Bitcoin Forum

In the aftermath of the recent Butterfly Labs announcement in regards to their 'Endgame' performing ASICs, I humbly ask all Bitcoin Developers and Supporters to take a step back and think about the future of Bitcoin.

In the first day, the Butterfly Labs ASIC announcement has literally KILLED the marketplace and future development of mining devices that have brought us to where we are today.

There has been a large enough shadow of uncertainty cast upon this community to cause more than a few SOLID and well known Securities on the GLBSE to literally CRASH in terms of price, leaving even those proponents of BFL in trouble, caused by none other than BFL.

Let me put this into terms that many of you can easily relate to...
Butterfly Labs wants to be Microsoft. By PREMATURELY releasing nothing more than FUD, they have taken away all incentive for anyone else to compete in the hardware market and would essentially be taking mining out of reach for every-day miners, using nothing more than their GPUs part time.

I think this KILLS THE TRUE SPIRIT OF BITCOIN and everything that it was intended to stand for.
I have a hard time believing that this is the type of growth (on any scale, or in any corner of the Bitcoin ecosystem) that Satoshi had in mind.

My PLEA is as follows...

Developers, please consider periodic DRAMATIC algorithm changes that would keep a single entity from being able to control any portion of the Bitcoin Ecosystem, whether it be hardware, software or anything that might force users out, while only allowing a chosen few to participate in mining.

If the above is not considered, then Bitcoin might as well be renamed Butterfly Labs Coin in the near future, if their ASICs truly do come to life.

I am a small time miner. I only maintain approx 11 GH/s.
I am NOT a hardware or software developer. I have NO 'iron in the fire' (so to speak) but I can clearly see a possible path that will surely be forced to travel for everyone, in time, if this is not addressed.

Windows and Linux..... Just remember that.

$150 for 3.5 GH/s ? .......this will surely be the downfall of Bitcoin as we know it.


Love me or hate me,
bitlane.

Bitcoin =/= mining.  

Also if Bitcoin becomes large enough there will be competitors in the ASIC space.  If Bitcoin remains tiny and insignificant then it doesn't really matter if all the hashing hardware comes from a single company.

Right now about ~90% (stat pull out of my ass) of the hashing hardware DOES come from a single company ... AMD.  Strange when you built your 11 GH/s of rigs that fact didn't scare you.  Why weren't you pushing to make the algorithm dynamic and platform neutral so that Nvidia and Intel could be viable hashing suppliers?

Do you REALLY think that the guys that have developed GPU kernels and spent hours and hours optimizing them really want to re-do all their hard work just because of a non-existent problem? What you would get is some non-optimized kernels for the new version, with all the optimizations being done by private farm owners, resulting in them STILL being faster than you, even on the new algorithm.

In essence the ONLY reason to change the algorithm is if there is a security problem with it, which at the moment there is not.

It's not the same. I am running 4 rigs that use off the shelf multi-purpose desktop hardware, available to anyone....not quite the same as BFL's ASICs.

Even if I were to use FPGAs, the speeds have slowly been climbing at a REASONABLE RATE that the Bitcoin infrastructure can manage. 40 GH for $1300 ?. Everyone will suddenly be a 1TH miner using specialized equipment and those who want to 'play' using their desktop hardware won't be able to.

'Spirit' killing....

They also have great resale value should you decide to upgrade, if BFL even makes something within the next while.

GPU killed the ability for users to "play" with the CPUs a long time ago.  That feature was removed from the client for a reason.  28nm FPGA would be the death blow to GPU mining anyways.  Difficulty would in time more than triple and put GPU miners under water.

Most end users are never going to build a rig.  The reality is with a simple plug and play hashing unit they might buy one and plug it into the wall.  I could see a form factor which plugs into the wall and has a single ethernet port, a reset button, and web interface.  

Still I wouldn't worry.  Given BFL inability to deliver anything on time if I was a betting man I would put the over/under line on first retail delivery being March 2013 and it likely will take 6 months before they can move enough units to kill GPU mining.  Most likely my farm will be at end of life by then anyways.

First off, don't get me wrong. If ASICs are going to come in at the prices that BFL posted, you can bet that I will be running 1TH myself...

It's not cheap-ass sour grapes on my part. I have the cash to play...but what about the community as a whole ?

As I said....SPIRIT KILLING...the Spirit of Bitcoin.

Yep, and let's put Ben Bernanke in charge of timing of block subsidy as well as network difficulty selection for the next two weeks while we are at it.

I can no longer mine Bitcoins on my computer's CPU in the background.

For this, I hold the GPU miners responsible. Please stop GPU mining.

Last post before you back on ignore.  

Bitcoin =/= mining.  

If anything way too much time/effort/resources has been spent on mining/miners/rig designs/pools/mining-distros/mining-bonds/etc and not enough on END USER PRODUCTS AND SERVICES.  That isn't an attack or slam it is logical that mining would form the initial core but at some point Bitcoin needs to expand beyond that.

Bitcoin =/= mining

Bitcoin =/= mining

Bitcoin =/= mining

Stop mining (when you are forced to) and take that passion and drive and build something (anything) which makes Bitcoin better.  I am no longer expanding my farm, and eventually will be forced to turn it off and guess what ... I have never been more exciting about Bitcoin. Cellcoin is a fun and exciting project.  Maybe it won't go anywhere but I am having fun USING Bitcoin to create value.

