Topic: One problem with BTC (Read 1043 times)

As long as they do not control over 50% of the mining done overall there is no real issue for the individual bitcoin owner. That is the only way they can change the course of how blockchains are written. And if a group does that and gains control of the blockchain, then all bitcoins become worthless and the massive amount of money that was invested to get that much mining hardware goes to waste. It's kind-of a pointless exercise, one would rather make tons of money mining bitcoins at that point then break the system.

I don't see how this leads to centralization.

There is no such thing as a free lunch. As long as there is a cheap and easy way to mine bitcoins the difficulty will ALWAYS rise high enough so that it is just barely profitable. You can't stop people from buying a free money printing machine. The only reason why it's been profitable to mine up to now is they can't make ASICs fast enough to keep up with the rising price of bitcoins.

Expect within in a year to reach a state where you can buy a mine machine for a few hundred dollars. Larger machines will cost a few thousand. Power consumption will be under 1000w which is low enough to run at home. The machines will expect to ROI in 6 months to a year after taking into account electricity cost. People with expensive electricity might not ROI at all. People will mine for fun, in general, not because they believe they are going to get rich. Some companies will mine, but likely only the ones that also sell ASICs as they will have access to hardware at wholesale prices. Other small companies might start mining where electricity is cheap. No one will be getting rich and there will be no centralization of mining because it is not cheaper to consolidate mining in one location or one company. As difficulty and price waiver up and down mining will come in and out of fashion with people who time it right possibly making a profit. Many people will lose money, though, and continue to mine anyway, either because they can't do math, or prefer it as a method for earning btc.

fyi, the difficulty at that point will be around 75 - 100 BILLION.

Suppose we'd get to that point, what do you think would happen?

(Do you understand how difficulty works?)

Nothing you say argues against my point.  I'm not talking of six months ago or now, or the next six months.  Once "banks" were little more than a money lender and a ledger, and ledgers are a commodity.  The power, the limiting factor you highlight, is one of the key reasons for this inevitable shift.  Corporations can have an advantage here, they can buy "bulk", or place their ASIC farm where power is cheap or free.  Having a half dozen or a dozen producers of ASIC hardware doesn't make much difference if you need $'00,000 of them just to mine a Bitcoin a month. The ROI on ASIC is already priced out most, if you don't get the next generation within the first couple of weeks the difficulty soon eats the returns. See contracts for hosted hashing, how far removed is that from a bond or other financial instrument?  The centralisation is already happening.

We also have security in numbers.  All it takes is to add a highly efficient ASIC in every POS machine, and USB hardware wallet that everyday folk use, and it would be near impossible to match that hashing power.

This is ridiculous and not true at all.

Six months ago there were only 3 ASIC manufacturers. Now there is almost a dozen.

Six months ago you had to wait months to get your hand on an ASIC. Now there are plenty of options that ship in much shorter time frame.

Six months ago ASICMiner dominated mining with nearly 30% of the global hashrate. Now there are serveral major players.

You are very mistaken when you say that you need a lot of ASICs to be efficient. In fact, the opposite is true!

The average person can presently run a couple of terahashes/second out of his home and only have to worry about his electricity bill.

If you want a larger setup you need to rent space for them, figure out a way to remotely manage them, pay for a separate internet bill, figure out how to cool them, plus pay commercial electricity rates.

Electricity is quickly becoming the limiting factor once again.

A large corporation does not have an advantage here. Mining ASICs are a commodity of which there is no bulk discount.

OP sounds like sour grapes that he didn't think to order an ASIC months ago when they were very profitable.

Wont it eventually get to the point, where is costs way more in hardware and electricity than it costs to mine 1 BTC, for them to run as a viable business? 

I dont think that's what the OP meant.  Big miners are slowly taking over the market, like banks.  The all important comma.  Large scale miners are becoming the banks of the Bitcoin world. 

It is inevitable, as cost increases to obtain and host ASIC servers on a scale that's efficient and ahead of difficulty, it becomes a business rather than a home/amateur hobby, and those businesses will dominate the landscape.  Once there were hundreds of banks, each city, region or province had its own or several.  They expanded, taking over some others, becoming more efficient due to scale, growing further.  The small ones either get swallowed up or remain with a tiny market share.  The pools might mitigate this, but they are analogous to building societies/credit unions and i'd expect a similar outcome (i.e. remain, but sidelined to a small market niche).

could it be that the big players can secure mining rigs with the manufactures? but even if that were the case, how bad is it going to be really?

Source please  Come on be realistic, the big companies didn't even start mining yet, did they?

Big fish miners are slowly taking over the market like banks are controlling the regular currency markets. If BTC has to be anything but a bubble this has to change.