Topic: Why should we invest in ASIC? (Read 2852 times)

Alright, yes, that makes sense.  If 25% of hashing power is controlled by a single entity in China, and the Red Party shuts it down, and happens to already have 75% of the hashing power necessary to stage a 51% attack, then it could be a concern, and maybe the Bitcoin community would help bail out the ultra-miner.  I will agree with you on that potential.

Er, yea.. kinda. Maybe.

As with anything, it's possible to destroy it. No system is 100% secure. I really doubt the scenario you have will occur though so... why are you even arguing that?

ASIC just represents the evolution of the mining hardware. CPU -> GPU -> FPGA -> ASIC. Each one an order of magnitude faster than the other. Because operation with ASICs is possible and desirable, then that is why they have been created. Now it is simply a matter of 'keeping up' with everyone else that wants one too. Some call it greed, some call it business. A lot of us call it fun. A way of 'competing' and everyone wants to go faster than the other guy.

The 51% attack, while theoretically possible, is not really likely given many reasons why it would fail and few reasons why there would be any point in carrying it out.

Okay, let's say there is a mining operation in China (I do not know the demographics of mining activity so bear with me its a hypothetical example).

This operation generates 25% of global BTC HR. (Fact:  BFL and ASICMINER are based in China)

The Red Party (or whoever is in charge at the time) says you have to shut this down per "blah-blah-blah".
The owner of the operation has few alternatives here. Either he moves all of his gear or complies/goes to jail.

Meanwhile, the Party has a setup ready to go to take over the network.
Assume, this '25%' has been the barrier to the entry for whatever factors at play.
The reason they initiated the shutdown of that mining operation in the first place is their need to lower it.
Of course they can take it over, etc but for the sake of illustration, we are going to say they can't. The owner is smart enough to destroy it if that happens.

Now with the bail-out, the owner of the operation can issue a plea to the community and say "I need resources to move all my gear".

There are many assumptions I am making and details I am omitting here though.

Does this now make sense?

I still fail to understand your idea of a bail out.  What exactly happens in a bailout?  Is the mining "corporation" given money?  Are they given miners to rebuilt their hash rate?  I don't understand what a bailout is or how it would work in the Bitcoin context.

Yes, I agree that 25% lower hashrate would be (generally speaking) a 25% lower barrier to entry.  I guess I just don't see how an attacker could easily get that 25% lower hashrate, and whether those resources spent taking down those mining pools (or mining corporations, as you call them) might be better spent on simply adding more hashing power to their own attack.

Why are you not considering a malicious entity developing their own ASIC?  That's by far the cheaper route to do a 51% attack (currently).

A 51% attack via GPUs would require around 50,000 of them (20TH/s at 400MH/s per GPU).  Assuming you could find 50,000 video cards for sale that do 400MH/s for $200, it would cost $10M.  And that's not including the costs for the basic systems to host them (say, 5 per rig, so 10,000 rigs would need to be built), the cost to rent out a datacenter to house them, the costs to set them up and keep them running, electrical costs, etc.  I'd say you're easily looking at $15M, maybe $20M.

Now, a 51% attack via ASICs, with the attacker developing his own, would cost, say $2M in R&D, plus the costs of the chips themselves.  People here have speculated that the Jalepeno might use a single chip, and that the cost of the chip would be around $10 in bulk.  So, we'll go with that.  3.5GH/s for $10, plus, say, another $40 per chip for the board and other electronics, so $50/3.5GH/s.  To get to the requisite 20TH/s, you'd need 5,715 of these chips.  At $50 each, that'd be another $0.3M in costs.

So, you can see now why it is important we introduce ASICs into Bitcoin mining.  It is to protect against other ASICs mining.

I agree with you that changing from GPU's to ASICs does not help prevent an attack using the same devices though.

Ok, I was unaware of the specifics of encrypted traffic.  Someone had mentioned it would be possible to continue using Bitcoin via encryption, so I was merely passing that statement along.  Apparently, that statement was wrong.

I was just using the 90% as an example.  You could change it to 50% and redo the maths if you like.  I agree that spending money on ASICs to attack the network would be much cheaper and easier than spending money on GPU's to do the same, which is why I believe it is imperative that the Bitcoin network start using ASICs.

Also it is just environmentally reasonable to have the hashrate utilize less electrical power. It is a bit silly to be spending hundreds and hundreds of watts for a ghash when you can get it for just a couple of watts with an asic.

