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

[SgtSpike]

So D&T, are you assuming in your explanation, that A will eventually change the rules in his favor?

Once again what "rules"?  Of course A will do what is in their favor.  By definition corporations are REQUIRED to maximize profits for shareholders.  In the US an officer (CEO, etc) of a corporation can be personally sued for failing to maximize shareholder value.  If a company can get x% incremental value without any increase  in production cost it is naive to think they won't take that "option".  Even if Vlad was a Bitcoin knight in shining armor a public company will be held accountable to the market, brokers, and fund managers.  They will want to see the "option" taken and if that means replacing Bitcoin friendly CEO with one who puts shareholder's interests first


Ask yourself this question?  How/why are banks "evil"?  Why do they load consumers down with heavy fees, borrow money for next to nothing, and charge high interest?  Shareholders demand it and they are in a position to get away with it.

Then again, isn't it mismanagement to go the 51% route and push away everyone who currently supports Bitcoin?

I, for one, would leave Bitcoins altogether if someone was trying to forceably control the Bitcoin network with > 51% of the hashing power.  And I know I'm not the only one...

Thanks Vlad for your recent detailed post.  I am glad to hear you are not interested in gaining a majority of the hashing rate, as you (rightfully so, in my opinion) indicated that it would kill interest in Bitcoins altogether.  If you sustain 20-30% of the overall hashing power of the network, it still leaves room for competitors to come in, and Bitcoin mining will remain distributed, as it should be, while maintaining the confidence of Bitcoin users that no single person or entity will have majority control over the network.

I wish you the best of luck with this project!

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[cypherdoc]

First everyone complains that Deepbit is going to take over the network.  Then diversification with the likes of P2Pool seem to have eliminated that possibility.

Then Mystery Miner is supposed to be able to take over the network by ppl wildly extrapolating his growth.  Then along comes Vladimir who will probably eliminate that possibility.

Then, the fact that Vladimir has done that, HE now becomes the next threat.  

And on and on and on....

[Vladimir]

And on and on and on....

LOL. The circle of life. Go ask Simba if you do not believe me.

[9c5207677]

It is better for Bitcoin to learn how to deal with a +50% Vladimir miner now than walking without any experience into a hostile government mining operation later. Maybe new technical solutions will be invented which prevent new nodes to contribute that much mining power, maybe Vladimir won't be able to achieve + 50%. Maybe Vladi will save the network some day with all his ASICs.

If Bitcoin wants to succeed it needs to come out stronger of this situation. So I'm looking positively forward to ASIC mining.

[cypherdoc]

don't you think that if Vladimir is preparing his ASIC assault that Artforz, BitcoinExpress, etc. are fast on his coat tails if not ahead of him in planning their own operations?  Vladimir does not operate in a vacuum.

the fact that Vladimir is moving forward on this makes me want to buy more Bitcoin.  His operation will work to ensure the safety of them.

[wogaut]

Then again, isn't it mismanagement to go the 51% route and push away everyone who currently supports Bitcoin?

I, for one, would leave Bitcoins altogether if someone was trying to forceably control the Bitcoin network with > 51% of the hashing power.  And I know I'm not the only one...

+1

[Technomage]

I have no problem with this either. I wish Vladimir good luck. It's good for Bitcoin that mining businesses become more prominent, their incentives go hand in hand with keeping Bitcoin secure and reliable. In fact this is likely to significantly increase Bitcoin security.

My only problem was with some of you that claim it's profitable to attempt 51% control and thus 100% control. People who still think that should go take a brainscan and check if they actually have any braincells.

Vladimir explained it very well in his own post, there are a multitude of reasons why it makes absolutely no sense to attempt taking control of the network. Profits from doing that can't be calculated in a linear fashion (more hash, more blocks, more money) because it would significantly erode trust in Bitcoin and thus likely crash Bitcoin's price. Vlad also had a good point about the fact that increasing his hash power becomes questionable at some point because he's increasing the difficulty of mining (and the bigger his percentage of the network is, the more significant the effect from that is to his entire operation).

The only thing we really have to worry about are hostile ASIC-farms which would in theory be built by either a government, the banks or other companies that provide competing payment systems. Friendly mining businesses are actually a very good way to fight this and make it so much more difficult and expensive to try to attack Bitcoin. So in conclusion this adds confidence in Bitcoin overall.

[payb.tc]

or the developers decide to change the algorithm so Asics have no chance at this (too early) stage of Bitcoin.

this is technically impossible, if you think about what an asic really is.

it's a specific chip designed to do the work required of a specific application.

if that application can only run on cpus then this specific chip will just be designed to mimic millions of cpus.

p.s. good job vlad... i'm excited to see you bring these online.

[Vladimir]

This is somewhat offtopic, but this proves my point indirectly. I hope mods will forgive me this little sin.


Selling only for BTC.

