Bitcoin Forum

I lean towards thinking that they've been a hugely detrimental development for the community, but I'd appreciate input, maybe some corrections where I'm wrong, especially being that my opinion is contrary to most of the opinions I see here z(spoiler: I think ASICs have done more harm than good.

I wrote an essay on the topic, but since it weighed in Around 1,700 words, I'm just posting a link rather than the whole essay.

http://www.dioxidized.com/2014/09/28/asics-public-enemy-1-to-the-bitcoin-ecosystem/

Again, feedback would be much appreciates on either on either venue, but tbh, I'd tather receive any feedback over here.

Thanks all!

Very well written and I agree with your views of ASICs but it's impossible to stop progression.

I agree the value of bitcoin miners using ASICs is doubtful, but suspect their development made little difference either way.  The problem was not ASICs.  

The problem for the hobbyist/home miner is that bitcoins became valuable.

Once the value of a bitcoin rose over about 100 dollars there was suddenly a mining industry worth hundreds of millions a year.  That is enough for big money to move in.  

The mining technology does not matter.   Difficulty will always rise to the point where only those with cheap access to miners and electricity, and large scale setups can make a profit.  

Let us assume GPUs were still the fastest miners we have.  We would now have huge mining farms with tens of thousands of purpose built GPU cards using megawatts of power. People would be complaining that the massive GPU farms in areas with cheap electricity had made home/hobbyist mining totally uneconomic.

The only way hobby/home mining would again be profitable is if a bitcoin was again worth under say 20 dollars.  Then big money is not interested.

It's the natural evolution towards farms that was always going to happen. Here's a quote from someone more authoritative who has the final word on the matter:

I have to disagree with this:


ASICMiners production costs are not nearly 1/8th of their sales price. I'd guess their profit margins are 10-20%.

They couldn't just buy 130PH from ASICMiner or any other manufacturer because they just don't have enough chips and it would take at least a few months to produce more. (not to mention I don't think any manufacturer would support a government plot to 51% attack the network)

If the government wanted to design their own ASIC starting now it would take at least 1-2 years until they begin mass production and by that time $100m will barely put a dent in the network.

Nowadays we're sifting for coin dust ;)

But it's still fun

I think the development of ASICs was a significant factor in the rise in BTC price.

Many of the early machine preorders were sold only for bitcoin and by wire (credit card payments are still quite rare). And there were a lot of new miners that had to buy bitcoin on exchanges for the first time. Manufacturer mining farms weren't common yet so there wasn't a lot of coin dumping happening at first. This could have had a positive effect on the price of bitcoin.

Subsequent generations of mining gear saw the rise and domination of the large-scale mine & dump farms. And home miners also needed to reinvest in new miners and had to use their mined coins to buy gear and sell coins on exchanges to pay increasing electric bills. This may be why we have seen the slow decrease in price now to the sub $400 range.

Asics introduced profit to the manufacturers and competition to the miners.

I hate asics  but I made my money mostly in the oct-nov 2013 runup.   That runup had a lot to do with asics.

If we had stayed 100 percent gpu with btc. The price of btc would not be 400 bucks. 

 It was possible to do so via worker size limits ie 1gh per worker max  25 workers per ip. 2 ips per account.

All the above would have slowed down network growth. Would have kept many smaller miners around.  I am not sure if losing my chance to mine is all that terrible.  I have 20 coins.  I can sit and sell some if they go back to 800 or buy some if they drop to 200.

I do a little mining on ck solo pool and mmpool.
A little bit of ltc+doge mining
a little of zen-gaw.

Help set up new people with very low power costs.
If you are under 5 watts a kwatt I can help a newbie setup. (I try to do a 2 or 3 s-3 antminer setup for them)

BTC would evolve in value without asics too.

It helped creating a huge derivatives market. At some point it really was more profitable to invest in a miner rather than just to pure cash directly onto BTC. But derivatives markets tend to lead to bubbles. I guess that we're living the POP of it right now. I thing that it'll take a year or so for things to settle and the adoption to have deep roots so it can finally start having a positive impact on the price.