Bitcoin Forum

Several people have asked me privately via email what I think of Butterfly Labs and ASIC mining in general, so:

What do I think of ASICs hitting the "mining scene" ?

meh.

It shows that Bitcoin is considered stable enough for a company to invest a LOT of money on design and production on it, which is very good. ASICs were bound to happen if Bitcoin survived long enough.

The long-term outlook for mining is "mining will happen with very specialized hardware, in places where either electricity is free or generating lots of heat is a benefit and not a cost"  (and probably both; I still think Iceland will be a big mining hot-spot eventually).

I'm not worried about Butterfly Labs deciding to take over the blockchain with their superior hashpower. They'd be idiots to do something like try to mount a 51% attack-- they don't want to kill Bitcoin, they want it to get more successful so they sell more hardware.

And if they are successful they will very quickly have competitors.

Full disclosure:  I spent some of my bitcoins to pre-order their USB coffee-warmer doo-hickey.  It gets cold here in the winter.

I think I'm most excited about the $150 jalapeño.  There's been a lot of concern that GPUs changed mining from being something anyone can easily do, to something only for people willing to spend a lot of time and money.  While the jalapeño doesn't fully restore the accessibility of CPU mining, an efficient plug and play device for $150 comes about as close as you can get.  Anyone that has an interest in bitcoin and would like to help secure the network will soon have an option with a very low barrier to entry.

I agree - I see ASIC as a sign that serious investors are taking Bitcoin seriously, which is a good thing!

It's cool to see a programmer come in and pop his thoughts out. Good read indeed.

Steve makes a valid point. I got into GPU mining back when GPU mining was first going. I pooled a few grand in with a buddy and we did pretty good. BFL's rigs are great because the cost per GH/s doesn't vary that much between models, and the biggest gap is between the Jalapeno and the Single, both affordable to most people.

Jalapeno : $42.85/GH

Single : $32.00/GH

Mini Rig : $29.90/GH

By upgrading to the Mini Rig, you only save ~$3,000 off compared to 25 Single's worth. This means that for somebody interested in mining, they can drop $150 in to give it a try, if they like what they see, or they enjoy being apart of it, they can pick up a single and the $/Ghash for them, doesn't differ too much from an investor who wants to drop $90,000 on Mini Rigs, after all, the investor who dropped $90,000 only saves $3.00/GH compared to the guy who bought the single. Compare this to how it was when I got into GPU mining...

I don't remember the exact numbers but, our $/MH (note: MH, not GH) was something like $0.50 less than somebody who could only spend $300-500. I really think this is good for bitcoin as a whole. Bad for anybody who recently got into GPU mining, but when I got out of GPU mining, cost of electricity with our rig was greater than amount of bitcoins we where mining.

ASIC mining will make it much, much tougher for an entity to borrow a bunch of computing power to attack bitcoin.

For instance, lets suppose BFL sells just $5 million dollars worth of their "coffee warmers". (a highly conservative number that'd probably leave them bankrupt after they paid for the ASIC development costs) That's about 33 thousand coffee warmers, or 234TH/sec. Suppose the attacker decided to requisition a whole bunch of computers to attack Bitcoin, for instance by asking Amazon or Google "nicely" One 4-way Opteron CPU can do about 115MH/s, so for your 51% attack you'll need about 1 million CPU's. If you're renting from Amazon, that's costing you something like a million dollars an hour, assuming you could even get them to let you rent that much computing power. The capital cost of all that computing power is also in the range of hundreds of millions of dollars, heck, easily a billion dollars with server farm overhead.

Finding a whole bunch of GPU's is actually rather tough, as most GPU farms are for scientific computing and use floating-point optimized GPU's that aren't very good at computing hashes.

A final possibility is borrowing an FPGA farm. We could make the rough assumption that the value of the farm's FPGAs will have the same $/Hash ratio as BFL's currently shipping product. So that's 117TH/sec / 0.8GHash/Single * $600/Single = $87.7 Million dollars worth of FPGAs. Intel might have that kind of FPGA farm available - they're used for chip verification - but again, renting it won't be cheap. Also, it looks like BFL is getting it's FPGAs at pretty cheap prices - a $600 single has $2000 worth of FPGAs in it - so with wholesale discounts we still might need to triple or quadruple that $87 million.

With ASIC mining, the cheapest way to computationally attack Bitcoin is probably by doing a run of your own ASICs, and it's not something you can do quickly. All that effort and money just so you can find out the myriad ways that the devs can stop 51% attacks using techniques possible now that Bitcoin is widely established.


