[ANN] A public company will build a huge Bitcoin Mining Operation (ASIC).

[hazek]

Monopolies and oligopolies lead to collusion. If you sell shares in a public corporation you owe your shareholders a return on investment, and these returns are judged by the marketplace on a quarterly basis under the theory of unlimited growth. Of course in the real world, no matter how large it may appear, there are limits to growth. So over time those monopolies or oligopolies particularly those addicted to oil (which after all powers the mining rigs) will pathologically seek out new ways to increase (make those) quarterly profits. Sure that might lead to green energy, but of course it is just as likely to create new ways to extract monopoly rents from bitcoin users and the bitcoin supply chain. At present, unfettered capitalism with out broad based representation (open source/distributed) has spawned monster corporations acting as sociopaths. This is not seen as theory, rather the question is what to do about it. Harnessing the wealth of many for the benefit of a few without any input or oversight by those who are being harnessed.  What is Facebook.

Unless bitcoin users have some sort of participatory powers in decisioning how bitcoins are administered, we will be replicating the current monetary system albeit without inflation.

It really pisses me off when people explain something not mentioning the whole picture. What we have in the entire world today is not a free market and it is not capitalism. What we have is GOVERNMENT (FORCE, COMPULSION, VIOLENCE, AUTHORITY) that enables companies to behave in ways the free market would have never allowed them to also called CORPORATISM.

I don't know how many more times do I have to repeat myself: BITCOIN IS VOLUNTARY, no one is forced, there is no violence, there is no authority and there is no compulsion.

NO ONE, not one entity in the world of Bitcoin can do something the rest of the participants wont like and get away without feeling the consequences. The behavior you describe would immediately be known to every participant and everyone could act in their self interest accordingly which would mean huge consequences for any business with such an intent.

Goddamn ignorance wants to make my head explode.

[1715383530]

1715383530

[kokjo]

NO ONE, not one entity in the world of Bitcoin can do something the rest of the participants wont like and get away without feeling the consequences. The behavior you describe would immediately be known to every participant and everyone could act in their self interest accordingly which would mean huge consequences for any business with such an intent.

BIG TIME LULZ!

[JWU42]

One of the things I always try to be sure I understand before I invest is -- Who is the customer?  In this case it isn't very clear...

It is easy to get tied up in the exciting technological aspects of ASIC and their impressive efficiency but the fact remains that for an enterprise to be an ongoing concern they are either subsidized or have customers that pay for products or services...

who are the customers ?  maybe the millions of people that may embrace using bitcoin daily in the future ?

@Gusti - And what are they paying the company?  How does that help "pay the light bill"?

I get what you are saying but don't clearly see the longer-term business plan -- again seeing this will be a publicly traded company.

We corner the market on ASIC and have first mover advantage, mine lots of blocks, then what...

[P4man]

Thinking out loud.
what happens if existing miners decide to "fork" and switch to a different algorithm, like scrypt, but building on the existing blockchain?
Most existing miners have everything to lose from competition like the OP, but switching to a different algorithm would likely render those ASICs useless.

All we need is 51%. Whos with me?

[DeathAndTaxes]

Thinking out loud.
what happens if existing miners decide to "fork" and switch to a different algorithm, like scrypt, but building on the existing blockchain?
Most existing miners have everything to lose from competition like the OP, but switching to a different algorithm would likely render those ASICs useless.

All we need is 51%. Whos with me?

For a fork 51% has no relevence.

You could fork the blockchain right this second with 0.00001% is you want.

Actually a 51% fork is a worst case scenario and likely means the death of Bitcoin.  Coins will exist and be spendable on both sides of the fork.  People will have wallets, and tx on both sides so merchants may accept BTC1 and some accept BTC2.  Some mining on BTC1, some mining on BTC2.

In a fork you want one side to have overwhelming support of the ecosystem (i.e. installed clients, developers, nodes, exchanges, merchants, etc).  If the original fork has 90%+ support then the new fork dies off.  If the new fork has 90%+ support the old fork will die off.  Having a roughly 50/50 split is going to create massive chaos.

[Littleshop]

Thinking out loud.
what happens if existing miners decide to "fork" and switch to a different algorithm, like scrypt, but building on the existing blockchain?
Most existing miners have everything to lose from competition like the OP, but switching to a different algorithm would likely render those ASICs useless.

All we need is 51%. Whos with me?

That brings up another ASIC problem.  Entrenchment.  If we find a weakness in SHA2 or in the bitcoin protocol itself and need to upgrade it, the ASIC miners may not be able to do the upgrade.  Even FPGA miners can switch up protocols pretty flexibly (unless it is specifically designed to keep them out), but ASIC miners can not switch as easily.  A bitcoin ASIC that was MOST flexible would probably be just an SHA2 engine.  At least flexible it would have even more of the protocol built into the ASIC and be harder to change.  So going to another hashing formula would be out of the question for most ASIC designs.