I hate to break it to you but your mom, and non techy friends, and small business owner couldn't give two rats farts about what makes Bitcoin secure.  They only care that it IS secure, has value, and they can make/save money using it.  The last element has been sorely neglected.  Be part of the solution to fix that.

So everyone is onboard for BFL's ASIC release ?

...then THAT solves that.

If the 'Fun' gets taken out of Bitcoin Mining for pure profit and who can crack 10 TH....then count me in.

I just believe that this will become a very lonely place with nothing but big spenders doing all of the mining.

Community as a whole is doing just fine. It is just some guys who ignored the warnings and spent too much on their brand spanking new FPGA's are begging for special treatment now. Well, tough titty, your pleas will fall on deaf ears.

Now tell me did you really think that FPGA's will last for 18-24 month?

u just mad cuz ur 7970s are becoming worthless for mining ;D

WTF are you taking about retard ? I DON'T OWN FPGAs.... I own GPUs and have NO problem with them. I will also own ASICs and will have no problem spending the additional money, but when the biggest BFL proponents are left speechless after this latest 'Press Release' what should the rest of the community take away from that ?
...fucking idiot.

BFL won't even start shipping for over nine months yet I reckon and then the'll be very slow coming.  They only made that announcement to suck in more FPGA sales with there buy back offer and I reckon the units they produce will actually be twice the price for half the hashing power they just announced.  I expect FPGA's bought at least in the next three months to pay them self's back with a profit yet so I'm still buying them until OpenBitASIC - https://bitcointalk.org/index.php?topic=76351.0 - start tacking pre-orders.  Opensource-hardware for opensource-software all they way.

Killing GPU mining is probably a good step forward for BTC.

Get people to stop thinking of BTC as a chance to print their own money and make it, you know, a currency to be used and exchanged.

Only until BFL develops quantum miners will I agree to algorithm changes, or if someone breaks the current algorithm.  Reminds me of the time when CPU miners were shut out due to GPU miners.  Yawn.

DeathAndTaxes pretty much already destroyed your FUD, OP, but I do want to make two additional points:

1. Bitcoin is open source so feel free and change the algorithm yourself, anything the devs could do, you can do

2. don't pretend to be smarter than the a market regulated by strictly it's consumers (i.e. the free market) because you're not

Even Gavin thinks the BFL coffee warmer is cool:

http://twitter.com/gavinandresen/status/214508819483598848

The whole BFL announcement is currently a whole lot of nothing. Nothing. There were many parts that didn't make any sense either, the electricity efficiency is off the scale and the pricing is ridiculously low. I wouldn't even THINK about this before there is something more solid let alone wonder into any conclusions about the consequences. There are no consequences right now because there is nothing.

I would bet that if these products will even exist with those specs (which I find HIGHLY unlikely), they will not be out this year. So just chill out. However I have to say that even if everything was true and they could deliver right now, it wouldn't be the end of the world. ASIC is not a question of if, it's a question of when.

It would be insane for ASIC producers to hoard all the chips for themselves and use them on the network directly because of the trust erosion it would cause for Bitcoin. No one can be allowed to have the power of a 51% attack and any business minded entity will voluntarily skip that route. It's gargantually more profitable to sell those chips so that they're distributed. So I wouldn't really worry about this in any case.

So smart to see so little. How are changes to the protocol made? They are voted on by the miners. It only takes a few THash miners to drive the difficulty so high everybody else gets squeezed out. So when a few control a majority of the network, it will be they that decide what BIPs get approved or not.  And when those few miners decide they want 3% of every transaction there won't be a damn thing you can do about it. So much for a decentralized currency. This was your last chance to keep Bitcoin in the hands of the people, because once those ASICs start rolling out it will be too late. Hopefully Bitcoin 2.0 will address this issue (amongst others).

I have to agree, that BFL announcement seems to be a tad too optimistic. Unless they got 30+ million USD venture funding, which seems to be rather improbable.

I agree, BFL is spreading FUD..

And this wont be for quite a while I presume..  Well after the reward halving.

And then, when they ship the first one..  they wont have enough to go around..

Just look at how pathetic they are handling the FPGA's, which are easily obtained.

Their stats, and prices is just FUD, a game to stop other companies starting up.. 


So yes, they are being stupid, and killing the spirit somewhat..


Im not a fan of how they do biz..   They have a lot to learn..   And customer service has to exist eventually..

Because at this point, the FPGA's were a scam..   how many are out in the wild?   100-250 ?  whoop dee doo

I really can't imagine a scenario or fix where miners with more resources don't have more advantage over "the people". Just kinda how these things work. People with access to dozens of GPUs are going to dominate miners with a dual-core CPU.  Eventually difficulty will increase and payouts decrease that only a handful of people will be able to mine successfully even WITHOUT ASIC coming into being.


Also, there's something funny about people arguing that bitcoin should be changed to keep some people out for the sake of "the people".  

And that said, BFL does look like a whole lotta vapor ware to me anyways.

And it is not working.

Wrong.

Those who run the full client but do not mine have just as much say in which BIPs are adopted and which aren't. If miners alter the protocol in anyway that isn't backwards compatible everyone else will reject their blocks and the chain will get forked.

I suggest you learn how the protocol works before you make baseless and false comments.

