Subsidy or not the cost is real. At this point there is no economic demand for an 8TH network. Maybe not even enough for a 1 TH network. The current network (at a guesstimate of 2MH/W, $0.10 per kWh and $1 per MH capital cost) consumes nearly $10,000 daily in electrical power and burns through another $1000 in depreciating hardware). That simply isn't sustainable given the tiny amount of economic activity actually occurring.
Since we're bringing things back from the dead:
Assuming 200,000 btc trade hands at lets say an average of $10, (just at mtgox) thats 2 million per day, with mining costs of 11,000 per day. Is this not a favourable ratio?
Probably not. Just because 200K BTC trades ON the MtGox exchange (which has nothing to do with the blockchain) doesn't mean an attacker could profit from all that.
So an attacker has a large number of BTC. He deposits it on MtGox and then starts building an "attack chain" in secret. Even if he converted the 200K into $2M he can't withdraw that in a day. Tier 3 verification (requires requires an apostle seal from your state govt for US residents) is still limited to $100K per day ($500K per month). So an attacker "could" in theory profit $500K in 5 days. Of course that ignores the effect of an additional 50K BTC in selling pressure driving down the price.
However in 5 days an honest miner could generate $225,000. So the ratio between good and bad is much smaller. Also the only way you are moving $500K in 5 days is by bank wire which is going to leave a trail. So $225K honestly or $500K + $225K = $725K and risk of going to prison? Factor in some delays by MtGox on wires and it may require more like 10 days to ensure you have sufficient funds which makes the attack more like $450K honestly or $950K + prison. Worse say there is a mixup or an AML/KYC hold by one of the banks for 15 days. Ouch more and more hashing power just to get this "easy" $500K.
Of course even if successful you are now a wanted man and likely wouldn't get more than one attack. Next month if you tried again (even with a new account) MtGox likely would have lower limits or more stiff validation so it is a low return of then $20M or so you spent on hardware. Plus nobody is going to run a 10TH/s farm by themselves you are talking an entire crew (admin, technical, electricians, security - you weren't going to leave $20M unguarded in some warehouse were you). Seems a pittifully small "score" divided 5? 10? ways to risk prison.
Much easier to just offer 7% returns and have people hand you 10x as much with no strings attached.
Satoshi designed it well. The economic disincentive for doing the wrong thing makes it very unlikely there will ever be an economically viable 51% attack. The only real threat is a non-economic 51% attack (where the attacker sees the attack as simply an unrecoverable cost to destroy Bitcoin).
Thank you for explaining this so well, I'm new to Bitcoin so I'm looking into all the flaws before I dive in.. So thank you.