For instance, lets suppose the NSA decides to attack Bitcoin. They could probably round up the hundreds of millions of dollars worth of computing power to make it happen, although it'd be a big hit to their black budget. Chances are within a few hours to days the devs will respond with something like a "coin-age" rule and ask everyone to upgrade. Now blocks get rejected, and nodes blacklisted, if they try to pass blocks into the network that don't meet coin age requirements. Transactions start flowing again, although the price on Mt. Gox has dropped severely, lets say 50%. At the same time the "known-legit" mining pools are also taking steps to protect their investment, by temporarily centralizing a bit, and blocking connections to nodes that aren't on a whitelist; the "most-difficult-block-wins" rule has been temporarily suspended. Note that at this point it's still not possible for anyone to steal coins, and not much more possible to do double spends.

Now, one thing the NSA could do is buy a bunch of coins so their blocks get accepted again. The problem is, now they're basically giving people a way to get out of Bitcoin, and boosting the price on the exchanges, restoring confidence. Exactly what they don't want! If they do nothing, they're still burning at least hundreds of thousands of dollars an hour, while the network figures out ways to mitigate the damage.

Honestly, ordering some assassinations on the guys running major exchanges sounds a lot cheaper...

I've felt recently that it would be easier (cheaper) for Gavin and other developers to simply suffer sudden "heart attacks".

We need to round up all our developers and put them in a "safety pit". For their safety.


But seriously, if we suddenly lost our core developers, where would bitcoin be? Do you think others would step up if it could mean assassination?

And I realize our developers being assassinated is not realistic, but then again I really really really don't want them all on the same plane on any business trips...  

edit: I just realized I'm derailing the thread. Too soon... so....

YAY ASIC MINING

Sure, but this time, using tor. And, no offence to Gavin and the rest of the Bitcoin devs, but the development being done right is something that a large number of developers could do. If they had to step down for some reason, other people could be found to fill their place.

ASICs are a good thing for Bitcoin, it's just the evolution of mining, from generalized hardware (gpu) to specialized hardware. Much much much more hashing power, much higher security.

If ASICs are going to be owned only by a small group of people, then it won't be good for BTC.

as soon as one realises that:

1. Good for CPU  miners != Good for Bitcoin
and
2. Good for GPU  miners != Good for Bitcoin
and
3. Good for FPGA miners != Good for Bitcoin
and
4. The higher the Bitcoin nework difficulty the more secure Bitcoin network is and therefore
Migration to ASIC mining and combined Bitcoin hashing power measured in ExoHashes as opposed to present TeraHashes  = Good for Bitcoin.

So if you want to whine about ASIC's try to be honest and not bring  "good of Bitcoin" into it. Go and whine like "ohh by October my FPGA will not pay for itself, my investment went baad, gotta go to work for Wallmart again!"

I'm holding out for cheap quantum miners!  :D

This. Most of the whiners just fear that they wont get rich anymore with asic around. Now they can prove that they're in for the project and not only to profit. This 51% bla bla just sucks. My fpga will be paid off when asic hits the market ;D I'm ready for the future.

The problem is, there is no other use for a mining ASIC besides mining, so after the sales to the community goes down, BFL could only make more profit by selling more chips. What if now the evil whoever will ask them for 'The network hash rate + x%' in Chips with usual discounts?

Then don't buy it.

Sure, but this doesn't solve the problem that a bad guy will get the mining ASIC at a much lower $ - GHash/s ratio.

Quantum miners aren't really that great for mining. We deal almost exclusively with int numbers.

So can everyone else at that point.

Seriously, what if the developers decided to change the block hashing algorithm from double SHA-256 to something else (WHIRLPOOL or SHA 3 maybe)? doesn't it renders ASIC useless?

But this solves the problem that bad guys could get large number of the mining CPU's GPUP's and FPGA's at whatever price.

I think so, yes.

It's been brought up that if something needs to change security wise and the Devs need majority of the miners to switch; ASIC users are basically screwed out of their investment.

I don't think its likely that anything is going to happen to SHA-256 in the foreseeable future...


But here I am talking about things i hardly have any knowledge of. I know ASIC is purpose built hardware, but is the architecture the end all be all of mining? Will the next thing after ASIC simply be upgraded ASIC via die shrink and design?

Actually they would need more than 117GH/s, because once they add their 117, the total hash rate goes above 300, they still don't have 51%.

Thank you Gavin.  I have been waiting for a senior developer to weigh in and add to our collective perspective.