Personally, I encourage all hardware developers to be as awesome as BFL. OP's complaint basically boils down to "those guys are too good, and the community should prevent them from being successful."

I welcome BFL's announcement and can't wait to buy some of the new hardware.

Any monopoly earned through virtue and brilliant achievement is legitimate. If nobody can compete with BFL, then so be it.

The monopoly is good, the business practices are not.

BFL could truly be evil and keep all of their technology for themselves and not sell it to the general public.  Instead, they are "nice" and sell their technology to anyone who wishes to mine.  They could easily, easily, take over the network and hold 99% of the remaining bitcoins to be mined.  Yet, they have decided to sell their equipment to everyone.

I meant the things like broken promises about performance and shipping times. But yes, selling to the public instead of keeping it to themselves is only logical, since it ought to make more in the long run.

Some believe this is not true.  I can't say anymore since I'm under NDA.

I don't think that praising them for making sound business decisions leads to the conclusion that they are good instead of evil. Hoarding the chips just doesn't make sense because even though you would get all the bitcoins you'd cause a serious trust erosion which would lead to at least a crash of the value of bitcoins, possibly even total failure of the whole concept.

The money needed to fund these sorts of things doesn't come from thin air, the investors behind it are making sound business decisions. If they were "evil" they would most likely not get the backing or if they did, then there would be something wrong. With Bitcoin a mining monopoly is not just a bad thing, it's potentially catastrophic. Most Bitcoin users and most likely the biggest holders of bitcoins love this currency for what it is and a single entity having the power to shut down the network at any time is not part of that.

So I would rephrase that selling and distributing those chips is them not being total idiots, it has nothing to do with them being good or bad. Although obviously they are more good than bad and gain respect by doing this. Simply because they do have the power to make different choices but they choose wisely.

This. If you don't like what they do, compete with them.

To me one of the big advantages of the current economy around Bitcoin is that it is the only thing I know even closely resembling a free market. Did I say I love free markets?  :)

I also agree with this. With the invention of the Internet and p2p networks and now finally Bitcoin, a free market works more and more efficiently. The future is of the free markets because information moves freely and efficiently and now money moves freely and efficiently as well. Also the barriers of entry to new markets that use these technologies are so small that it also helps and keeps the markets competitive.

should things really get ugly we can simply fork and have a majority vote.

+1. Bitcoin as a concept is unstable until we get to current technological edge (which is ASICs); ie, until no further effort requiring only a few $million can meaningfully influence hashing power. Once there are a bunch of big ASIC farms, we'll be at that point. Before then, some malevolent entity *can* theoretically build a 51% attack for sub-$10M (via ASICs). Having ASIC mining actually distributed, even if just a dozen big farms or so, will be a good thing.

The real point at which the bitcoin community can breathe a little easier is when hashing power is sufficiently large so that a government can't launch a 51% attack. Though that'll be a while - a few $B buys a lot of hashing...

+1000000


The only thing keeping mining alive right now is subsidy.  If there is no widespread adoption then tx fees will not be sufficient to keep mining incentivized.  Not a good situation. 


Concerned about mining gear depreciation and infinite ROI brought on by proprietary ASICs and crazy high difficulty?  There is a reasonable solution.

Show your support for open, community developed ASIC where profit margins would be negligible.  Infinite ROI would be primarily attributed to hefty profit margins in the face of plummeting returns as difficulty goes way, way up.

Really, ASICs are a good thing, but not at 10x cost of production.

The only problem with this line of thinking is that when you do have a problem, it will be too late.    I am looking for more formal guidance from BFL and maybe some added information on what there intentions are long-term.  They have to understand politics do play apart in this because so many peoples hard work and investment is tied to Bitcoin so they have a RESPONSIBILITY to understand the fortunate position and power they weld.   

If they disagree or anyone on here responds with, "they can do whatever they want", in my opinion, don't really believe in Bitcoin for its important place in history and are really just in it to profiteer.   In any case, thats what we already have in the world around us, but here we "could" actually try and work together to change things so we help not only the big players grow, but the small one too so we have a robust network and people we have a pleasure to work with.   Maybe it is idealistic, but I don't think this bar is set too high.

I want to build something that will be here after I am not and is in a better shape than I left it

.02 BTC
Dalkore

The only danger is in the beginning and BFL can address that situation.  In the beginning, one entity could buy up 51% for about 600,000.  If BFL does not allow one person to buy that many at once... or even just staggers delivery to known different buyers there is really not a big problem.  

This is the free market, and the buyers will be taking a bunch of risks.  One is that they spend $30,000 and the protocol changes in such a way that they can not keep up.  Even buyers of the current FPGA single probably do not fact that problem as it is more programmable.  

Video card miners can sell their cards.  People who keep boxes and keep items in good condition could get more then 50% or more of what they paid for their cards.  They are not doing so bad!

Think of it this way, right now bitcoin is subsidizing the power industry, who does not give back to the bitcoin community.  With bitforce SC products the money is going into the community instead of the power industry.  

Don't worry if there is one thing BFL is good at it is not delivery enough product to make a difference.   I am still waiting on my single from over two months ago.

I find your presumptive tone deploring. As if it weren't for BFL somehow Bitcoin or any businesses related to it are guaranteed to succeed. Well guess what, they're not. There are no guarantees, not in life and not in Bitcoin.

