I have to admit though that this point becomes utterly moot under the assumption that Bitcoin's future PoW scheme is as resistant against QC as it is against ASICs.
And we are done with QC issue, because ProgPoW is absolutely better than sha2 in this regard.
Regardless of this, economics of scale would still apply and whether big miners buy ASICs or GPUs wholesale seems to make little difference to me. However I'm not quite up-to-date with the current mining hardware market and Bitmain's stranglehold may be worse than I think.
It would be interesting to see what sharing mining hardware with Bitcoin would mean for alts though (and vice versa).
GPU industry is far more competitive and healthy than its ASIC counterpart and more importantly, gpus are distributed around the globe more evenly. A gpu friendly algorithm of any type has a large memory footprint (to resist being cracked by ASICs like what happened to bitcoin) and memory banks are a rare resource with limited global supply, a scene that is unlikely to change for near future.
IMO, there is nothing to worry about gpus being monopolized, nobody could afford such a huge investment because the demand for mining is a fraction of the total demand for gpus and manufacturers won't sacrifice their market for a tricky one time business.
Is it though? The GPU industry is essentially a duopoly of NVIDIA and AMD, with Bitcoin's GPU mining era having been an AMD monoculture. Additionally the 2017 bubble had enough of an impact on the GPU market that regular gamers were facing a supply shortage and prices inflated way beyond the original release date prices. And that was just alt coin mining, even excluding Scrypt-based coins.
GPUs are definitely wider distributed than ASICs, but don't underestimate the market impact of crypto. Given a crazy enough market high-end GPUs (ie. the ones that are relevant for mining) can become just as hard to attain for the common mortal as ASIC miners.
You are right about duopoly, but it is not a threat. NVIDIA and AMD are not stakeholders in cryptocurrency and gaming industry is very high profile ways more important than mining. We are speaking of a 200 billion dollars market which is doubling every year and is supposed to keep the pace for a decade. Neither of the two giants have any plans to quit this industry or undermine it in favor of mining.
Still, you are right about it being a problem, having two manufacturers as original source, but it is the same for most essential parts of computing industry RAM, CPU, GPU , ... and when it comes to choose between Bitmain and NVIDIA I rather choose the latter for so many reasons: not being a mining company, absolutely no ways to implant backdoors, potentially subject to a comparably strong competitor (AMD), having a much wider market to be worried about, more transparency, ... you say.
As of altcoin gpu miners, I believe it is really interesting because they can act as another stabilizing factor.
Funny, I personally assume quite the opposite as I'm instantly reminded of the BCH / BTC hashrate fluctuations and the recent 51% attacks on minor alt coins. Not necessarily a problem for Bitcoin, but definitely not stabilizing for the ecosystem as a whole.
That's just my thoughts though, what leads you to the conclusion that Bitcoin sharing hashrate with alts would be stabilizing?
Although I propose a gradual migration, in the beginning it would have disruptive consequences on gpu market and altcoin mining both, but once the dusts are settled we have nothing much different than what we already have right now.
And yes, it is good situation with gpu mineable coins, despite all the hype about 51% attacks. I don't care about this attack at all, as you know.
Let's don't worry about this attack for a moment, and realize that it is a very strong stabilizer mechanism in altcoin mining industry right now. Professional miners, don't switch between coins just because of temporary price fluctuations as reported by coinmarketcap or other indexing services, they consider choosing coins with stronger infrastructure and long term perspective as well. As a result we have an objective measure regarding actual value of coins. When something bad happens for a coin, both price and hashrate will drop and vice versa and mining industry acts more coherent with basic incentive system designed for bitcoin...
On the contrary, ASIC mining is subject to manipulation by the manufacturer. It is why we have experienced a long term weird pattern in bitcoin mining in 2018. Despite steep price decline for months network hashrate and difficulty figures were climbing sharp and stopped just when mining bitcoin proved itself not to be profitable and miners were no longer able to tolerate losses. It is what happens when you have miners as slaves of a manufacturers, even worse.
Let's look closer to the recent event in ASIC industry, Bitmain is launching its 7 nm ASICs while bitcoin is in the lowest price levels in a year, now what do miners have to do other than
buying new hardware and dumping their now useless ASICs? See? It is worse than slavery!
This is very different for gpu miners, when the whole market is down, there is a chance to assign other jobs to gpus and more importantly,
there is no force to install new hardware.