Kudos,
Dalkore

Doh! Yeah, in general that's not a safe assumption, because in theory miners drop out as profitability drops due to the new hash power, but I'm assuming a sudden attack. In that scenario you actually have to provide an equal amount of hash power to the existing network. So all my already conservative, BFL labs goes bankrupt because they don't sell enough hardware, estimates can be doubled.

As it is, the idea that miners will drop out as profitability drops is probably not all that true either now that mining profitability is mainly a function of capital costs rather than marginal electricity costs.

Of course, to bad that there is no other use for CPUs and GPUs besides mining that keeps the prices of that hardware at a decent level.  ::)

Glad to hear that :-) We'll jump into ASICs as well :-)

As the most stopping factor was fear of algorithm changing...

We'll focus on tiny devices for mining and usable with p2p-pool (as with fpga it is quite difficult to upload tasks fast enough to them).

I consider ASIC to be a great bitcoin development. Currently, if someone wants to mine, they must be extremely geeky. Even being moderately geeky isn't really good enough in the existing mining climate, since 'the edge' is so important to having a viable setup. Surprisingly few people can set up a computer from parts at all, let alone one that's good for mining.

If BFL (and their inevitable competitors) can nail their UX to the point where less-geeky and eventually totally normal people would consider buying and using an asic (and thus bitcoin), this could trigger the start of mainstream acceptance of bitcoin. Bitcoin is fairly well-proven on a technical level. The biggest problem facing bitcoin is a social one, and removing the high barrier to mining is (imo) a very big step toward getting wider interest in the system. If you could just plug something in and make money, you'd do it right?! The way it is now, people look at it and decide it's too complex, not for them. But if asic can simplify it... it'd be very cool. It's a big 'if', but I think asic suppliers will understand that if their UX is really great, they will sell a lot more (and a lot more to the less geeky types). Imagine if apple made a bitcoin asic... now let's see the existing asic mob actually do that.

I also agree that ASIC will ultimately be good for Bitcoin too, I have serious reservations on both BFL's specs and timeline, but I do think it's going to happen, regardless of who is first.

If a really big player desired to dominate Bitcoin, ASIC may be the way to go. FPGA would not be competetive enough because they are already in the wild. Placing large buy orders would be too obvious and drive the price too high. Instead, they would be developing the latest technology for mining. I wonder how they would do that secretly, so as to alert others to compete?

OTOH, if someone wanted BTC bad enough, they would pay a little extra for electricity and use whatever technology they could get their hands on. Bottom line, I don't think any major players are even looking at Bitcoin. Makes no sense.

hopefully one that hasnt been totally brutalized

Just my little thought, since I cannot see it anywhere, and everyone seems so positive (or only concerned about 51% attacks).
Just think it this way: why do miners make money? Because they use differently, better hardware -GPU- that is priced (for them) low because the vast majority of its buyers value it much less, becayse they only need it to play fancy graphics.

If everyone can use ASIC and price is completely determined by its use in mining, is there one reason for why competition and prices shouldn't rise until the profitability is basically zero? Free market works like that.

My understanding is that an FPGA could probably be reprogrammed and flashed to whatever.  However, an ASIC cannot and does one thing forever.

There's a coming vanity key gen market brewing...

Part of profitability is risk. If the market is assuming that Bitcoin mining is highly risky, the apparently profitability can be very high even if the total profitability is zero.

Of course, no-one knows how risky mining actually is.

I doubt ASICs can be used for that.  EC Key generation is an entirely different beast.

Technically speaking, if one wants to be un-nice to the Bitcoin network, you could setup 3-addresses for a regular Bitcoin miner...

Don't forget mining NMC and all the other SHA256 forks like DVC, IXC, IOC as well as BTC at the same time !

ASIC will probably be the best thing for BTC since sliced bread for the world !

Good point. Similarly, I remember there was a alternate blockchain that was designed for cpu-mining only, but forgot its same.

Then the Bitcoin community would need to approve of this change with a large majority choosing to switch. However, the only reason to do so would be if 1) the ASIC miner were compromising the security of Bitcoin (not going to happen with BFL distributing these diversely), or 2) big-investment GPU miners make up enough FUD to scare people (so their income isn't compromised). So far, most of the panic seems to be #2, though I don't see what the GPU miners really hope to accomplish considering the subsidy halving will make them unprofitable either way.

