ASIC arms race = the end of bitcoin?

[Hyena]

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?

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[crazy_rabbit]

so. much. nope.

[ronimacarroni]

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.

[ElectricMucus]

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.

[Xer0]

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.

[crazy_rabbit]

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.

[SebastianJu]

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.

[Ekaros]

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... 

[Dalkore]

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.    

[crazyates]

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.

[Hyena]

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.

[JoelKatz]

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?

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.

[smoothie]

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.

[smoothie]

so. much. nope.

The person on the left keeps floating around.

[MerchantMiner]

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 

[BobMarley]

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

[bobitza]

The ASIC arms race is making it harder and harder from some rich entity to corner the market. ...

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. 

[Rival]

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.

[mgio]

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.

[mmeijeri]

The ASIC arms race is making it harder and harder from some rich entity to corner the market.

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.