Bitcoin Forum

Any chance this could be the end of bitcoin? Mass ASIC production as arms race. Some rich entity might then have more than 50% computing powder that it's not going to use so that nobody knows about it and then when the timing is right they will switch their miners on and bitcoin collapses.

I suspect this could happen because ASICs are expensive to develop but cheap to spam-produce. Maybe this will give rise to the PPCoin's proof of stake system then?

so. much. nope.
http://www.reactiongifs.com/wp-content/uploads/2013/05/nope.gif

at some point ASICS will be so expensive that only corporations will be able to afford them.
People will be able to have shares in said corporations though. Like ASICminer.
Either way rewards halves every 4 years to the point when it'll be next to zero anyways so who cares.

No not really.

What could happen though is the preorder chain leading to such a high difficulty that almost everybody mines less than power cost, at a immediate loss the manufacturers closing shop because nobody buys them anymore and the eventual sale of the second hand miners. Depending of how long that lasts 51% of those could eventually end up in the hands of a single entity.
But that would only be the symptom not the cause. The cause can only be prices to stagnate over an extended period.

no, this wont happen.

what could kill bitcoin would be a never ending arms race
they must mine even faster, cheaper every new generation

and at some time... earth's ressources are not unlimited.

The truth is, whatever ASIC you have now is essentially a disposable unit. The hash rate will keep going up so fast, for so long (although not forever) that your initial units are really just disposable units intended to 'get while the getting's good'. Yes corporations will eventually make mining institutional- this will probably be a good thing. There will be a lot of corporations out there, pools already are kind of like corporations, and when pool mining started people had similar fears. But of course that also means mining cooperatives where people join forces to mine against larger corporations. As long as the equipment makes money, and it will make money for a long time to come, there will be many people doing it. Remember if you can guarantee only 1% more in earnings then you spend, someone will raise the money to do it.

Hobby miners- yes different issue, but miners in general? No. Hobby miners will be replaced with more professional miners, but there are more "professional miners" now then there have ever been. So, rinse, wash, repeat. It will work out.

Oh, and at the rate the difficulty is increasing, it would be pretty fantastically hard for someone to build more then 50% of the network capacity in secret, and not constantly having to add to it. All without turning it on supposedly.

I think it will be the end of private miners. Since private miners at some point wont afford the miner anymore. Some companies with asic designs that can create miners at cost will rule the market. And private miners would have to pay more than they could mine back. So the big companies will share the market between themselves. I dont like that future but i was told an open source asic is not possible. So i dont see a solution here so that bitcoin mining remains decentralized.

The outcome is likely that best design will win. That is best balance of cost and hash/W. And it's really about overall design, the sweet spot of speed and power.

So in end it's probably a few corporations making the miners for own use. Though the capital is good questions, probably those who have the most forsight now to store some for private use... 

Private independent miners will continue to have a tougher and tougher time.  As you might know I do hosting for ASIC miners and this puts me in contact with tons of miners from different backgrounds.  What I have noticed in the last 3 months is the more and more I am seeing larger and larger single customers coming to us for hosting and there calculations are in agreement that scale and efficiency is their plan to get ROI and expand.    

IMO, mining hardware is only good while it's making a profit. Eventually, the less power efficient hardware will no longer even cover the cost of the electricity it takes to power them. When this happens, the power inefficient ones will be sold to people with cheaper/free electricity. I pay 0.15USD/kW. Someone paying 0.03USD/kW would make a lot more profit off a large batch of Avalons than me.

First the Avalon and ASICMiner Blades will drop off. Then the BFL. Eventually, the 28nm ones will be the only ones profitable to even run. But by that point, they'll be so readily available, that the price will have (hopefully) dropped, and we can pick up miners with 1Th per 1U for 1kUSD.

I think there are plenty of sick-ass-rich private entities who could buy some ASIC company and produce as much computing power as they want. The worst thing ever happened to bitcoin is that money buys you (computing) power. We all know how the pyramid works. This will happen when bitcoin becomes a serious and obvious threat to the reptilians.