They have 0, YES ZERO, responsibility with their fortunate position. They can do what ever the hell they want, that's real freedom, anything else is you trying to impose your arbitrarily presumed authority upon them and you should be ashamed for even suggesting something with even a hint of that. And yeah, freedom is scary, you must rely on other people without the option to force them to do as you'd wish in order to experience a preferred outcome, that's what real freedom is. Or are you in favor of masters and slaves where you'd like to be a master and just tell everyone how things are going to work? Is that it?


They can well damn do what ever the hell they like. But if they are smart, they'll sell their product and offer it to the market and not acquire more than ~40% of hashing power to maximize the profits of the situation they themselves have put themselves in (that's right, you're also wrong saying they somehow magically found themselves in that position).

^^^^

Then it is true that "true freedom" is based on direct violence or assumed violence.    In a world of freedom with the above world, only the strong and powerful prosper.  Now you may cut too, "this is reality, get over it"  Yes, and I will but denigrating me for saying what I said, it a pretty weak argument.  FYI:  Violence can be done in business as well.


Bitcoin is a decentralized p2p cryptographic currency.   What we are dealing with is a centralization issue.    In our system, this becomes a problem.  What I care about is keeping the network robust, if our networks end up in a few hands, those make easy points of attack.   I just want more communication and guidance from BFL for the networks sake.   I am a customer and will be purchasing ASIC as well as we upgrade.   

No one is preventing you to defend yourself against their "violence" and fork the chain. No one. And that's freedom.

And if they are stupid enough to destroy the trust in Bitcoin through keeping their technology to themselves and acquiring more than 51%, they'll not only destroy the value of their investment but they'll also trigger a response by everyone else changing the protocol and forking the chain as self defense.

And again, that's freedom, the best possible social and economic foundational principle for maximum peace and prosperity known to man.

First, I see a threat in monopoly. Imagine a 20x more effective hardware coming out reaching all the miners in storm pushing the difficulty to 200TH only to turn out to have a kill switch. Right after reaching block #XYZ they all fail. That would be fun :) The next retarget would take a year and endless discussions. Poppcorn :)

Second, I like proof of stake. We need it and we will see it at some point. The earlier we start the transition the better.

And these Jalapeno thingies, do they ship and perform as advertised? because I'd be interested. ;D

Reading this thread just reminded me of something...

Those dudes who invested on CoinLab must be pulling their hair right now lol
Half a million down the drain ehehehehe

Well, Ive been doing a lot of thinking. Too much really...I can't sleep and it is 1:22 in the morning. Your conclusion is absolutely right. This is quickly heading towards centralization with respect to mining: the most critical part of Bitcoin in my opinion. Unless someone can prove to me that this will not happen with the current conditions of Bitcoin and BFL's bold move then it's time for bitcoin to change. I could care less what happens to the remaining BFLcoin fork and its mindless followers.
The market depth and total market cap of bitcoin doesn't suggest that developing a full blown ASIC is good idea. The motivations of the "venture capitalist" is not only based on greed for money, but greed for power; that is, power over Bitcoin. Ever since their announcement, I've felt powerless. The decentralization of bitcoin had given me a since of power that motivated me to help out where I can, but that has diminished. I add my plea with yours and ask those that truly care about Bitcoin to sit back and really think this through.

BTW, I sold half of my BFLcoins today and I plan to sell the rest until we have a solution. This is the chance for the community to show where the true value of bitcoin really is - that is, it's in the community not just the technology. I have a lot of faith in you all.

I will be working on a BIP the next few days. Right now, it is clear to me that bitcoin mining protocol needs to be improved in a way that it always steers clear of dedicated hardware right now that would be ASICs.

GPU and FPGA cockroaches are running for the cover and demanding a fork to protect their hides. How hilarious!

Here is a news for you. You can make that fork yourself right now, no need to beg any devs. Just pledge a 50 BTC bounty and someone will make that fork for ya. So stop whining and do the fork I dare you.

The rest of us will stay with Bitcoin that will enjoy Exahashes of hashing power securing it's transactions.

BTW. Consider applying for Whiner in Chief job at RIAA, they will surely understand your angst.

I had to lol a bit at this too; although thy might be able to sell upgrades in the form of jalapenos do you think? Most gamers will spend a bit to boost their stats. Hopefully openbitasic comes along with something competitive.

I have 1 GPU running my display and two Bitforce singles from BFLcoin.
I like your optimism, but decentralization of bitcoin is getting a huge blow with this trend.

Hmmm... perhaps I know something that you don't.

Why centralization? They're selling to everyone. But I am done with mining, I never expanded my mining operation beyond a single PC with 1.2GH. Once they release ASIC, I'll sell GPUs to gamers.

Perhaps you know that people who aren't miners still want their coffee warm ;)

Question of the day: Is 2 watts enough to keep a coffee piping hot?

It's to keep it warm, not to boil it. duh! ;)

I can't stand lukewarm coffee.

My coffee is annoyingly tepid. I hope they actually ship these products soon.

+1.

ASIC is the only thing that can give the Bitcoin network enough security to save guard it from Governmental and Institutional attacks that would use CPU and GPU based Supercomputers.

Don't think I agree with the op's approach to fix the issue, but interested to see what others say.

Did you get that bet with Inaba ?

I was 90% sure they delivered in the timeframe ...

I am confused now TBH.

