Will ASIC mining destroy Bitcoin?

[Hexadecibel]

Seriously, what if the developers decided to change the block hashing algorithm from double SHA-256 to something else (WHIRLPOOL or SHA 3 maybe)? doesn't it renders ASIC useless?

I think so, yes.

It's been brought up that if something needs to change security wise and the Devs need majority of the miners to switch; ASIC users are basically screwed out of their investment.

I don't think its likely that anything is going to happen to SHA-256 in the foreseeable future...


But here I am talking about things i hardly have any knowledge of. I know ASIC is purpose built hardware, but is the architecture the end all be all of mining? Will the next thing after ASIC simply be upgraded ASIC via die shrink and design?

[Vorksholk]

ASIC mining will make it much, much tougher for an entity to borrow a bunch of computing power to attack bitcoin.

For instance, lets suppose BFL sells just $5 million dollars worth of their "coffee warmers". (a highly conservative number that'd probably leave them bankrupt after they paid for the ASIC development costs) That's about 33 thousand coffee warmers, or 234TH/sec. Suppose the attacker decided to requisition a whole bunch of computers to attack Bitcoin, for instance by asking Amazon or Google "nicely" One 4-way Opteron CPU can do about 115MH/s, so for your 51% attack you'll need about 1 million CPU's. If you're renting from Amazon, that's costing you something like a million dollars an hour, assuming you could even get them to let you rent that much computing power. The capital cost of all that computing power is also in the range of hundreds of millions of dollars, heck, easily a billion dollars with server farm overhead.

Finding a whole bunch of GPU's is actually rather tough, as most GPU farms are for scientific computing and use floating-point optimized GPU's that aren't very good at computing hashes.

A final possibility is borrowing an FPGA farm. We could make the rough assumption that the value of the farm's FPGAs will have the same $/Hash ratio as BFL's currently shipping product. So that's 117TH/sec / 0.8GHash/Single * $600/Single = $87.7 Million dollars worth of FPGAs. Intel might have that kind of FPGA farm available - they're used for chip verification - but again, renting it won't be cheap. Also, it looks like BFL is getting it's FPGAs at pretty cheap prices - a $600 single has $2000 worth of FPGAs in it - so with wholesale discounts we still might need to triple or quadruple that $87 million.

With ASIC mining, the cheapest way to computationally attack Bitcoin is probably by doing a run of your own ASICs, and it's not something you can do quickly. All that effort and money just so you can find out the myriad ways that the devs can stop 51% attacks using techniques possible now that Bitcoin is widely established.


For instance, lets suppose the NSA decides to attack Bitcoin. They could probably round up the hundreds of millions of dollars worth of computing power to make it happen, although it'd be a big hit to their black budget. Chances are within a few hours to days the devs will respond with something like a "coin-age" rule and ask everyone to upgrade. Now blocks get rejected, and nodes blacklisted, if they try to pass blocks into the network that don't meet coin age requirements. Transactions start flowing again, although the price on Mt. Gox has dropped severely, lets say 50%. At the same time the "known-legit" mining pools are also taking steps to protect their investment, by temporarily centralizing a bit, and blocking connections to nodes that aren't on a whitelist; the "most-difficult-block-wins" rule has been temporarily suspended. Note that at this point it's still not possible for anyone to steal coins, and not much more possible to do double spends.

Now, one thing the NSA could do is buy a bunch of coins so their blocks get accepted again. The problem is, now they're basically giving people a way to get out of Bitcoin, and boosting the price on the exchanges, restoring confidence. Exactly what they don't want! If they do nothing, they're still burning at least hundreds of thousands of dollars an hour, while the network figures out ways to mitigate the damage.

Honestly, ordering some assassinations on the guys running major exchanges sounds a lot cheaper...

Actually they would need more than 117GH/s, because once they add their 117, the total hash rate goes above 300, they still don't have 51%.

[Dalkore]

Thank you Gavin.  I have been waiting for a senior developer to weigh in and add to our collective perspective.


Kudos,
Dalkore

[Peter Todd]

ASIC mining will make it much, much tougher for an entity to borrow a bunch of computing power to attack bitcoin.

For instance, lets suppose BFL sells just $5 million dollars worth of their "coffee warmers". (a highly conservative number that'd probably leave them bankrupt after they paid for the ASIC development costs) That's about 33 thousand coffee warmers, or 234TH/sec. Suppose the attacker decided to requisition a whole bunch of computers to attack Bitcoin, for instance by asking Amazon or Google "nicely" One 4-way Opteron CPU can do about 115MH/s, so for your 51% attack you'll need about 1 million CPU's. If you're renting from Amazon, that's costing you something like a million dollars an hour, assuming you could even get them to let you rent that much computing power. The capital cost of all that computing power is also in the range of hundreds of millions of dollars, heck, easily a billion dollars with server farm overhead.