I would seriously consider investing into PPCoin as proof of stake is much more resistant to rich entities doing what they want. Maybe I'm not the only one who fears this scenario as I see the PPCoin's price has been going up lately.

The ASIC arms race is making it harder and harder from some rich entity to corner the market. The price to corner the market keeps going up as there are more and more ASICs that are more and more powerful in the hands of more and more people.

It is true that mining will increase until mining isn't particularly profitable, thus discouraging casual mining. But there's no reason to expect there wouldn't be a number of groups mining seriously.

Um no. It that logic worked then the GPU arms race would have made your statement true and we would not be here discussing this.

The person on the left keeps floating around. :D

I think that we will all be fine if you want to mine you will spend the money to buy the kit to do the mining , don't forget how the maths works with bitcoin, its not just about finding the new coins but processing transactions of the coins already in circulation, also why would someone spend tonnes of cash on equipment that looses money over time and becomes worthless at some point in the future. if i had a spare £250.000 i would just buy bit coins direct and leave it at that.

The price of the tech is getting cheaper not more expensive just check ebay !!!

Keep the faith 

It just keeps getting harder to break, even, eventually only people with free electricity will profit

This.

Actually, the lack of an ASIC arms race would be a threat to BTC. Imagine everybody still on GPUs and some "evil" corpo deciding to design and manufacture a 28nm ASIC chip ... they need but a few machines to take over the network.

The ASIC arms race is actually a good thing because in the pursuit of profit and assuming market forces are in place, the efficiency and price of the new machines will be at their limits. That means that any new entrant in the market will be facing low profit margins and high initial costs. If you add the ever growing hashing power of the network, it becomes clear that whoever wants to control the market and or destabilize BTC will have a hard time doing that and would need really deep pockets. 

I think the endgame is somewhat different than what has been presented here.

What we will see is margins cut closer and closer to production costs. Eventually and inevitably every possible amount of margin will be squeezed out of every device offered for purchase, until they are nearly unprofitable to even make. Every producer will eventually go bankrupt, leaving only perhaps one or two of the most efficient scraping by. But even they cannot last long. With a network so heavily leveraged by years of asic adaptation the hash rate will be so high that even the concept of trying to finance another generation of asics is ludicrous. It would be a negative equity endeavor on it's face. The last mining producers will eventually have to shutter the windows and close up shop as no miner built anywhere by anyone can squeeze out more than a few satoshis per day. At that point, the network stabilizes because even then no one will ever turn them off so long as they return above electricity costs.

Every few years, someone will get the bright idea to build a better asic, and collect money from investors. Some will actually get some built before going bust. These will probably just replace the ones that have failed in the network over the last few years, once again keeping is stable.

The only time it will ever be profitable to create more asic miners from this point would be if there was an exponential increase in the value of btc. That would be the correct incentive to build more for a short time, until margins are squeezed right out again. Just another short-term boom and bust for the industry, one of many.

The endgame is not going to be the end of bitcoins. It will just be the end of the asic arms race as we know it.

Just because the OP is bitter because he couldn't afford an ASIC doesn't mean the end of bitcoin.

ASICs are one of the best things to ever happen to bitcoin in terms of securing the network! The higher the difficulty, the better!

I'm tired of these whiny, FUD posts.

But not for governments, which can monopolise access to ASIC mining hardware if they want to. They can't realistically do that with general purpose CPUs, or with widely available GPUs or even FPGAs.

Similar to what i thought too. But lets pretend the NSA would buy the biggest ASIC-Companies or build their own asic and create so much asics that they rule bitcoin (while pretending its different companies, so that no one feard >50% attacks), why should they do it? I first thought they could do the same like they did with the internet infrastructure (sort of) but would it be rewarding for bitcoins? They already know where the bitcoins flow, they have the best tools to find out who owns what address too, so owning the network hashrate only would be of use when you want to crash bitcoin, if im right. And would they spend money on that?

The NSA doesn't even care and would waste their time and resources targeting Bitcoin itself.

Bitcoin is good to help concealing one's small addictions (e.g. porn, gambling, pot - consuming is decriminalized where I live) from family, but only an idiot would use it for large scale criminal activity.