So a needed protocol change ur upgrade would be veto'd by the ASIC miners.  

[Littleshop]

Thinking out loud.
what happens if existing miners decide to "fork" and switch to a different algorithm, like scrypt, but building on the existing blockchain?
Most existing miners have everything to lose from competition like the OP, but switching to a different algorithm would likely render those ASICs useless.

All we need is 51%. Whos with me?

For a fork 51% has no relevence.

You could fork the blockchain right this second with 0.00001% is you want.

Actually a 51% fork is a worst case scenario and likely means the death of Bitcoin.  Coins will exist and be spendable on both sides of the fork.  People will have wallets, and tx on both sides so merchants may accept BTC1 and some accept BTC2.  Some mining on BTC1, some mining on BTC2.

In a fork you want one side to have overwhelming support of the ecosystem (i.e. installed clients, developers, nodes, exchanges, merchants, etc).  If the original fork has 90%+ support then the new fork dies off.  If the new fork has 90%+ support the old fork will die off.  Having a roughly 50/50 split is going to create massive chaos.

True.  It is also much more about the majority of users and businesses, not the majority of miners.  If the next version of bitcoin set a change date of Jan 1, 2013 (well not really a date, but a block #) past which all blocks would be mined with a different protocol, it would matter more which fork the users and businesses recognized.

After such a fork, people are going to be on the side where the exchanges, businesses and developers are, even if the hash rate was 1/3 of the other side. 

[Tomatocage]

The Spaniards have some competition.

[SpontaneousDisorder]

Goddamn ignorance wants to make my head explode.

Your not alone.

[gusti]

One of the things I always try to be sure I understand before I invest is -- Who is the customer?  In this case it isn't very clear...

It is easy to get tied up in the exciting technological aspects of ASIC and their impressive efficiency but the fact remains that for an enterprise to be an ongoing concern they are either subsidized or have customers that pay for products or services...

who are the customers ?  maybe the millions of people that may embrace using bitcoin daily in the future ?

@Gusti - And what are they paying the company?  How does that help "pay the light bill"?

I get what you are saying but don't clearly see the longer-term business plan -- again seeing this will be a publicly traded company.

We corner the market on ASIC and have first mover advantage, mine lots of blocks, then what...

they (we) are paying small fees (by now), and higher fees for every transaction made, once the block rewards go lower.
the business plan is to participate and collect a portion of that fees.

[asdf]

It really pisses me off when people explain something not mentioning the whole picture. What we have in the entire world today is not a free market and it is not capitalism. What we have is GOVERNMENT (FORCE, COMPULSION, VIOLENCE, AUTHORITY) that enables companies to behave in ways the free market would have never allowed them to also called CORPORATISM.

+1

To anyone complaining, if what Vladimir is doing is so lucrative, you'll have no trouble starting your own ASIC farm and taking a share of the market. If it's not, then what have you got to worry about.

You assume that Vladimir will be the only guy who ever mines on a massive scale. This isn't the banking sector, where GOVERNMENT FORCE prevents competition.

Free market cartels are unsustainable, because there is a great incentive for any participant to break from the cartel and undercut their competitors.

Damn state apologists make me sick!

[SgtSpike]

It really pisses me off when people explain something not mentioning the whole picture. What we have in the entire world today is not a free market and it is not capitalism. What we have is GOVERNMENT (FORCE, COMPULSION, VIOLENCE, AUTHORITY) that enables companies to behave in ways the free market would have never allowed them to also called CORPORATISM.

+1

To anyone complaining, if what Vladimir is doing is so lucrative, you'll have no trouble starting your own ASIC farm and taking a share of the market. If it's not, then what have you got to worry about.

You assume that Vladimir will be the only guy who ever mines on a massive scale. This isn't the banking sector, where GOVERNMENT FORCE prevents competition.

Free market cartels are unsustainable, because there is a great incentive for any participant to break from the cartel and undercut their competitors.

Damn state apologists make me sick!

It's not that easy.

If there is only one ASIC mining person/company, they will push out the competition, confidence/price in BTC will drop, and it will not be profitable for a second ASIC company to join in even if they had the funds to develop one.

Also, no bank will lend $1M+ to a startup company investing in technology to do with something as risky/variable as BTC.  So yes, most of us here WOULD have trouble starting our own ASIC farm, for lack of funds.

[gusti]

It really pisses me off when people explain something not mentioning the whole picture. What we have in the entire world today is not a free market and it is not capitalism. What we have is GOVERNMENT (FORCE, COMPULSION, VIOLENCE, AUTHORITY) that enables companies to behave in ways the free market would have never allowed them to also called CORPORATISM.