I agree with OP. ASIC is bad !

People can and will compete with BFL, producing ASICs of their own.  The world will move on.

+1000000000000

Totally agree.

*If* there is ASICs, it better be no hostile nodes. If there is money in producing ASICs, great! Others will do better ASICs and the monopoly problem is solved. As a miner myself with his 2k€ equipment idle since half a year, I see rather more people mining with appliances that you just plug in than less.

+1

omg, I love it when anarchists and libertarians talk about freedom.  As if freedom will set you free.  Noooope :)
(I hate that I get involved in these kinds of discussions.  It's pointless.)

One has to protect one's interests.  Miners getting together and talking about implications / risk examination of ASIC is completely natural and healthy thing to do.
ASIC producers aren't the only business interests here.  I also think a lot of people talking about free market + mining + ASIC completely forget that miners are a business interest and should fight just as fervently to protect themselves and ensure a good outcome.

And if miners are smart, they will collectively let their interests be known and angle for a solution that works for them.  Not necessarily a solution where an ASIC producer will win and miners might win.  
Obviously, that isn't an acceptable solution.  And, of course, we still might lose and some ASIC company walks off with the cash.

Now, here's the great part about Bitcoin.  It was designed to allow mining, a profitable exercise, to support a socially responsible, decentralized commodity-currency.

So, it's both business and working for the greater good.  There aren't too many examples of that in typical business.

Thing is, if someone made a big investment in GPUs recently, it will likely never pay for itself. I thought that looked quite likely for a while, since newer cards don't improve on the 5-series cost/hash-rate wise. When BTC was at 5$ it was pretty obvious that you'd rather buy coins than cards. Now it can be tight, but ASICs or other tech can always turn up soon.

As with everything, don't bet more than you can afford to lose.

How much cheaper do you want your mug warmers to be? If the only option was huge rigs then I'd agree but there will always be the inexpensive options not to mention those still getting free electricity, better video cards, and improved FPGA designs and hardware. I don't get your "big spenders" idea with ASICS I can get in for half the price of GPUs? My guess is the ease of use and relative cheapness of these new ASICS will increase adoption amongst the general population.

Even ASICS will have risk, the plug-able engine might be upgraded or precision increased (which, by the way, from Zeno's paradox will make mining never really end), it is an open source project after all.

True, but there is a dynamic to Bitcoin where this developing situation could be tragic. First, consider these points:

1) Every government institution has passed laws that directly and/or indirectly enforce their monopoly over money (or the monopoly of their banking buddies). Bitcoin is the first real contender to compete given its technology is pear to pear and can run on equipment available to all.

2) The ASIC market is a high barrier entry especially if you consider the Bitcoin economy size. BFL entry was premature and it was done on purpose to remove the incentive from potential competitors.

So, what are the possible outcomes?

1) BFL plays their cards right and serves the community just good enough to guarantee there will be no competitors (remember silicon technology is high barrier).
    They will make bitcoins cheaper for themselves compared to everyone else. They will always have the first chunk of the pie with each advancement.
    But the real problem is the source for bitcoin mining technology will have become 100% centralized. I hope I don't need to explain the problem there.
    Too much power or influence over any monetary system will always lead to abuse and corruption down the road. Also, it's a single entity for government to go after.

2) The Bitcoin community forfeits some of its power and control over Bitcoin. BFL at any time could take us for a ride. That is happening now; but just you wait a year down the road when they are the only vendor on the block and then they decide to decrease their hardware cost by 25%. Again, too much power and influence over the market. Insider trading that can't be punished! At least if they do something too stupid, another competitor will be much more likely.

I must confess, my last rant was full of emotions and I was grumpy. I was dumping on the community so to speak.
This led me to ponder the alternatives more. Here are my thoughts:

Ideally, Bitcoin mining should always be done on equipment that has a different primary use. For example, mining on GPUs.
If the algorithm was changed to be hostile to specific hardware, it would still only be a matter of time before someone finds a new approach
to make specific hardware successful again. So, what does that leave us?
Like the OP proposed: The algorithm would need to be altered on a periodic basis or from time to time. This would discourage anybody from making specific hardware.
This comes with its own set of challenges. A trustworthy source by the community would have to lead the way in order for each change to be successful. Changing the core components to Bitcoin is extremely difficult. I just don't see this happening.

So, the reality: the majority are going to go with the flow. BFL coin here we come. I remember my friends advice that said life is too short to run against the current. I'm going to take his advice. I just hope the community and all of you won't be oblivious to the developing situation. Better yet, I really hope BFL becomes a better community player and makes some sacrifices like making their ASIC design open source. Now that would be awesome!

Just ordered some more BFL equipment BTW to support BFL coin. :-|
Plan to follow the open source ASIC initiative much more. Hopefully it will find some venture capitol.

Thanks for reading my thought and sorry about my previous post.

Edit: minor grammar edits

Fruit stocks skyrocket on breaking news that they are the wave of future currency technology.

I know.. Just $150 for such a massive amount of additional security in the block chain.  Isn't it awesome?

Oh.. you think that's not a good thing?

<thinks>

No, I'm not getting it.  Why is it bad that miners can now buy reasonably priced dedicated mining hardware, that gives an incredible boost to bitcoin security for the rest of us?  That the block rewards actively incentivises them to do so is bad?  Nope.  Just don't see it.