Every fabric of the universe is energy. Usable energy is just establishing the ability to route the fabric of the universe into patterns of motion that suite our will. As humanity grows in sophistication, our ability to control the patterns of energy around us will be completely established and quantity of energy, in the form of electricity and heat, will be just a matter of infrastructure. Eventually the economic cost of energy will be near zero. When ASICs reach their peak mining efficiency and manufacturing of ASICs also reaches peak efficiency, one's mining power equates to available energy one has access to + cost in energy to produce the required ASICs to mine that energy. At this point, costs of bitcoin mining will be so incredibly low, that transactions fees will be reduced to negligible amounts, but the mining will continue, in absence of reward, because there will be literally no cost to it. Bitcoin mining will become simply a way to use up the free excess usable energy left over from all other energy requirements of humanity. Maybe eventually, when usable energy storage technologies are perfected, we will simply scrap crypto coins and just use pure energy as a form of currency. That seems like the next step in the sequence: barter => physical coins => digital coins => pure energy? Nothing is simpler to exchange and more universal than usable energy, so why not? And nothing has more reassurance against counterfitting than energy, due to our confidence in the law of conservation of energy. Infrastructure to transmit large amounts of energy over long distances I'm sure would be trivial by this time; so currency could disappear and the world economy could operate on the basis of exchanging energy alone.

People please don't forget why we do what we do with mining,To help support a currency that isn't manipulated to enslave the people with crushing interest that leads to homelessness and family's breaking up . to the IMF ECB FED Bank of England , HSBC running drug money and all we hear is bitcoin can buy drugs from silk road, This is OUR evolution from our bedrooms our living rooms and our basements. to help stop whole countrys like Spain Greece Portugal going bankrupt foring people into food banks and poverty, OUR Zeitgeist MOVEMENT.

Yes it would be nice to make £100,000 doing this but at least my reasons for doing this are not just greed , if that's the case with you go work for JP Morgan or HSBC !!

Dont forget the goal of BITCOIN

IMHO   

Are you Nikola Tesla?

I agree in most part, .  we are still dumb humans that dont and cant manipulate the fundamentals of our universe , (Large Hadron Collider) when we do we wont need money, we need money because Petrol is expensive , food is expensive, energy is expensive and well everything's expensive , or in poor country's just dosnt exist there for them. we are being held hostage by the energy company's . in the uk anyway 

Thats the point again where i have to think about silkroad. Bitcoins seems to be presented nearly as "the currency" for such things. While in fact its not really good for this the question comes up if it wouldnt be in the best interest of agencies when bitcoin has the nimbus of anonymous currency, while in fact they can observe easily. They most probably can find dealers and what more easier than with policemens searching for strange cash-transactions. I think bitcoin is in the best interest of such agencies and i believe that might be part of the reason why governments dont fight bitcoins and instead legalize it. They werent so friendly with money issued from someone different than states before. They forbid it simply. So bitcoin has to be different for them.

+1

The ASIC arms race most certainly does not mean that the end of Bitcoin is inevitable and anyone who says that it does is a fool.

That said, it is also clear that the ASIC arms race does carry a number of serious threats to the future of Bitcoin and anyone who denies that is just as much a fool.

The Bitcoin community needs to identify those threats and work out responses.

The threats are all related to the way that the mining community will be changed by ASICs.

At the moment, the demand for ASICs greatly surpasses the ability and willingness of manufacturers to supply devices to the mining community. That means that manufacturing ASICs is a profitable and low risk activity and new entrants are seeking to join the sector and existing players are looking to expand and produce new models. That looks like a very healthy situation.

That situation will not last forever. The willingness of consumers to buy ASIC miners at prices higher than the value of the coins that the devices will mine is not going to continue forever. Once that happens, ASIC manufacturers will be faced with a simple choice. They will be producing machines for a certain cost. They can either sell those machines at a low enough price to allow their customers to make a profit or they can mine themselves and make more money.