Unfortunately, I have not made a deep assessment regarding this issue and I have no statistics to present right now, but according to my own experience, ASIC miners are easy targets for the manufacturer but gpu miners are not slaves of NVIDIA or AMD, they have a better chance to back-off or at least not to sink even more.
Please note, having a good balance between incentives and costs is the essence of what makes cryptocurrency a decent industry, so, I'm not talking about miners interests here, I'm talking about how keeping miners safe and secure is critical for a long term stability of the whole ecosystem.
The way I see it, gpu mining provides a better mechanism for regulating the balance with cryptocurrency total value and its total costs (energy consumption mainly) and a better mechanism for distributing this costs between different coins.
In cryptocurrency we have no assumption about loyalty, all in all it is about being rational instead of loyal. I know you are aware of this point I just don't get it why should you make such a weird argument tho.
If your investment is at stake and you can't use it for anything else (as is the case with ASICs), loyalty becomes the rational choice. Granted, it's the kind of "loyalty" that only lasts until the hardware becomes obsolete, but that's still a couple of months of hashing that you would otherwise need to continuously compete for.
I understand miners being trapped (because of using a specialized device) sounds like kinda 'loyalty' but it is not a good kind, it is even bad because of fragility. Naturally when there is no flexibility we are dealing with fragility, aren't we?
Investment is about opportunity cost which is just one factor and not the most important one. We have electricity, labour and overhead costs involved as well. A miner remains
loyal up to the point that other costs have not surpassed the incomes minus opportunity costs substantially and in long run. They start to halt their operations at a certain point while in the same time, ASIC producer pushes for new hardware, hence the gradual elimination of small mining facilities won't act as a relief because the total network hashrate remains high or even climbs up! So the elimination process escalates even more. The net result would be a highly centralized mining scene.
I think people who insist on this kind of 'loyalty' just forget the basics and mistakenly suppose this kind of loyalty,
accidentally is good for security of bitcoin because of miners (slaves) who are trapped in the network and are securing it for free!
It is not how it works in socioeconomic systems. Such a security is not considered
sustainable and is doomed to centralization. When a coin price is tilting down, you need less hashpower to keep it secure and vice versa. It is the rule and as much as having such a system in its pure form is impractical, violating this rule intentionally or justifying such violations as "fortunate accidents" is not acceptable.
Let's forget about 50%+1 attack, not everything is about such an attack and it will never happen for a big fish like bitcoin or ethereum and smaller ones should take care of their business by smart measures, I've proposed one earlier: require more confirmations for more precious txns.
Requiring more confirmations is the obvious solution, but also an incredibly impractical one. Having your customers wait for a day worth of confirmations on the off-chance that a someone is about to mount a 51% attack is rather crippling,
even if you only apply it to larger transactions.
I disagree. 51% attacks for the soul purpose of double spending one or few utxos do not put ordinary txns in danger unless they spend coin base of orphan blocks. Maturity of a coin base txn should be delayed enough proportional to the costs of attacks and if it is not tuned properly, user wallets should issue a warning for such txns (my proposal) so, it is all about how and when the recipient is satisfied with number of confirmations. For ordinary low stake txns there is no risks (supposedly not originated from a recent coinbase) involved as after the re-org it will be re-confirmed if it is not already, for high stake txns, it is totally acceptable to analyze the risks and wait for a substantially higher period of time (number of confirmations).
I think it is all about exchanges and their poor software designs: typically they do not distinguish between a multi million dollar and a one hundred dollar txn and use a same stupid parameter as the number of confirmations. it is really crazy, you don't need to wait like two days to be convinced about my deposit of like 5 etc but if I had enough money to buy like 1,00,000 etc from you, I wouldn't release the funds sooner than a week after the first confirmation. When two entities have chosen a low hashrate coin to do a high stake business, they need to treat it properly.
I have to insist on the above arguments once more: When bitcoin was started 10 years ago and in the first couple of years no body accused it of being insecure, while any data center owner was able to commit a 51% attack against it! As long as we are discussing bitcoin as of its design principles, it is secure not because of its absolute security against 51% attacks but because of the equilibrium between the incentives and the costs involved. Lower prices reduce incentives and attack costs altogether and higher price acts contrarily. it is true because in an idealistic scenario, we have network hashrate and price that are regulated inversely and network hashrate is what determines attack costs.