<thinks>

Oooooh... you've bought a load of GPUs and they're looking a bit worthless?  Awwwww; shame.  It's not really the downfall of bitcoin if you get stung a bit is it?  Still, look on the bright side: when the next computational leap in bitcoin hashing power comes, all those who carelessly buy these BFL products will be in the same position as you.

Your concerns about centralisation are unjustified.

• 3.5 GH/s for $149 is $42 per GH/s
• 40 GH/s for $1,299 is $32 per GH/s
• 1 TH/s for $29,899 is $29 per GH/s

Perfectly reasonable economies of scale; and all in the same order of magnitute.  There is nothing to stop 1000 small investors either buying one mega rig between them, or 1000 mini rigs of their own.  Either of which will represent "decentralisation".

Who ever believes otherwise, hasnt thought it through. Think of it this way, if you have an asic, you could sell a relatively small amount of them for a few months and pocket a huge markup on them, and then immediately turn on 5x or 10x more (virtually free) asics and mine with that yourself, ensuring your customers essentially threw their money away. Sure, you could call that evil, but those customers did throw their money your way, so do you have any doubt it would earn you more than mining yourself from the getgo without selling anything?

6 or 12 months after the first asic comes to market, things might change, as price per GH may have come down so much it may not be as profitable to sell asics, but who ever comes to market first would be nuts or mathematically impaired to not sell.

Sure, if it's competitive. Otherwise, why bother?

Changing the proof of work algorithm periodically would do nothing more than promote centralization. Why? Simple: I don't know of any developer that will continually rewrite a GPU kernel or FPGA bitstream from scratch "just because". They need a damn good reason because they put a lot of time and effort into it. Therefore, the only ones with optimized hardware would be those like ArtForz who own the hardware already and are capable of writing fast kernels to run on it.

We even saw previously him (and others?) selling access to faster kernels, just because he had the expertise to write them in the first place. Don't kid yourself that an algorithm change periodically just for the fun of it would in any way promote decentralization - even though a kernel may be written to support the new proof of work and distributed to the miners, it will never be the fastest available in the first iteration.

Its a free market. I wonder how much it would cost to buy bfl out by the community.

No.  BFL has not yet entered the ASIC market; they have issued a press release.  Others have spewed hot air about doing an ASIC as well, and no doubt a few others are working silently on one.


Another erroneous assumption.  There is only a single hurdle to leap -- money -- in building an ASIC.  Once you've handled that problem, the rest -- using the latest industry process and die size, etc. -- will come naturally to any new ASIC competitor.

If bitcoin needed my help to succeed, it would not succeed.
Bitcoin is fundamentally a good idea and superior to other options. No one is going to ruin it by producing products to use it. Of course it may eventually be the end of casual mining, but mining is just a distribution method.
IMO, we are about to go mainstream and unless you scale up $20k or so your mining dreams will just be a fantasy.

Well on the bright side the ASIC is the last mega leap, after that advancements will not be x20 like it is now.

Just wait for the quantum computing :)

Why do you assume the attack isn't already in the works?   What I am saying is that one of the effective ways to attack Bitcoin is from within.

The code does not allow "from withing" attacks.

Meta:  Not sure where the "g" came from.   I'll assume you meant "within".   

Back to your point, use your imagination a little more.   

This announcement pushes the bar so high that there is effective no company that is going to step-up to make the investment in developing their own custom chip (ASIC).  So the centralization issue is two-fold.  One, being that only a single company will be effectively supplying all the hashing power for Bitcoin until we have a true competitor.   Second, being that the profits for mining that were and are more decentralized at this moment, will now go to the miners that will make the capital investment to keep up with this new hashing power cold war.   Not at first but give it a little time as more large units ship out, the difficultly will increase to keep up and eventually you will only have a few mega miners that can have operations that are profitable enough to keep them mining (ie: incentive).   

Now you have two more points of attack along with the exchanges to really give Bitcoin a lot of hassle.   I am not sure what the answer is at this point, I would like to have Gavin or other core developers weigh on this.  To try and ignore that this could be a potential issue is disingenuous.

There is nothing wrong with only one company developing ASICs right now for 2 reasons.
1. We don't know when a second company will come up with their own ASIC.
2. ASIC is the natural evolution from FPGA, and it would take a lot of luck and great coincidence to have 2 different companies develop or release ASICs at the same time, it's logical that one company will be the first and the only one for a while, before other companies step in.

Regarding having only a few MegaMiners, these are smart and successful business men (if they have the money to invest) and they will be interested in making a profit.
This is where it gets interesting, the more trust there is in Bitcoin, the more people use it and the more the price of each Bitcoin goes up, thus if the people with 1TH rigs start messing about, then they are destroying their own wealth.

Also you'll be surprised how many people around the world are more than happy to make $500 per year from mining, I think the $150 unit will sell in enough quantities to make Bitcoin well decentralized.

asic is SO bad for bitcoin.  NOT good at all!!!!!!

Thanks for adding that. That was kind of the conclusion I had reached after more thought, but failed to write because I had already rambled far too long.

Ice_chill - Thank you.   I understand your point of view.  

maybe they will only sell the coffee warmers at first to slowly ramp up the difficulty rather than release the 1TH units straight away.

Are you trolling right?

This would be the best scenario and if they made that policy, it would make me feel much better.