ASIC companies that opt for the latter course will make more money than companies that opt for the former choice and it would be reasonable to expect that those companies will out perform, out compete and outlast their rivals.

As each generation of ASIC is rolled out, there will pressure on the companies whose products are the least competitive. Those companies risk being caught in a perpetuating trap. Their products will cost more to build and run and will mine fewer coins at higher cost. They will then have less and less money to fund future generations of devices and will eventually no longer be able to participate in the market.

ASIC mining seems to present a future in which mining activity is limited to a diminishing number of ASIC manufacturers who will be self mining with their own equipment.

That will affect Bitcoin in a number of ways, many of which are not immediately apparent.

The classic fear is that the last man standing in the ASIC war end-game will be able to exert superior hashing power to launch a 51% attack on the network. That seems to be a very unlikely outcome. If a dominant miner were to try that, confidence in the coin and thus its value would plunge and the perpetrator of such an attack would see the value of their mining activities drop accordingly.

A more likely effect will be on transaction fees as block rewards drop. A dominant end-game miner would be able to dictate transaction fees. Whatever the network or users might wish, a dominant miner could present the network with a simple choice. Pay higher fees or your transaction will not happen. Observers of dominant ecommerce platforms such as ebay will be familiar with such tactics.

Bitcoin supporters frequently express the opinion that an advantage of Bitcoin is that control of the currency lies with its community of mining users. Who would you trust to run your money: the Bitcoin community or a bunch of faceless suits running the Fed, ECB, BIS, IMF etc? That argument can be turned round if the Bitcoin network is being run by a cartel of ASIC manufacturers. The suits who run the world's financial institutions can be replaced by our governments and if we do not like our governments we can vote them out of office or rise up on the streets.

One aspect of the pre-ASIC Bitcoin network was that almost anyone in the world could participate. Restrictive governments can clamp down on foreign exchange but they found it much harder to restrict access to commodity computer components such as CPUs and video cards. Media reports suggest that some governments have already moved to restrict access to Bitcoin ASICs, if the general availability of ASICs is further limited, then the opportunity for people in countries without free currency exchange facilities to participate in Bitcoin will be further limited.

If the trend to centralized mining works out as described above then these three effects - transaction fee control, unaccountable network control and the loss of Bitcoin democracy - will come into play. How severe they may be is yet to be seen but the Bitcoin community should be thinking about these things.

Exactly. If you're in a car and there's a curve ahead, you don't scream "We're all gonna die!", you turn the wheel just before the curve.

One of the things that annoys me is when people complain that things are unsustainable. Almost everything we do is unsustainable, that's why we don't do the exact same thing for decades. Driving in a car in a straight line is unsustainable, but you do it until you get to the curve. Then you drive in another direction that is also unsustainable. The goal is not to find a path that's sustainable but to find the next change in direction to maintain progress.

Most of the disaster scenarios that I've thought about for Bitcoin seem possible but unlikely. But I'm absolutely confident that if we approached any of those disaster scenarios, the community would respond with a solution, just as it did when we had the chain split. Miners all want the system to succeed. Software maintainers all want the system to succeed. And if there's a few jerks who don't, it won't take long for everyone else to stop listening to them. If at any time the majority of stakeholders actually want Bitcoin to fail, then it probably should.

OP here. For a record, I do have an ASIC, so just because I'm sceptical doesn't mean I'm bitter. It's disturbing to see how many of you make assumptions without really knowing the context. How can your "wild guess about the bitcoin's future" be believable if you can't even make correct assumption about whether the OP has ASIC or not :D

I made this topic to see any objective opinions on my question. Unfortunately I got a bunch of emotion-driven-subjective stuff :(

So let's try again:
1. once developed, ASICs are sick ass cheap to mass produce
2. Nikola Tesla is no joke, it is possible to get free energy from Earth's magnetic field
3. there are people/families wealthier than your governments, they own you
4. ???
5. profit

Some dude said something about NSA. This was actually going to the direction I was hoping this thread will go.
I personally will prepare myself for Bitcoin's demise. I won't sell my bitcoins but I'm already looking forward to alternative crypto currencies that could be possible replacement for bitcoin. This is not FUD, this is an attempt to stay alert and objective. People tend to be blinded by their desires and slowly lose contact with reality, bringing totally laughable arguments like "OP is just bitter because he can't afford an ASIC" - come one, don't fall that low.

