Marathon Digital Holdings, the publicly traded company operating the MARA Pool Bitcoin mining pool, encountered an issue with transaction ordering on September 27th after mining an invalid block with height 809,478. The invalid block was the first mined by a user named “0xB10C” before Jameson Lopp, the CTO of Casa, a Bitcoin-focused company, later confirmed it.
Lopp scanned his node and found that MARA Pool had spent an output before it was created, resulting in a double-spent transaction being validated.
In Bitcoin, a mining pool or individual miner cannot approve an “illegal” transaction originating from a network user. By double-spending, the user attempting the transaction seeks to defraud the system.
Bitcoin self-validates, and every miner and mining pool connected to the network must always confirm that all transactions in the latest block and longest chain are valid. If a block contains an invalid transaction not supported by other miners, it will be rejected. This was the case with the block verified by MARA Pool; other miners automatically discarded it and did not build on it.
Results from BitMEX research show that the block was ignored due to an issue with transaction ordering. In Bitcoin, miners determine the order of transactions within a block based on the fees accrued.
All these transactions are selected from the mempool, a temporary storage for all unconfirmed transactions. While they can be arranged in any order, this changes once the block is confirmed after solving its cryptographic puzzle.
By ensuring that transactions are chronologically ordered, Bitcoin is resistant to double-spending that could undermine the credibility of a public network. Bitcoin achieves this by automatically proving that only a specific transaction was confirmed first in the network, rendering all other transactions invalid.
The event also coincided with increased Bitcoin volatility. On September 27th, the coin reached a high of up to $27,263 and remains confined within a $1,000 range when considering the price movement on the daily chart.
Nevertheless, the price surge quickly faced strong rejection. The coin fell sharply from today’s highs, forming an inverted hammer on the daily chart. Despite the decline, Bitcoin has risen by about 5% from its September low. Buyers hold the upper hand as prices move within the uptrend range established in the second and third weeks of the month.
Currently, prices tend to stay above the primary support at around $26,000. Considering the price action in recent weeks, the path of least resistance shows a southward trajectory despite the recent recovery.
Feature image by Canva, chart by TradingView.