My GPU's would still be (barely) profitable with 12.5 BTC as a reward if difficulty stays lower than 3,000,000, yes 3 million.
If yours aren't you are doing something wrong. ASIC will ruin GPU's. 25BTC a block shouldn't unless you are doing it wrong Mr. FUD Jr.
I don't get free electric either.

Even if ASICs are the main cause of GPUs being unprofitable, it doesn't justify making up FUD about ASICs harming Bitcoin.

The one concern I have is that it makes it effectively impossible to fork the network for any protocol change that would alter mining, because >95% of hashing power will be these ASICs, and so it would be impossible to get a majority of the hashing power to switch.

This may be totally unfounded on my part, as I don't know how likely such a requirement is, but regardless I'll be getting out of BTC once these start shipping until the dust settles and price+difficulty stabilise ;)

The ASICs don't do the actual transaction validation part, just the proof-of-work, which is unlikely to change ever (the only reason that's ever been put forward for it was an attack from a single big ASIC miner - but having ASICs available to the general community mostly prevents that). Even quantum computing doesn't break SHA256.

Moores law man (kinda). At some point ASIC will become the "new" GPU and it will have to be upgraded or completely changed at some point. Will it destroy bitcoin? That was just a title to entice readers. It will only strengthen competition for miners which can only be good right?
And what can be wrong with strengthening the power of the miners? It will only make it more difficult for a 51% attack.

Correct, and I don't know why other users find it so hard to figure this out.

you don't use ASICs for gaming

how will it strengthen competition for miners?  strengthen competition amongst the 2% that are left?

who cares about a 51% attack when nobody cares about bitcoins anymore?

surely i'm not the only one that solely became interested because I could use my existing equipment to procure my 'own' bitcoins

i wouldn't have thought twice about it had it required some POS that was useless otherwise.

ed: (and why in the hell would more people have ASICs than GPUs, making a "51% attack" less likely?  since when does total hash power figure in here, rather than # of players?)

What does gaming have to do with anything? That doesn't help Bitcoin.

Perhaps after eliminating all the illegal botnets and miners who are just mining for "free money" with no real interest, there might just be 2% of total miners now - but that's still better than the status quo. Total hash power has always been the important factor of Bitcoin mining, and it was designed to be intentionally highly competitive (and therefore just barely profitable).

If you don't care about Bitcoin, that's another problem entirely. Perhaps you should look into reasons Bitcoin is better than conventional currency.

If the only reason you like Bitcoin is because you could make money from mining, then it's not much of a loss when you leave.

haha, that's not what I said.

do you think grocery stores leave out those free samples to feed the starving ppls?

what if you had to pay $100 to get a key to gain access to these (not so) free little pieces of diced cheese and what not?  would you ever sample the product?

i doubt it


your 1st sentence, i don't find any of it based in actual reality

2nd sentence, yes, total hash power matters to an extent.  with 1/100th as many people mining, a "51% attack" becomes more likely, rather than less likely, however

I'm fine with asics as long as there's a reasonable low priced option to spread the mining power among more people (lot's of small miners is safer than a few big miners), and seeing as that 150$ device is priced competitively against it's higher powered siblings things look ok.

ASICs will kill the GPU miners (http://www.youtube.com/watch?v=Iwuy4hHO3YQ).

Then work on giving out samples.  Don't QQ because the average joe won't be able to mine profitably anymore without buying specialized hardware.  If someone really wants to try out Bitcoins, there are plenty of free faucets and such that give out Bitcoins.  Or they could, you know, always go and buy some.

Why wouldn't someone trying to 51 the network just approach BFL? They'd have ready-to-use chips and it would significantly cheaper for them to produce them than the entity doing it themselves.

As far as I can see, bitcoin security is proportional to market capitalization. The more bitcoins are worth the larger the income for miners will be and, thus, more miners will exist. The marginal cost of ASICs is tiny though. So if some entity were to develop their own ASIC, I'm not sure if it would matter that they'd have to produce 100,000 chips instead of 10,000.

We should instate the Coca Cola rule. No two developers can ever travel on the same plane at once!

EDIT: Also, bike helmets are now mandatory for the devs.

+1 lol

So someone will all of that mining power would do a 51% ATTACK and destroy Bitcoin rather than use it to solo mine all the time and get loads of cash and then support the currency? I want to see Bitcoin to very well. This planet needs a wordwide currency and is not dependent on what governments do with their money, like for instance printing loads of it devaluing their own currency.

This can't happen To Bitcoin as only so many can be mined and created.   