That said.. as a GPU miner the pending arrival of ASICs is not something I am financially happy about.

Encrypted traffic does not all "look very much the same". Before you can encrypt, you must handshake--this is typically a dead giveaway. Even if a handshake was unnecessary, the bitcoin data stream is open to the public and can be monitored, so it would be excessively easy to find encrypted traffic matching the same patterns. The only significant way to combat this is to use steganography or excessive padding to the point where the real data may only be a small portion of the padding. And even in the latter case, it may still be obvious because there are not many protocols that do this sort of thing.


Why would you need 5,000 TH/s to attack 500 TH/s? If anything, spending a few million to develop your own ASICs and using significantly less power and space seems a lot better than buying 50,000+ GPUs and the power and space requirements that go along with that. Bitcoin is quickly going to approach the spot where there is no profit to be had in mining which means sales of ASICs will stall, especially after the award halve. Who is going to buy specialized hardware to not see a return? GPU mining is only so popular because most everyone already has one. Once ASIC power is the norm, the network can only support so many ASICs per price of a bitcoin. Either transaction fees have to start rising significantly, or the value of BTC has to keep going up for the network to be continually better protected.

PS - The price from existing ASIC manufacturers should probably drop significantly after they recoup the startup costs.

I am not even considering a maliciuos entity developing their own ASICs (or whatever the next technology is) - this usually involves significant r&d and setup costs. The attacker would be better off simply purchasing the same technology that "good" miners are currently using - the most effective, currently available technology. The community upgrading to the next technology simply means the same technology is available to the attackers. Keep in mind that any technology cannot cost more than the expected profit from mining over some reasonable time frame (for ROI purposes.

All right, I am having a difficulty illustrating this.

I see the bail-out applicable in a scenario where a mining corporation that does lets say 25% of all BTC HR drops of the map because of connectivity issues.
Bail-out comes in where this mining corporation needs to move all of its resources to get the total BTS HR up to where it was.
Without it the attacker has a much lower entry barrier.

I've also edited the last post prior to you posing, sorry...

I'm not sure what you mean by a "bailout" (and I have a great distaste for that word to begin with), and also uncertain why you think this is a thread.  The attacker could certainly work to take down as many pools as he wanted, but it wouldn't stop individuals from mining.  And people whose connection was just severed from all of the mining pools would most certainly take steps to start solo-mining instead of on a pool, partially negating the attackers efforts.

Now, if you're talking about the attacker targeting miners themselves, I don't think any one miner holds a significant percentage of overall hashing power.   Maybe the top miners of the world have 1 TH/s or thereabouts.  Certainly, an attacker could work to take those top miners down, but it wouldn't make a large difference in the overall network hashrate - they'd still have to have quite the node themselves to actually exceed the total network hashrate.

Not the entire network's activity, no... Just the node's...

You knock down a node, drop the total network HR and set up the system to take over.

That's where I see potential emergency bail-out fit in.

Right now, someone could develop their own ASIC and EASILY have and hold 90% of the hashrate with a small number of devices (say, 200 devices @ 1 TH/s each).  Once ASICs are in the wild, and the hashrate is pumped up to 500 TH/s (my estimate of where it will be after BFL finishes its current preorders), it would take 5,000 of those same devices @ 1TH/s each to gain the same 90% advantage over the Bitcoin network.

So yes, it would make it more difficult and expensive for an attacker to stage a disruption using ASICs.

How exactly does upgrade by the community to a faster hashing hardware make it more difficult for someone to start hashing with that same faster hardware?

Please elaborate how it is more difficult to stage a 51% disruption in the ASIC ecosystem compared to a GPU ecosystem compared to a CPU ecosystem.

You mean if Bitcoin activity in general was blocked?

This sort of case has been discussed, but more in the context of forced governmental restrictions.  However, the data could still be encrypted to bypass such restrictions, and unless the restricting government planned to block all encrypted data, they would have no way of knowing what is Bitcoin traffic vs what is other traffic - encrypted traffic all looks very much the same.

Okay, that is covered. However, I was thinking about ISP policies and perhaps all the way down to the fiber itself.

I am satisfied with your answer to the main question though. Thanks!

Yes it does.  It makes it more difficult and expensive for an attacker to stage an attack.