Actually they would need more than 117GH/s, because once they add their 117, the total hash rate goes above 300, they still don't have 51%.

Doh! Yeah, in general that's not a safe assumption, because in theory miners drop out as profitability drops due to the new hash power, but I'm assuming a sudden attack. In that scenario you actually have to provide an equal amount of hash power to the existing network. So all my already conservative, BFL labs goes bankrupt because they don't sell enough hardware, estimates can be doubled.

As it is, the idea that miners will drop out as profitability drops is probably not all that true either now that mining profitability is mainly a function of capital costs rather than marginal electricity costs.

[lame.duck]

Then don't buy it.

Sure, but this doesn't solve the problem that a bad guy will get the mining ASIC at a much lower $ - GHash/s ratio.

But this solves the problem that bad guys could get large number of the mining CPU's GPUP's and FPGA's at whatever price.

Of course, to bad that there is no other use for CPUs and GPUs besides mining that keeps the prices of that hardware at a decent level. 

So can everyone else at that point.

quantity discounts are avaiable buying quantities, i don't see a scenario where everyone else will buy quantities

[bitfury]

The long-term outlook for mining is "mining will happen with very specialized hardware, in places where either electricity is free or generating lots of heat is a benefit and not a cost"  (and probably both; I still think Iceland will be a big mining hot-spot eventually).

I'm not worried about Butterfly Labs deciding to take over the blockchain with their superior hashpower. They'd be idiots to do something like try to mount a 51% attack-- they don't want to kill Bitcoin, they want it to get more successful so they sell more hardware.

And if they are successful they will very quickly have competitors.

Full disclosure:  I spent some of my bitcoins to pre-order their USB coffee-warmer doo-hickey.  It gets cold here in the winter.

Glad to hear that :-) We'll jump into ASICs as well :-)

As the most stopping factor was fear of algorithm changing...

We'll focus on tiny devices for mining and usable with p2p-pool (as with fpga it is quite difficult to upload tasks fast enough to them).

[mav]

I consider ASIC to be a great bitcoin development. Currently, if someone wants to mine, they must be extremely geeky. Even being moderately geeky isn't really good enough in the existing mining climate, since 'the edge' is so important to having a viable setup. Surprisingly few people can set up a computer from parts at all, let alone one that's good for mining.

If BFL (and their inevitable competitors) can nail their UX to the point where less-geeky and eventually totally normal people would consider buying and using an asic (and thus bitcoin), this could trigger the start of mainstream acceptance of bitcoin. Bitcoin is fairly well-proven on a technical level. The biggest problem facing bitcoin is a social one, and removing the high barrier to mining is (imo) a very big step toward getting wider interest in the system. If you could just plug something in and make money, you'd do it right?! The way it is now, people look at it and decide it's too complex, not for them. But if asic can simplify it... it'd be very cool. It's a big 'if', but I think asic suppliers will understand that if their UX is really great, they will sell a lot more (and a lot more to the less geeky types). Imagine if apple made a bitcoin asic... now let's see the existing asic mob actually do that.

[Raize]

I also agree that ASIC will ultimately be good for Bitcoin too, I have serious reservations on both BFL's specs and timeline, but I do think it's going to happen, regardless of who is first.

[cbeast]

If a really big player desired to dominate Bitcoin, ASIC may be the way to go. FPGA would not be competetive enough because they are already in the wild. Placing large buy orders would be too obvious and drive the price too high. Instead, they would be developing the latest technology for mining. I wonder how they would do that secretly, so as to alert others to compete?

OTOH, if someone wanted BTC bad enough, they would pay a little extra for electricity and use whatever technology they could get their hands on. Bottom line, I don't think any major players are even looking at Bitcoin. Makes no sense.

[zvs]

Of course, to bad that there is no other use for CPUs and GPUs besides mining that keeps the prices of that hardware at a decent level. 

I am hoping to get a cheap 7970 from the aftermath...

hopefully one that hasnt been totally brutalized

[Francesco]

I consider ASIC to be a great bitcoin development. Currently, if someone wants to mine, they must be extremely geeky. Even being moderately geeky isn't really good enough in the existing mining climate, since 'the edge' is so important to having a viable setup. Surprisingly few people can set up a computer from parts at all, let alone one that's good for mining.

