2.0 Last Accessed: 25/07/14, Available: https://cryptonote.org/whitepaper.pdf

[8] Ashmita Debnath, Pradheepkumar Singaravelu and Shekhar Verma, (2012) Efficient spatialprivacy preserving scheme for sensor network, Central European Journal of Engineering 3 (1)doi:10.2478/s13531-012-0048-7

[9] CryptoNote, (2014) Proof of Work, Last Accessed: 02/08/14, Available: https://cryptonote.org/inside.php#equal-proof-of-work

[10] University of Sheffield, (2014) Iceberg Specification, Last Accessed: 02/08/14, Available:https://www.shef.ac.uk/wrgrid/iceberg/specs

[11] Bitcoin Charts, (2014) Bitcoin / USD exchange rate, Last Accessed: 02/08/14, Available:http://bitcoincharts.com/charts/bitstampUSD#rg90zigDailyztgSzm1g10zm2g25zv

[12] Monero Chain, (2014) Network Information, Last Accessed: 02/08/14, Available: http://monerochain.info/charts

[13] Crypto Coin Charts, (2014) Monero / Bitcoin exchange rate, Last Accessed:02/08/14, Available: http://www.cryptocoincharts.info/period-charts.php?period=alltime&resolution=day&pair=xmr-btc&market=poloniex

[14] Colin Percival Stronger key derivation via sequential memory-hard functions, Last Accessed02/08/14, Available: http://www.tarsnap.com/scrypt/scrypt.pdf

[15] Evan Duffield and Kyle Hagan (2014), Darkcoin: Peer-to-Peer Cryptocurrency with Anony-mous Blockchain Transactions and an Improved Proof-of-Work System, Last Accessed03/08/14 https://www.darkcoin.io/downloads/DarkcoinWhitepaper.pdf

[16] No Author, Whitepaper:Nxt, Last Accessed 03/08/14, Available: https://wiki.nxtcrypto.org/wiki/Whitepaper:Nxt

[17] N8 Research Partnership, (2014) Live Feed, Last Accessed: 19/07/14, Available: http://www.polaris.leeds.ac.uk/ganglia/

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[18] Iceberg, (2014) Live Feed, Last Accessed: 19/07/14, Available: http://gridweb1.shef.ac.uk/ganglia/

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Executive SummaryDigital CurrenciesMining SoftwareCompany FormationCompany Location and Facilities

Products and ServicesPooled MiningServer ManagementIndustryMarketsAlternate Products

Sales and Marketing PlanPositioningSalesDistribution to Regional Supercomputing Grid N8Expansion to other Institutions with HPC/idle ComputationPromotionRevenues and Costs

Management and OrganizationOwnership StructureInternal Management TeamExternal Management ResourcesOperations

Action PlanFinancial PlanFinance ForecastsInitial Startup CostsOngoing Costs - Power Consumption of CPUsCash Flow of Mining RevenueProjections of Revenue based on N8 SpecsRisks

Financial ForecastsTechnical AppendixN8 feasibility studyHPC Scheduler

HashingPublic Key EncryptionHashcash (Proof-of-Work)Cryptographic Hash Functions

Network ProtocolsPooled MiningStratum Mining ProtocolBlock RewardsMerkle Tree and Mining System SecurityCommon Algorithms used in Cryptography and CryptocurrenciesCryptoNote

Glossary of Terms

Documents

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