Am I missing something? I can't think of a single way to design a system where it is economically advantageous to move away from centralization (where we are intentionally neglecting the possibility that bitcoins might be worth more in a more decentralized environment).
Heat dissipation, possibly.
A huge mining datacenter will produce a lot of heat, and may not be able to make efficient use of it.
Whereas, a million individuals with ASICs in their hot water heater, may be able to utilize close to 100% of the heat. Then their marginal cost to run the miner is close to zero. The difficulty would rise to make the marginal revenue close to zero also, but it would still be an advantage to decentralized mining.
Would make sense if:
1. The cost of integrating a miner into a consumer hot water heater was negligible.
2. Hot water was consumed at a constant rate, thus providing the necessary temp. differential between coolant and the chip it is cooling. (What happens when the water in the heater is hot, and no one takes a bath?)
it's not that hard to figure out.
1) all businesses have a need for capital, retrofiring an electric hot water tank is a fixed cost and can be amortized over time, having conceived of the exact mechanics to do this it can be achieved at a viable cost.
in other words (1) above is a typical business risk not unlike any other production endeavor. Negligible is a relative term in relationship to the total capital investment, I'd say at this point in time the investment risk is negligible. One of the many reasons I haven't invested more time in the design is my mining equipment is still producing a profit in excess of 50% of the input costs. (
so from a business need perspective its cheaper to wast the heat energy at the moment than use it to reduce my overhead by finding a customer willing to pay for my wast product.) worth noting my equipment is running at around 60% capacity to account for the summer heat, and if I chose to reinvest and grow my mining business when others do not, it would be called centralization, and that is a direct result of the subsidy paid to miners.
2) the concern you point out is valid but not problematic, if the water in the tank is hot, the miner runs but is not used to heat hot water. (so your wast heat is wasted) but for the rest of the time, the cost of hot water is free, or the bitcoin are being mined for free. you can still mine with 100% efficiency 100% of the time and not mine if your efficiency drops below say 99% or whatever your threshold is.
The way I see mining centralization is just a temporary imbalance as a result of the generous subsidies given in exchange to miners for growing the network. We almost got to a centralization saturation point with ASICminer however fryedCat was at a point where mining operations couldn't scale up any larger and he had started to flood the market with cheep efficient ASICs, personally I think that pissed of a lot of the wrong people and it resulted in very unfortunate circumstance for him, no one knows why he disappeared not even his employees or his immediate family, he is either going to great lengths to convince us and his family to think he is dead or he is dead.