You might be wrong thinking that would be the best scenario. If BFL will slowly but constantly ramp their sales, people will constantly be misguided about the speed at which difficulty will go up, so they will buy "too many" asics and risk to all make losses.

The best scenario is that BFL makes their production and delivery schedule public. Simply state we will sell no more than x TH over the next Y months. Then, and only then can potential customers make a somewhat informed purchase decision. I say somewhat, because of course any other asic coming to market or mining in the dark could still kill them.

I stand corrected,  THIS would be the best case scenario.

Sorry peeps. There is no such thing as safe high-yield investments.

You won't know difficulty beforehand with certainty. Deal with it.

I don't see the big deal with this as other manufacturers are sure to move in if there's so much profit to be made there. Though is it possible to patent something like 'ASIC SHA-256 hashing' in general, so nobody else is even legally allowed to compete? That could be disastrous for Bitcoin as BFL could then have >51% at any time, and nobody would be legally allowed to challenge it by producing their own ASICs. I assume this isn't a potential problem though, or somebody would have mentioned it already?

You are correct sir.   

The problem I see here is that the increase is so great and the mechanics of Bitcoin, there won't be too much profit motive to get into ASIC once the first products gets out, especially with the large cap-ex investment in development.  I don't think we will see a competitor for this in plain words.

My theory is that the people against ASICs are botnet owners as their whole network of zombies will suddenly become a lot less profitable and they won't be able to find any zombies with ASICs idling.

It currently takes just under 10 years for the USPTO to approve a patent. In Bitcoin time that is an eternity. There has also been a recent trend to reject patent applications with little merit. I would imagine a hardware implementation of SHA-256 falls under such a category.

++1

Not to mention several other projects including an open source one in the forum.

Someone might even be bright enough to build a CPU designed with multiple algorithms on the silicon and outdo BFL, it would hardly cost any more and folk would pay extra for the future-proofing. Like realnowhereman said it looks like a pretty ordinary business model and an open market where quick witted cpu manufactures can make the Fiat they want so much and quickly, even if the application is extra-ordinary.  ;)

This sounds entirely plausible and is now on my list of reasons for ASIC!
Thank you.

1880:

http://www.yukon-news.com/news_images/2011/december/16/historyhunter.jpg

2012:

http://cache.gizmodo.com/assets/images/4/2011/11/6516331cdeaa78797b3884aef7fe3c4e.jpg

BFL is speculating, by pricing their asic product to reflect their idea of where the price of Bitcoin will be after the halving. They show they don't understand Bitcoin or other markets that are affected by supply and demand. If total oil production goes down by half, what happens to the price of oil? Bitcoin is no different. Also, projected value of Bitcoin places it in the $12 per BTC range just before halving time.

Difference here being oil is burned and bitcoins aren't. You need new oil being produced, no one "needs" new bitcoins being mined - old bitcoins will be traded over and over again.

BTC are being hoarded by peoples like me and loads of others on the forum. Oil isn't ;) Price will get to $10 surely by Dec

I too think ASIC is good idea now I think about it.

The difference here actually being that it is impossible to alter the production rate of bitcoins.

With oil/gold/anything else, capital investment can be used to raise productivity or fund innovation to raise production.  With bitcoins it cannot.

The best you can do is tip the constant production in your favour, you get more of that fixed pie; which is what BFL are selling.  When ASIC/FPGA miners push the total hash rate up (which is great for users, the blockchain is more secure) one of two things will then happen:

• The unprofitable GPU miners will give up; very slightly (relative to the new order of magnitude higher rate) lower the total hashing power of the network.  This will make very little difference to ASIC miners, since they will already be taking the lions share of the block rewards.
• The unprofitable GPU miners will upgrade to ASICs.  This will tip the reward ratio back to where it was.

In either of these cases, the end point is the start point just with a considerably more secure blockchain and a load of money in BFL's pocket.

I don't envy the miners; they're in a horrendous position.  They all start mining with CPUs.  Then one of them invents GPU mining; any CPU miner who doesn't upgrade instantly finds their share of the pie reduced to minuscule proportions therefore everyone becomes a GPU miner, and they have to invest in the equipment to do it.  Then one of them invents ASIC mining; any miner who doesn't upgrade instantly finds their share reduced to minuscule proportions therefore everyone becomes an ASIC miner.  Then one of them invents quantum mining...

Miners are doomed to constantly play catch up with the other miners, who are inventing better technologies.  It's no fun for them, but that is the nature of a free market -- innovate or die.

Bitcoin's peculiarities mean that the rewards for innovation accrue to the innovator, not the miner.  BFL are the ones who will profit from this, not the miners.  And there is nothing wrong with that, because for the rest of us, we see ever increasing efficiencies -- and more hashes per Watt means a more secure blockchain for less energy expended.  Great.  This is about as far from destroying bitcoin as it is possible to be.  Bitcoin ends up stronger (for example: malicious bitcoin botnets will vanish pretty quickly).

What is malicious about a BTC botnet ?

Where is FPGA in your little story ?

Nice post, otherwise !

One that doesn't include any transactions at all could be marked as "malicious". :)

Nothing is malicious about a botnet.  A malicious botnet is malicious though.  I'm talking about a botnet for the purposes of double spends or (as vuce says) a non-contributing botnet.