If BFL (and their inevitable competitors) can nail their UX to the point where less-geeky and eventually totally normal people would consider buying and using an asic (and thus bitcoin), this could trigger the start of mainstream acceptance of bitcoin. Bitcoin is fairly well-proven on a technical level. The biggest problem facing bitcoin is a social one, and removing the high barrier to mining is (imo) a very big step toward getting wider interest in the system. If you could just plug something in and make money, you'd do it right?! The way it is now, people look at it and decide it's too complex, not for them. But if asic can simplify it... it'd be very cool. It's a big 'if', but I think asic suppliers will understand that if their UX is really great, they will sell a lot more (and a lot more to the less geeky types). Imagine if apple made a bitcoin asic... now let's see the existing asic mob actually do that.

Just my little thought, since I cannot see it anywhere, and everyone seems so positive (or only concerned about 51% attacks).
Just think it this way: why do miners make money? Because they use differently, better hardware -GPU- that is priced (for them) low because the vast majority of its buyers value it much less, becayse they only need it to play fancy graphics.

If everyone can use ASIC and price is completely determined by its use in mining, is there one reason for why competition and prices shouldn't rise until the profitability is basically zero? Free market works like that.

[fireduck]

Seriously, what if the developers decided to change the block hashing algorithm from double SHA-256 to something else (WHIRLPOOL or SHA 3 maybe)? doesn't it renders ASIC useless?

My understanding is that an FPGA could probably be reprogrammed and flashed to whatever.  However, an ASIC cannot and does one thing forever.

[Tuxavant]

The problem is, there is no other use for a mining ASIC besides mining,

There's a coming vanity key gen market brewing...

[Peter Todd]

Just my little thought, since I cannot see it anywhere, and everyone seems so positive (or only concerned about 51% attacks).
Just think it this way: why do miners make money? Because they use differently, better hardware -GPU- that is priced (for them) low because the vast majority of its buyers value it much less, becayse they only need it to play fancy graphics.

If everyone can use ASIC and price is completely determined by its use in mining, is there one reason for why competition and prices shouldn't rise until the profitability is basically zero? Free market works like that.

Part of profitability is risk. If the market is assuming that Bitcoin mining is highly risky, the apparently profitability can be very high even if the total profitability is zero.

Of course, no-one knows how risky mining actually is.

[fireduck]

The problem is, there is no other use for a mining ASIC besides mining,

There's a coming vanity key gen market brewing...

I doubt ASICs can be used for that.  EC Key generation is an entirely different beast.

[Luke-Jr]

The problem is, there is no other use for a mining ASIC besides mining,

There's a coming vanity key gen market brewing...

I doubt ASICs can be used for that.  EC Key generation is an entirely different beast.

Technically speaking, if one wants to be un-nice to the Bitcoin network, you could setup 3-addresses for a regular Bitcoin miner...

[bulanula]

The problem is, there is no other use for a mining ASIC besides mining,

There's a coming vanity key gen market brewing...

I doubt ASICs can be used for that.  EC Key generation is an entirely different beast.

Technically speaking, if one wants to be un-nice to the Bitcoin network, you could setup 3-addresses for a regular Bitcoin miner...

Don't forget mining NMC and all the other SHA256 forks like DVC, IXC, IOC as well as BTC at the same time !

ASIC will probably be the best thing for BTC since sliced bread for the world !

[bitcool]

Seriously, what if the developers decided to change the block hashing algorithm from double SHA-256 to something else (WHIRLPOOL or SHA 3 maybe)? doesn't it renders ASIC useless?

Good point. Similarly, I remember there was a alternate blockchain that was designed for cpu-mining only, but forgot its same.

[Luke-Jr]

Seriously, what if the developers decided to change the block hashing algorithm from double SHA-256 to something else (WHIRLPOOL or SHA 3 maybe)? doesn't it renders ASIC useless?

Then the Bitcoin community would need to approve of this change with a large majority choosing to switch. However, the only reason to do so would be if 1) the ASIC miner were compromising the security of Bitcoin (not going to happen with BFL distributing these diversely), or 2) big-investment GPU miners make up enough FUD to scare people (so their income isn't compromised). So far, most of the panic seems to be #2, though I don't see what the GPU miners really hope to accomplish considering the subsidy halving will make them unprofitable either way.

[GernMiester]

My GPU's would still be (barely) profitable with 12.5 BTC as a reward if difficulty stays lower than 3,000,000, yes 3 million.
If yours aren't you are doing something wrong. ASIC will ruin GPU's. 25BTC a block shouldn't unless you are doing it wrong Mr. FUD Jr.
I don't get free electric either.