+1

To anyone complaining, if what Vladimir is doing is so lucrative, you'll have no trouble starting your own ASIC farm and taking a share of the market. If it's not, then what have you got to worry about.

You assume that Vladimir will be the only guy who ever mines on a massive scale. This isn't the banking sector, where GOVERNMENT FORCE prevents competition.

Free market cartels are unsustainable, because there is a great incentive for any participant to break from the cartel and undercut their competitors.

Damn state apologists make me sick!

It's not that easy.

If there is only one ASIC mining person/company, they will push out the competition, confidence/price in BTC will drop, and it will not be profitable for a second ASIC company to join in even if they had the funds to develop one.

Also, no bank will lend $1M+ to a startup company investing in technology to do with something as risky/variable as BTC.  So yes, most of us here WOULD have trouble starting our own ASIC farm, for lack of funds.

this whole "the sky is falling" scenario is completely nonsense, multiple asics companies and end user devices will flourish.
currently, 1M investment is only 2% of bitcoin market cap, I bet it will be 0.01% in the near future.
 

[BurtW]

I think I will get some of my ASIC design buddies together and we will do an ASIC ourselves.  We just want to sell the ASICs to you.  Who wants to do the boards and software?  We will sell them to you for almost nothing but you have to order 10,000 per month (or was it per week - I will get back to you on the volume costs).  We are used to doing multiprocessor SOC ASICs for disk drives so this should be easy enough.  Now where is that open source FPGA design that I can use as the basis of my ASIC design ...

How much does R&D cost (ballpark), and could the people who want this option pool together and pay for R&D and manufacture of ASICs with bitcoins?

Looking into it.

[Technomage]

This thread is slightly disturbing but I'm not too worried about it. First of all there is only a problem if one entity has over 50%. I would be comfortable if the majority of mining was done by major mining companies, but I would not use Bitcoin ever again if there was a sustained 51%+ presence in the network. It doesn't matter one iota if this entity is presumably "friendly" or not, it takes all credibility away from Bitcoin and what it's supposed to be.

So in conclusion, anyone who thinks they can get over 50% and that would actually benefit them, are entirely out of their minds. People would not be happy about it, not at all. Bitcoin would lose all core support instantly. Not only is mainstream bye bye, it's people like me bye bye. That is exactly the reason why I believe that no one is actually going for that and I'm fairly optimistic. I have no problem with someone starting a 2 thash operation but I would have an issue with someone starting a 15 thash operation (at this point in time).

It's no accident that Deepbit hashing power has never been over 50% sustainably, there are always enough people who care about this issue. A sustained 51%+ would be an absolute catastrophy for Bitcoin, mark my words. I honestly can't believe there would be anyone instead of a couple of complete lunatics or potheads using Bitcoin in that scenario.

[hazek]

This thread is slightly disturbing but I'm not too worried about it.

It just gives you a small glimpse into just how tough a market regulated and constrained by it's participants is. Hint: Much much tougher than any government regulations could ever be.

That's why it's also so laughable and at the same time so frustrating for me to see all this fear based on a logic that simply doesn't apply to this experiment.

[P4man]

It's no accident that Deepbit hashing power has never been over 50% sustainably, there are always enough people who care about this issue.

Switching pools because you "care" is easy (not too mention profitable when moving from deepbit). Keeping x GH GPUs running just because you care, even though its costing you money, that is quite something else.

DnT has a good point about the 51% too. If 20% is doable, 100% is almost a given, more so because a sudden 20% increase in hashrate and therefore difficulty, will drive out a comparable number of existing miners, increasing your share automatically.

[DeathAndTaxes]

This thread is slightly disturbing but I'm not too worried about it. First of all there is only a problem if one entity has over 50%. I would be comfortable if the majority of mining was done by major mining companies, but I would not use Bitcoin ever again if there was a sustained 51%+ presence in the network. It doesn't matter one iota if this entity is presumably "friendly" or not, it takes all credibility away from Bitcoin and what it's supposed to be.

How would you know?  Pretty trivial for a major entity to relay a portion of its hashing power to appear <50%.

[Technomage]

DnT has a good point about the 51% too. If 20% is doable, 100% is almost a given, more so because a sudden 20% increase in hashrate and therefore difficulty, will drive out a comparable number of existing miners, increasing your share automatically.

His point is absolute lunacy. It's true that from a linear point of view it is completely doable for a mining operation to attempt near 100% share but anything over 50% would be idiotic. Even if he can somehow hide it, there is a risk of people finding out somehow. That day Bitcoin price would crash to pennies (I'm not kidding about this, I would short with my entire bankroll and so would anyone with any sense). That risk would have to be fairly minimal for him to risk such a massive investment on the possibility of total failure.

[P4man]

anything over 50% would be idiotic.

Good job missing his point entirely 
Read it again.