You're forgetting about the capital costs upfront.  If ASICs are used, then the malicious entity must first spend the capital on developing an ASIC (or somehow purchase as much as the rest of the Bitcoin network combined without being noticed), and have a place to put them all (perhaps a small portion of a datacenter).

If GPU's are used, then the malicious entity must build or rent out a data center to put them all.  The current network hashing power of about 20 TH/s would require around 50,000 video cards to even equal it.  Those 50,000 video cards would draw around 200 watts each, requiring 10 megawatts of power.

Now, I'm not saying it's impossible for someone with lots of money to do this, just that the costs would far exceed the ASIC electric cost equivalent of 7200 BTC/day.

So?  The miners can still move to a different mining pool that is unaffected.  And many of the larger pools have quite the DDOS protection, due to attackers DDOSing them and asking for money in exchange.

Try reading my post again. Higher hash rate does not make the network more resilient or secure against the 51% disruption.

Maybe, but without a resilient and secure network, bitcoins are pointless.

Okay, consider the compromise affects the internet connection of the mining enterprise.

I suspect the only reason is a self-centered race for quick profit. All the stories about making the network more secure are either naive or dishonest. A malicious entity willing to spend resources to temporarily disrupt the network could do so today with GPUs or FPGAs, or next year with ASICs. At any point of time it can be done with whatever technology is in use by the miners.
Everybody is racing for a piece of the same, predetermined block reward and for the fees. Nowadays the fees are negligible compared to the block reward, therefore nowadays the total value of mining economy is limited. Anyone willing to spend (waste, more precisely) more than 7200 coins per day (plus the electricity overhead) would become the majority vote.

I don't worry about this, but won't discuss the reasons here.

What, exactly, is your definition of greed?  Is wanting money a bad thing?

Money is certainly the main incentive for INDIVIDUALS to invest in ASICs, but as a COMMUNITY, the reason we should support investments into ASICs is to further protect the network.


Yes, this would be a risk.  This is also why lots of people start making an outcry when a single pool holds a large percentage of total hashing power.  If the single pool controlled more than 50% of the total hashing power, it would indeed become a central point of failure.

But, at this point, an attacker would have to compromise the top 5 pools to have > 51% of the total hashing power (see the chart here: http://bitcoincharts.com/), which would undoubtedly be an extremely difficult thing to do.  On top of that, as soon as members of the pool knew it was compromised, they'd simply switch to a different pool, leaving the attacker without the hashing power he needs to continue carrying out the attack.

Well, if you think it is then consider what I am highlighting is an undesirable side effect. Not sure if it needs to be addressed though. (Basically need help thinking it through)

Yes, it made sense. It just feels like and attacker an community have different objectives (No, doh!)
BUt consider this scenario...

The attacker has enough resources to build a network of the BTC size. To get it this 1% to take over, it compromises a "legit" mining operation.
The owners of the operation do not have enough money to address the issue.

It seems like bail out is needed, or some sort of insurance...

Huh ?

It's just  a greedy race for money.

If I had a 60GH asic today; I would earn 30 BTC a day i.e. $10,000 a month.

Now wonder why everyone wants one.

GET OUT OF MY HEAD!

No, but we as a community are responsible for making sure a malicious entity doesn't take over the network.

Thanks for your answers... So, are we as a community then responsible for bailing out failing MINER enterprises?

A malicious entity could engineer and produce their own ASIC, build enough of them that they have 90% of the overall hashpower, then put them online.  From that point on, until the Bitcoin community could produce their own ASIC to compete, the malicious entity could do whatever they like, including reversing all blocks mined by others and never including transactions in their blocks.

So, by having our own ASICs, we will increase difficulty a great deal, and the difficulty of a malicious entity pulling off such an attack would greatly increase (along with the cost of doing so).

It's an arms race with potential attackers. An attacker needs to have more hashrate than the rest of the network and will invest in ASIC to that end; if we hope to compete we'd better have ASIC as well.

Hey, all,

I've been reading peoples' thoughts around the forum quite a lot lately.
I still don't quite understand why investing into ASIC is important for BTC future.
If it's lack of my understanding how Bitcoin network operates then please point it out.

Here is what is clear to me, Bitcoin difficulty scales proportionally to the amount of hashing power there is.
So it seems like the whole point of investing into ASIC is to raise difficulty so there is no competition.
I do not feel that's really the case.

Will someone share what they think is going on here...

Thanks!