Possible impacts of ASIC mining and hypothetical scenarios

[kano]

...
As soon as BFL ships the ASICs, they have no control over them. Their own customers will be securing the network against such an attack. If they tried to pull off such an attack before shipping, the Bitcoin community could just switch to an algorithm their chips don't support.

... and how long would that take?
The last soft fork took forever and failed dismally - massive orphans (and chains of orphans up to 4 long) for almost a week.

If someone had the hardware to do an attack they could do it and make a profit before anything would change in the bitcoin code ...

Which is also why I ALREADY said that this required foresight and planning ... but of course that planning WONT happen.

[makomk]

As soon as BFL ships the ASICs, they have no control over them. Their own customers will be securing the network against such an attack. If they tried to pull off such an attack before shipping, the Bitcoin community could just switch to an algorithm their chips don't support.

They have no control over the ones they've shipped, true. However so long as the amount of ASICs they've kept back is a reasonable amount larger than the amount they've shipped they'll still be able to carry out the attack, and for various economic reasons we might expect this to actually be the case for any manufacturer of Bitcoin mining ASICs.

[Luno]

Would it not make best sense to push back delivery as much as possible (talking about any ASIC rig producer), for as long as possible, until reward halving? Burn in testing is more profitable than delivery into a small market. This had to be a balanced act as not to have customers cancel their orders or ruin cred.

I suspect the latest steady rise in hashing capacity are from ASICS from multiple sources also the less public ones.  No one would buy new gfx cards now? Second hand gfx market would have zero net effect on global hashing if they are bought from other miners. Investing in an ASIC rig, and mining at a higher difficulty, will make your coins more dear. An outside negative influence on the economy, or the technical side of having a non upgradable rig, could start a sell off.  If the market gets really flattend by regulation or otherwise, running an ASIC could be very profitable, if like 70-90% of miners goes of-line in fear of criminal charges.

[phillipsjk]

There is an obvious reason Butterfly Labs does not want to mine themselves: In the long run, mining is not very profitable. It is expected to converge on the cost of bandwidth/electricity. There are only so many bitcoins to go around; only so many block processed per day. In the long run, Butter fly labs can make more money selling chips to miners trying to outdo each other.

[Jutarul]

There is an obvious reason Butterfly Labs does not want to mine themselves: In the long run, mining is not very profitable. It is expected to converge on the cost of bandwidth/electricity. There are only so many bitcoins to go around; only so many block processed per day. In the long run, Butter fly labs can make more money selling chips to miners trying to outdo each other.

Please don't confuse long term strategy with short term strategy. On short term it is very rational for BFL to do a bit of self-mining. And there are different ways to market that: Quality control, Shareholder profit (ASICminer), Burn-In, .... 
Why would BFL want to let a highly profitable business opportunity pass? All they need to do is throttle the hardware selling a little bit and keep each chip at BFL for quality control and burn-in for e.g. 2 weeks. Do that round-robin and you got yourself a free mining facility.
Of course you're right - if the market saturates the profit from burn-in and quality control is negligible. So it doesn't make sense to build a huge mining facility.

It's a food chain and the chip producers are at the front of the line. Mining facilities are second in line. People who hold mining bonds or contracts are third.

[phillipsjk]

If they really want to do a burn-in, they can use test-net.

[Jutarul]

If they really want to do a burn-in, they can use test-net.

And let an opportunity to make profit pass? How is that rational?

[lame.duck]

Why should they do that? It doesn't make sense at all since its about business and not fairness or whatever.

[LazyOtto]

And let an opportunity to make profit pass? How is that rational?

Merely due to the company's honor?

I do seem to recall they clearly stated they would not mine with their devices prior to shipping.

After all, they have a reputation to maintain.

-- edit --
Nope, I was wrong.

We use EasyMiner's built in evaluation function to burn test, not the live network.  Why?  Because the live network isn't a very good test.  Meaningful performance evaluation requires known problem sets with known results.  With live mining, you miss out on absolute confirmation of work.  Network inconsistencies further cloud performance testing metrics.  However, after units have been cleared, they're tested on a live pool connection as a last minute sanity check.  What you're looking at with that burn in account is the cumulative result of six months sanity check live testing.

Our primary objective is delivering product as soon as we can.  We do not hold product back for unnecessary burn time.

[Jutarul]

And let an opportunity to make profit pass? How is that rational?

Merely due to the company's honor?

I do seem to recall they clearly stated they would not mine with their devices prior to shipping.

After all, they have a reputation to maintain.

It'll be interesting how that "promise" plays out. I think the damage to the reputation wouldn't be huge. Also there's plausible deniability: "don't have enough manpower to ship above a certain rate"... and in the meantime, why should the devices stay idle?

I expect some sort of excuses. But that's fine. I actually think it's fair for BFL to do self-mining. After all it's the privilege of the innovator in a free market to keep the profit (and pay taxes...).

The only thing I think is not fair is their pre-order strategy: They likely used the pre-order money to finance the chip production, which is very much in the gray area, because the customers didn't agree to a risk of default, should the chip production fail.

[Luke-Jr]

I do seem to recall they clearly stated they would not mine with their devices prior to shipping.

Citation needed. I don't know why they wouldn't, the chips certainly need burn-in to eliminate the bad ones.

[phillipsjk]

If they start Mining with one of their $30,000 (1Thash/s) mining rigs, it should show up on Bitcoin Charts (as 5% of the network).

[lame.duck]

I do seem to recall they clearly stated they would not mine with their devices prior to shipping.

Citation needed. I don't know why they wouldn't, the chips certainly need burn-in to eliminate the bad ones.

No, chip testing is quite a problem in semiconductior industry since  the are only a few seconds per die to decide whether it meets the specs or not. So complicated devices have build in BIST (build in self test) and even RAM chips have such provisions. Since SHA is quite regular and each flipflop is toggling every second  clock cycle it would be take only very few hashes where you compare the output  of some known input patterns against the precomputed output pattern.

Of course  there are other points of failure bur this would require them their other equipment, for instance their power cables at maximum current in a climate chamber.