For brevity I abbreviated "ASIC/FPGA" to "ASIC"; I didn't think anyone would have trouble understanding... after all it's the idea that matters, not the actual technology used (hence my made-up "quantum miner").


Ta.

Stealing someone's computer resources is malicious.

+1

I meant in BTC context. Not passing transactions is one aspect.

Also, as all you said : botnet owners should be burned on the stake ;)

With a small USB plug and play device at $150, mining will become more accessible.  People with limited time and/or money will have an easy option for contributing to the security of the bitcoin network.  GPU and FPGA mining made bitcoin mining more cumbersome and costly as compared with CPU mining.  But I think this transition reverses that trend and will make mining more accessible.  That's good for Bitcoin, but I can see how it might threaten the profits of existing miners.

+1

All the people raging and crying about ASICs looks like dinosaurs facing extinction without being able to adapt.

Big spenders? At $150 for a mining device? That's cheaper than a used 5970! Sure, buying the more expensive devices will get you more bang for your buck, but that is also the case with GPU mining: a dedicated rig will be cheaper in terms of dollars per mega hash than your everyday gaming computer.

If Butterfly Labs is honest about their intentions and believe they are able to produce ASIC miners at the price specified, I support them making the announcement now. I mean, are people seriously complaining about being told this in advance? Would they prefer being told this after investing a large amount in an FPGA miner?

I thought the thread was settled when Vladimir summarised:

"GPU and FPGA cockroaches are running for cover"

Well said, Vladimir chap.  :D

Moaning is much easier than 2 so expect a tons of trolls and whiners on the forum when difficulty will start to skyrocket

People like "bawwwhhh i just spent 10k $ on GPUs and now ASICs fuck my investment. ASICs are bad for bitcoin! ban them!"

This ASIC upgrade is just like GPUs were originally. Before FPGAs, GPUs had moved almost all mining to ATi/AMD video cards - notice the single vendor for mining hardware is not a first-time thing! Since BFL is being responsible and distributing the ASICs in a way that avoids a 51% risk, I see no problem, just the next step on the mining game.

Actually, the upgrade to GPUs did have one difference: for a few months, only a select few had working GPU miners. ASICs are being introduced (more or less) to the masses all at once. So it's actually a better upgrade flow.

going to have to agree with you on this one.

I've been scrutinizing potential ASIC investments (with help of financial pros) for a few month and I am going to have agree with you here. All the projections related to ASIC mining enterprises have one thing certain, that is a significant jump in network difficulty. Most of the projections assume rather significant increase in USDBTC that brings ASIC minig projects into reasonable risk adjusted return territory.

My conclusion is that it is much less risky and profitable to invest into BTC itself. Another good option for those who do not want to be passive investors is to "sell shovels to the miners" and it seems BFL is doing just fine there.  As Soggy-hamster said, if you want to become rich provide services that enhance Bitcoin network.

And I am not just telling it to you so that I have bigger piece of mining pie. I am myself out of the mining game for good  for some time now and working with various projects such as Bitcoin Magazine, Ellet, Safebit etc... just to mention a few.

Does that mean your ASIC farm is no longer in the cards?

My guess is that pie tasted sweeter when there was the possibility of a monopoly on ASIC tech.   Doubling difficulty and getting 49.9999% of annual revenue is pretty damn profitable.

Seeing difficulty increase by a factor of 10x getting a small cut of that and always having the risk that miners with more cash than brains keep driving difficulty higher and higher and higher likely has a bitter taste for any VC.  That outside factor is something which can't be controlled.  Miners underestimating difficulty increases buying more and more and more and more rigs pushing difficult higher and higher.  All the while that hugely expensive farm produces less and less and less revenue. 

I would imagine at this point being a competitor to BFL would be less risky than trying to produce a huge farm.  Remember the per unit cost of whatever devices BFL launches is likely 5% of retail price.  Now that doesn't mean BFL can cut prices 95%.  They have some fixed costs (staff, order processing, upfront NRE costs, etc) but it does mean that anytime sales slow down they can cut prices to stimulate demand.  Anytime they do that difficulty goes even higher and any already purchased gear because slightly less valuable.  One doesn't want to be sitting on a multi-million dollar farm when there is this huge outside factor you can't control or influence.

And yes demand will eventually slow down because x GH for $y is less attractive at difficulty 20 million then it is at 1.2 million.  

That's pretty much what I was thinking, just wanted to hear it "from the horse's mouth", as it were. I don't know how far along he was with the mask design, but as you say, a competitor would be an ideal market position. It could potentially recover the cost of such a venture, anyways.

I agree I am excited to see the ASICs come out

Our financial models told us that risk/reward is not that great, our partners were not too happy giving our investors decent terms so we pulled out of that project a few weeks before BFL announcement.

We decided to let all the competing ASIC teams to fight it out between each other without us.

Some of our time got wasted on this, but nobody on our side lost any money, except me (and it is negligible).

So Bitcoin would end if say AMD brought out a 3.5 GHash GPU for about the same price? I should imagine the market will appreciate multiple ASIC vendors in the same way it has FPGA vendors? 

Why is $150 so significant and how come Bitcoin didn't die during the last meteoric rise in difficulty?

So, how does the above fit with you saying on May 28 that you were waiting for ASICs to be printed?
FUD spreading much?

+1


I think anyone with 11.1 gh/s and over should be forced to shut down... its not fair !!1111!  :'(

+1