Heathrow, You appear in your reply to me to have agreed to the essential pieces of the jigsaw but are missing the picture it makes...
If I may assist...
...those Jalapenos will come out at the same time as all the other ASICs, and the current difficulty will skyrocket, pushing back a recovery on one's investment to a year or more on the assumption that BTC prices remain the same.
So you expect folks to mine, even at no profit, just to help the Bitcoin network?
...you also have to be willing to do this for free. Your Jalapeno isn't going to pay itself off for a LONG time (again, unless BTC prices skyrocket).
Let me repeat what I wrote:
With prices per hashing capacity virtually the same for the hobbyist (e.g. BFL Jalapeno buyer) and 'farmer' spending tens of thousands there are virtually no economies of scale to speak of which would drive the hobbyist out. It will take the same duration for the hobbyist and the farmer receiving their kit at the same time to recover their investment (other than for some variation in running costs).
What this means is if difficulty is so high that you are unable to be making a sustainable ROI from a Jalapeno then it's also too high for the 'ASIC farms' to be making a sustainable ROI from their kit. OK there will be differences for instance if a 'farm' locates itself in a very low power cost area or where the ASICs are mined by the manufacturer making the cost of their rigs significantly cheaper but if anything the farmers have admin charges to run as a business including premises whereas I suspect you have no need to charge for the space your Jalapeno is taking and for your time ensuring it keeps running!
There is a roughly the same amount of BTC mined each day. [..] if the value is sufficiently high where someone can get the equipment to mine with and make a profit then people will do so.
This is a truism. It adds nothing to this discussion.
It certainly does add to the discussion - it is essential to the discussion, in fact it is the next consideration.
You talk of increasing difficulty and increasing prices. They do affect profitability but the point is they affect profitability approximately equally for you and your Jalapeno as it does the farmer. Who do you think can keep mining at a loss longer, the business who has business expenses or the hobbyist who just has a slightly higher electicity bill and a slightly warmer house? Regardless of who switches off first when (whether sooner or later) mining ceases to be profitable, when enough people have switched off it will be marginally profitable for those lremaining - until the price/difficulty situation changes again either making it unprofitable again so more have to switch off or more than marginally profitable in which case more ASICs will come back on line making it marginally profitable again.
The point is scale really doesn't matter. Everyone's in the same boat. After the ASIC 'gold rush' there will be no big money made (relative to purchase price) regardless of scale. The ones I'm feeling it for are those, whether spending hundreds or hundreds of thousands, who have borrowed or are banking on making more than they will.
But from the network perspective it is great.
The next percentage referred to is '1% of population'. It's unclear to me whether this refers to the currently mining population, to bitcoin user population or world population. Let's hazard a guess at Bitcoin user population?
I was referring to a much larger population than the current bitcoin user population. Something like the population of potential BTC adopters.
Other than for securing the network why does the percentage matter if the primary purpose of Bitcoin is not to make money for miners but to serve the needs of its users?
So you expect folks to mine, even at no profit, just to help the Bitcoin network?
My understanding is that the decentralisation of mining does not need to grow relative to the number of Bitcoin users. It just has to be distributed enough and to be located in enough jurisdictions not to be vulnerable to being taken over by authorities and to keep the risk of anyone controlling >50% to a minimum. From what I gather there is a much bigger risk from the pools controlling too high a proportion of mining than the actual miners. But that's for another discussion.
So if you were referring to something along the lines of 'the population of potential BTC adopters' the proportion that need to be mining to keep the network safe is actually miniscule - probably way less than 1%. But if a random hobbyist in every hundred Bitcoin users fancies playing a role and mining for the fun of it and it is just as likely to be profitable for him (relative to his investment) as the big boys then I don't see where there's a problem.
The question is whether there will be enough such people to keep BTC decentralized and secure when the massive ASIC farms start coming online.
My question is why would there not be?
The other assumption you appeared to have was that miners (ASIC farmers) would be fiat-rich and that something about the distribution of Bitcoin that is just going to make already rich people richer at the expense of everyone else. I hope you can see now that the advent of ASICs isn't going to concentrate bigger profits into smaller number of hands. There's also the consideration that a smaller and smaller proportion of the money made in Bitcoin will be made by miners. There's speculators, long-term holders being coaxed into spending by higher spending power, there's payment service providers and all the other Bitcoin-centric businesses.
This was discussed in another thread quite recently
https://bitcointalk.org/index.php?topic=149389.0 but I hope you will be able to conclude from what people have commented in this thread that you need not be overly concerned about a supposed increasing gap between Bitcoin Rich and Bitcoin Poor.
The future's bright