Have large amount of used hardware in excellent condition for sale, most boxed "almost as new" with all the original kit.

5870's XFX-587X-ZN (lots of those)
various 5970's (many)
various 6990's (many)
various 1200W PSU's (best in class)
proper mining motherboard/cpu/memory bundles (work with many GPU;s)
low cost custom compact open air mining cases (up to 8 GPU's) of my own design and made by yours truly
pcie extenders (hundreds), fans, etc..

if you can pick it up in UK have heavy 4U mining cases ready to go with GPU's and everything in it already, just add your USB stick.

skype: vladimir.marchenko.co.uk (text/audio/video)

Do not expect me to be very responsive on the forum and PM's.
Use skype, tell me what you want and how much you are prepared to pay.
Bitcoin payment upfront, this is not negotiable, will ship worldwide, will ship within 2 biz days.
Large orders will be given preference.

Someone come and take all the stuff I have left off my hands retail or wholesale. I have some offers already, but I want a better price.

[Raoul Duke]

Now time for some serious trolling...

From Vladimir's signature

(Do not PM me on this forum, I do not read or respond on PM's here for security reasons. Nothing in my posts should be treated as legal or investment advise. if I say something stupid, it probably is a joke or sarcasm).

Which one is this thread? Joke or Sarcasm?

[SgtSpike]

Now time for some serious trolling...

From Vladimir's signature

(Do not PM me on this forum, I do not read or respond on PM's here for security reasons. Nothing in my posts should be treated as legal or investment advise. if I say something stupid, it probably is a joke or sarcasm).

Which one is this thread? Joke or Sarcasm?

Serious troll is serious.

Teh internet is srs bsns.

[Raoul Duke]

Teh internet is srs bsns.

Oh sh**... 

[camem]

For anyone equating ASICs with 51% mining, I wouldn't worry too much. ASICs become financially viable if you plan to sell them in consumer products in high volume (millions), or for dedicated tasks at high cost where a higher power and larger FPGA just won't cut it (say, a pacemaker).

If vlad's plan is the first, this will lead to a high volume product that's good at mining. Much less chance of anyone getting 51% in a market like this with cheap commoditised hardware available, whether he sells them, allows his subcontractor to sell them after a lockout, or his subcontractor owns the design (in which case he needs a pretty good reason for the investor to invest in him rather than the sub), and also the sub will sell the design to as many people as possible = more miners

If it's the second, you can still achieve his hash rate with gpus or fpgas. You'll just need to buy more hardware and spend more on electricity and cooling than he will. But nowhere near the amount he spent on designing the chip ($2-$5m depending on complexity and whether you cock it up or not). He's got a lot of money to make back. So perhaps he'll rent out his new ASIC hashing power from a central location. But then you're back to more distinct miners in the market = less chance of anyone hitting 51%.

Oh, and for the record, GPUs are ASICs themselves... (the GPU guys had to design the first GPU, right?). Just not ones that are particularly dedicated towards SHA hashing. Oh, and the GPU designers will have tried the design out first on an FPGA. Crystal ?

[SgtSpike]

For anyone equating ASICs with 51% mining, I wouldn't worry too much. ASICs become financially viable if you plan to sell them in consumer products in high volume (millions), or for dedicated tasks at high cost where a higher power and larger FPGA just won't cut it (say, a pacemaker).

If vlad's plan is the first, this will lead to a high volume product that's good at mining. Much less chance of anyone getting 51% in a market like this with cheap commoditised hardware available, whether he sells them, allows his subcontractor to sell them after a lockout, or his subcontractor owns the design (in which case he needs a pretty good reason for the investor to invest in him rather than the sub), and also the sub will sell the design to as many people as possible = more miners

If it's the second, you can still achieve his hash rate with gpus or fpgas. You'll just need to buy more hardware and spend more on electricity and cooling than he will. But nowhere near the amount he spent on designing the chip ($2-$5m depending on complexity and whether you cock it up or not). He's got a lot of money to make back. So perhaps he'll rent out his new ASIC hashing power from a central location. But then you're back to more distinct miners in the market = less chance of anyone hitting 51%.

Oh, and for the record, GPUs are ASICs themselves... (the GPU guys had to design the first GPU, right?). Just not ones that are particularly dedicated towards SHA hashing. Oh, and the GPU designers will have tried the design out first on an FPGA. Crystal ?

He already said he's not selling them.

If he achieves his goal of 20-30% of the network's hashing power, and does it quickly, that'd be around $9,000/day of BTC.  $270,000/month.  $3.2M/year.

Obviously, there's the block reward decrease to account for, but even if his payback doesn't come for 2 years, it's still an amazingly profitable venture.

[disclaimer201]

or the developers decide to change the algorithm so Asics have no chance at this (too early) stage of Bitcoin.

this is technically impossible, if you think about what an asic really is.

it's a specific chip designed to do the work required of a specific application.

if that application can only run on cpus then this specific chip will just be designed to mimic millions of cpus.

p.s. good job vlad... i'm excited to see you bring these online.