So, we're in a car and there's a curve ahead. This curve is "51% attack by entities who run this place". How can you turn the wheel on that?

From JoelKatz's reply I extracted that Bitcoin community would somehow act as a whole and maybe change the protocol rendering all ASICs useless? That is actually a nice argument and it might work. But nevertheless 51% attack can still be profitable. Knowing all that, I think it's reasonable for people like OP to think about such scenarios and even discuss it in mining speculation.

I think I got my answer from JoelKatz. Thank you for that. The answer is to not put all your eggs in the same basket, even if that basket is Bitcoin :D kind of obvious but for some reason I needed a topic for that. I guess I'm fool then.

I think the market will level out and existing ASIC chips will continue to be manufactured in quantity and seeing all the development costs are already covered, will be cheaper and everyone can eventually afford.

Maybe all house holds can be heated with solo mining ASICs and we can have our decentralized network again. :-) But I doubt it since heat pumps are more efficient.

That is a very poor analogy. Cars are designed to be able to go around corners and drivers are trained to do so. Drivers have been going round corners for as long as there have been cars. Bitcoin faces a set of problems that were not anticipated when Bitcoin was conceived and we have yet to see answers or even signs that the community is seriously thinking about the issues - I do not count miners running around saying that the sky is falling as serious thinking.

That!

How could GOV fight with CPU againt bilions of CPUs?
How could GOV fight with GPU againt bilions of GPUs?
They could - but it would be hard and costly.

Now they (FED, NSA, GOV) can just (anti terrorism, blah blah) make a law forbidding ASICs or sell it to plebs.
Or just buy 1000pcs of 2THs from Terra - each for $10K - or $3K, or just size their Ltd. a and force them somehow to sell it only to them.
And 100 or 1000 or 10K of 2THs boxes will take 90% now or "only" 60% attack in December.
Gov has electricity and no costs as they have power.

So ASICs make it easier for enemy :(

Worst is
A) in 4 months 60% of today's miner won't be effective - none CPU, GPU, FPGA and first 2 waves of ASICs and anything less than 10GHs
http://mining.thegenesisblock.com/a/b6bda97409
10GHs with only 20% diff rise, no costs, no pool fees, no electricity, no buy costs - can't handle.
So I am wondering why is any1 buying miners - I don't want them even 4free.
B) in 12 months 95% of today's miner won't be effective - even if free electricity, no other costs, no pickup/SH costs and 1BTC for 100GHs. Output will be like 1mbtc / day.
http://mining.thegenesisblock.com/a/100498799f

What problems is Bitcoin facing?

1) Utility beyond itself and the mining scene?
2) Mainstream adoption?
3) Money cartel and captured Government attack if 1) & 2) are ever achieved or even likely?
4) Network security and incorruptibility after mining stops?

Well, 1 and 2 are major problems Bitcoin actually faces today. I certainly wouldn't say that they aren't getting enough attention or are being ignored by the community. That's what people are talking about.

3 and 4 are potential problems. Right now, they're more of academic interest, since no such threat is imminent, Trying to work out specific solutions that could actually be implemented is probably not particularly useful since we don't know what versions of these threats Bitcoin will actually face.

Can't dispute any of that, and I certainly don't profess to have any answers or solutions. I'm just mindful of perspective and the thing perhaps lost on the bitcoin scene is how utterly insignificant bitcoin really is at present. Obviously people in here, mining and involved with btc elsewhere live and breath bitcoin but globally it's still an insignificance, novelty at best, and far from secure in terms of a future beyond itself and a mere existence. A fragile thing for all it's mathematical and conceptual brilliance.

I want to see btc succeed but cannot conceive of it being allowed to, by the crooks in charge, if and hopefully when it gets to the point where it starts to loosen the debt money strangle hold the money printing masters of the universe have on peoples lives.