There are people, some just 16 year old script kiddies, that are making huge amounts of BTC with botnets and selling it off for profit.

How does it hit Bitcoin? Well for a start there are hundreds of thousands of computers out there that have viruses installed that are mining Bitcoins without peoples permission, that's not going to go down well.

There will be a difficulty increase as a result of the botnets, taking coin away from legitimate mining operations.

I see no reason why this would stop just because of ASICs. With ASICs you still have to buy the hardware. Here there is no start up cost at all unless you are buying/renting the botnet.

This whole state of affairs undermines bitcoin and is enough to destroy faith in the currency. Mining needs an overhaul, I don't pretend to know the solution.