ASIC chips can never keep up with the logarithmic increase in power required to solve the algorithms.
Do you realise that mining difficulty is a result of increased hashrate and not the other way around? Miners don't have to keep up with the difficulty, the difficulty keeps up with the miners. The only reason the power required increases is because the hashrate increases. When we run up against the physical limit and Moore's Law stops applying there won't be new generations of ASICs, so the hashrate will stop increasing exponentially, and so the difficulty will stop increasing exponentially. You have the whole causality of the situation backwards.
So why have the number of miners fallen from hundreds of people like Bob in a backroom with a PC to a few huge companies (in China) with farms of machinery?
Mining is a competitive business. Only the most efficient miners will survive. If Bob is paying twice as much per kilowatt as the Chinese miner then how can he hope to remain in business? There are no "participation prizes" in the real world. Only the fittest survive.
Because the hashrate has gone up so much. But why has the hashrate gone up so much? .... Chicken or egg which is first?
The hashrate has gone up due to improvements in mining hardware. From CPU to GPU to FPGA to the various generations of ASICs, each faster and more efficient than the last. Difficulty tracks hashrate. Hashrate doesn't track difficulty. Your chicken and egg analogy doesn't apply, since if anything higher difficulty has an inverse effect on the hashrate as uncompetitive miners drop out when they stop being profitable.
To be honest, it does not matter,
I only bothered correcting the point because that guy made the same error many many times in this thread and elsewhere. He thinks that the difficulty goes up on its own and that miners have to keep up, when in fact it's the other way around. If it doesn't matter to you, why comment on it?
only that Bitcoin is reliant on a few (almost getting centralised) Chinese farms. We, the community, have little input, in fact zero.
The miners work for us, the economic majority. We are not reliant on them. If they misbehave we can fire them by changing the proof of work algorithm.