As far as I understood it there is a risk for Asic owners. Asics are highly specialized chips and therefore not very adaptable. Much less adaptable to different ways of computing hashes than GPUs or FPGAs. Besides, it was already discussed in the forum that if quantum computing becomes ever a reality the protocol might need to be changed in order to protect bitcoin's security. I don't see why that couldn't happen if a single entity gains more than 50% for an extended amount of time (who or whatever). Though I'm against changing the core protocols of Bitcoin for every problem that occurs Bitcoin as we see it today is not carved in stone and there are many actors with an interest for it to survive. I don't think people will just say oh fuck it, nevermind, didn't work. Let's move on.

[phillipsjk]

As far as I understood it there is a risk for Asic owners. Asics are highly specialized chips and therefore not very adaptable. Much less adaptable to different ways of computing hashes than GPUs or FPGAs. Besides, it was already discussed in the forum that if quantum computing becomes ever a reality the protocol might need to be changed in order to protect bitcoin's security.

If tho protocol is changed to screw people who invested in specialized hardware, Bitcoin is dead. Quantum computing is not likely to be a threat either. Each hash corresponds to an infinite number of possible inputs. You would have to structure your question for the quantum computer very carefully to get a valid response.

I don't think this move is bad for Bitcoin. If taking over a large portion of the network with ASICs is profitable (even with the up-front costs), it means mining has stagnated and it is time to move on. If Vladimir is doing this, I would not be surprised if 3 and 4 letter agencies/banks are considering the same thing. They won't be announcing their plans for Bitcoin 6-12 months ahead of time. With lead times the way they are, this may turn out to be foresight on Vladimir's part.

Are we to believe this this can't be programed to screw with Bitcoin?
JP Morgan supercomputer offers risk analysis in near real-time

The (end of day) risk calculation time has now been reduced to about 238 seconds, with an FPGA time of 12 seconds.

What is that computer doing for the other 23 hours, 56 minutes of the day?

[Transisto]

As a reply to some monopoly whatever concerns.

Vlad has no chance at having a future monopoly on efficient sha256 hardware.

Some 3 letters agencies... more likely.

[memvola]

Asics are highly specialized chips and therefore not very adaptable

That's the point. I'm imagining a cheap PCIe x1 mining card since I first heard about Bitcoin in 2010. The chip would be practically free if sold millions. Put one in a $20 USB coffee cup warmer and it will pay for itself in a year. It's fancy too.

(And, and, I want an LCD displaying the current block count on the cup warmer. The new universal time clock.)

Much less adaptable to different ways of computing hashes than GPUs or FPGAs

Look, even if the dev team decided that it would make sense to change the hashing algorithm now, it would take years for them to switch, and it would still be a soft landing. This would be a different matter though, if you really believe that SHA256 can be cracked. It's a very tough assertion though.

Besides, it was already discussed in the forum that if quantum computing becomes ever a reality the protocol might need to be changed in order to protect bitcoin's security.

I suggest you re-read those discussions. Even if quantum computing becomes a reality (which it won't at least until your ASICs get old), the last thing that would be replaced are the hashing functions, which are pretty much immune.

[camem]

He already said he's not selling them.

If he achieves his goal of 20-30% of the network's hashing power, and does it quickly, that'd be around $9,000/day of BTC.  $270,000/month.  $3.2M/year.

Obviously, there's the block reward decrease to account for, but even if his payback doesn't come for 2 years, it's still an amazingly profitable venture.

Ok, but as a reason for this leading to more miners, Vlad is entrepreneurial, has created a unique position at this point, and there's a long term and elastic source of reward money. why would he stop there ?

Let's say you invested in inventing a new spade that you could use to dig up $100 of precious metals. There's plenty of precious metals around, but no-one else's spade is any good. Do you make more money by :
A) making a spade and digging
B) selling spades for $99 each ?

[SgtSpike]

He already said he's not selling them.

If he achieves his goal of 20-30% of the network's hashing power, and does it quickly, that'd be around $9,000/day of BTC.  $270,000/month.  $3.2M/year.

Obviously, there's the block reward decrease to account for, but even if his payback doesn't come for 2 years, it's still an amazingly profitable venture.

Ok, but as a reason for this leading to more miners, Vlad is entrepreneurial, has created a unique position at this point, and there's a long term and elastic source of reward money. why would he stop there ?

Let's say you invested in inventing a new spade that you could use to dig up $100 of precious metals. There's plenty of precious metals around, but no-one else's spade is any good. Do you make more money by :
A) making a spade and digging
B) selling spades for $99 each ?

Because he knows that if he acquires too much of the hashing power, people will lose trust in Bitcoins and the price will drop, reducing profitability.  It's not as simple as just extrapolating the profits all the way out to 100%.