The real question for miners is - Do you spend your money on these machines or do you simply buy the BTC on an exchange.  Historically, are you not better off just buying BTC off MtGox, especially if you believe difficulty will dramatically increase after the first x-number of units are delivered and turned on?

+1,

after some analysis and some risk models done with help of professionals back in May 2012 I have suggested to some people I've been in touch with regarding potential ASIC mining project to forget about mining and simply buy BTC instead. After that our ASIC project was scrapped. It was back when BTC was valued at 5$.

My opinion is still the same. BTC represent better risk/reward than mining, provided that one keep em secure in own wallet, of course.

For what it worth,
Vladimir "The Miner".

This is the first time I've heard that you scrapped your ASIC project.  Interesting...

I don't know anyone besides BFL who is making a legitimate effort towards developing a Bitcoin mining ASIC then.  Anyone else know of someone?

I perhaps should clarify that we never actually tried to build our own ASIC's (I would not know where to start). The idea was to rise funds and set up a mining company that would in turn finance one or more ASIC development teams and we would get in return preferential terms, long term discounts, distribution rights, equity shares etc in those chipmakers. However, negotiations took too long, the potential ASIC development partners did no give us what we wanted, there were too many of those potential ASIC teams. In the end we did not like risk/reward and withdrew from the marketplace.

That is the story of it. Thankfully, nobody on our side got hurt financially, except maybe me (some professional fees and time invested and it is all negligible anyway).

friedcat with Block Erupter is raising funds and is working on analog design, last I heard. There is also OpenBitASIC, but I haven't heard anything from them recently. Jason hasn't been on the forum for a while.

Sorry for resurrecting the topic or beating dead horse, but I wanted to share my opinion today when ASICS are already out there and much much more powerful ones are now on the pre-order.

I believe that coin mining is almost comparable to gold mining. When bitcoin started it was like a Klondike gold rush. A lot of lucky people who got to the river first got rich similar to a lot of bitcoin miners who mined thousands of btcs when they had a chance. Then the news got out a lot more miners jumped in for the riches and difficulty of finding any gold on the river or mine any bitcoin drastically increased. People started to bring heavy equipment to dig the gold out from deeper nodes and bitcoin miners started developing equipment to mine at more hashes per second.

In the end the gold rush ended when supply was almost exhausted and only people with the most expensive equipment could make some kind of a profit. Same happened to bitcoin. Mining btc today with anything but hundreds or thousands of GH/s is pointless. And difficulty increases every day. Unlike the real world there are different kinds of cryptocurrencies, the problem here is that BTC will be a foundation of this virtual gold mining for many years still and will be considered as the most solid cryptocurrency and considered as a trade value.

With more powerful ASICs being released on quarterly basis mining BTC will become pretty much impossible unless you have something like 2TH/s miner and then not long after that even those miners will struggle to mine any btc. Thats why there are more coins out there to mine now, but will these coins be ever valuable as BTC? Will gold be equal to silver, or silver to bronze? Unlikely. Even if you are able to mine 1000$ a day in Dogecoins because everything is based on BTC value and because you can't directly sell new type of coins your 'fortune' will pretty much be only 'virtual' and possible never realize itself into a real world money unless the cryptocurrency trade will pick up and people will be able to trade any coin towards bitcoin.

Will ASICs destroy bitcoin? No, it will only make BTC value stronger and higher. But less and less people will be able to mine btc unless they have very powerful ASIC miners and value of other coins will increase because of that. Cryptocurrency mining though is quite niche 'adventure'. Its more of an experience and a "game" if you wish than the actual business so it will never be as popular as gambling in Las Vegas for example. BTC is being acknowledged as possible currency in the world today and in time we may even be able to buy things on Amazon for BTC, but when this happens I bet that it will be VERY difficult and will take forever to 'mine' btc or obtain it for free. It may be legalized as a currency for transactions online but this I bet will lead to conditions put on miners that will limit them in some way.

So BTC will be there but similar to mining gold today you'll have to be either very lucky or will have to own a farm of rigs that will mine BTC 24/7 at hundreds of Terahashes per second to make some profit. And when 'gold mine' runs empty people will have to look for other coins to mine but they may never be as profitable as BTC if this coin will be kept as a base trade unit.

No it won't its like taking a step everyone will eventually be on the step.

By which time the people on the "step" would have milked it's worth dry. The gold analogy given above is pretty accurate though.

Way to go.  Bringing up a thread that's been dead for 2 years with that pointless reply.  ::)  Learn to read the dates on posts before adding to the thread.