Quote from: ranochigo on January 13, 2018, 01:50:26 AM

Quote from: squatter on January 12, 2018, 10:54:32 PM

What's your point? Who suggested you couldn't? The point was about hardening Bitcoin's network from attack. You conveniently omitted from the quote the statement about considering future nation-state attacks and censorship.

I was referring to the fact that it can't be a currency if users can't transact. Unless any entity can gain a large majority of control of the network, they cannot censor Bitcoin effectively.

Actually, it can be done with a third of network hash power. The reason that considering nation-states is especially important here is that their incentives are external to Bitcoin block rewards. Therefore, rational mining incentive (itself still unproven long term) isn't necessarily a strong enough deterrent to prevent censorship attacks.

Quote from: ranochigo on January 13, 2018, 01:50:26 AM

The point is, if an average joe can run a miner without any issues, cost, profitability, etc. Isn't it more likely for governments, who have vast amount of resources to be able to better obtain more hashpower than most people.

Sure. If vast amounts of wealth are transferred from fiat currencies to the Bitcoin economy, could that change the equation? If enough money flows from fiat currencies into Bitcoin/cryptocurrencies, surely governments will fear for their monetary sovereignty. Ideally, these events coincide such that governments actually have considerably less resources to attack the network.

Quote from: ranochigo on January 13, 2018, 01:50:26 AM

The marginal miners who can't cover their overheads are likely the small-time miners first. Mining farms would make it such that unless one has a cheap electricity, they cannot profit.

Again, you are only talking about short-term profit. It's strange that people talking about mining as if it's not an investment. Your hardware and electricity costs are an investment. That doesn't necessarily entail immediately dumping to cover principal and overhead.

Quote from: ranochigo on January 13, 2018, 01:50:26 AM

Quote from: squatter on January 12, 2018, 10:54:32 PM

Re-read what you quoted. Coins I mined years ago have ROI'd many times over. You're only thinking in terms of someone who immediately dumps to cover all overheads. You say you're talking about long term profitability when you're actually referring to short term profitability.

So that's under the assumption that Bitcoin will increase far above its current price point? Is it more profitable to buy ASICs and then mine than to just buy Bitcoins directly?

Yes, of course that's the assumption. If it weren't, then why would you make a long term investment? I already addressed the fact that buying bitcoins directly can be more profitable in the previous two posts....

Quote from: ranochigo on January 13, 2018, 01:50:26 AM

Quote from: squatter on January 12, 2018, 10:54:32 PM

No one said it wasn't more profitable just to buy bitcoins. The theme of this thread is concentration within the mining ecosystem. Hence "consider it as an investment in the currency, since decentralized mining is required to secure Bitcoin from majority-miner attacks." The implication is that a casual mining investment will be less profitable than merely buying bitcoins. But merely holding bitcoins also gives you no say over the network. Only economically important (transacting) nodes and hash power is relevant to consensus change.

Yeah, I get the point. I still don't get why is it rational for normal users to be mining Bitcoins, at an economic loss without actually gaining anything.

At "an economic loss?" That's the nature of investing. How is that so different than buying BTC before it immediately dumps 50% in price? Investing involves a principal that can be lost. Mining investments entail USD principal/overhead and USD ROI. It's simply a form of investment in BTC where players like Bitmain currently have a big edge. That edge is disappearing, as discussed earlier.

Quote from: ranochigo on January 13, 2018, 01:50:26 AM

Big players have far too much hashpower than the users themselves. Sure, the network would be decentralised if everyone is mining with a significant hashpower but the cost of it makes it unreasonable for anyone to do so. There's no incentives for any mining farms to execute a 51% attack or anything similar.

What makes the cost unreasonable, on a long term basis? You apparently think the uptrend in difficulty will never end. Similarly, then, the uptrend in price will never end ( Roll Eyes

) So, why is the cost unreasonable? You point to the difficulty trend but refuse to acknowledge the BTCUSD price trend that corresponds to it.

As pointed out above, the incentives of nation-states to attack Bitcoin go far beyond block rewards. I'm far more concerned about mining pools that are operated or co-opted by nation-states. The network needs to harden against this possibility.

Quote from: ranochigo on January 13, 2018, 01:50:26 AM

Quote from: squatter on January 12, 2018, 10:54:32 PM

Again, you are only thinking in terms of never-ending difficulty increase (sort of like a never-ending bull market). If you think mining speculation will always look like the 2013-2018 period, I think you are gravely mistaken. That's not how markets work.

It's predicted that ASIC fabrication will become more competitive in the future, as optimizations become increasingly difficult. That can significantly level the playing field vs. players like Bitmain. For example:

Quote

[The 14nm chip] is a very good thing for decentralization, explains Antonopoulos. What it does is it extends the shelf life of mining equipment from 2-3 months of useable life cycle to almost two years, which levels the playing field among all participants in the system.

You're also only thinking in terms of the current pool ecosystem, as if it's static. Pool incentives can certainly evolve over time to address the needs of miners. Like the exchange system, all current market participants flood to only a few entities. That may not always be true, especially if the interests of pool miners begin to diverge significantly from those of operators of prominent pools.

I don't get the last part; can't the miners themselves just run their own node? They never needed a pool for them, antpool is ran by bitmain and so on.

Yeah sure, it may attempt to level the playing field. However, you have to keep in mind that most farms have access to cheap hardware and electricity that makes it suitable for mining.

Sure, miners can run their own node. The reason they may not in the future is the same they don't now: hash pooling, orphan rates, optimal mining code, etc. None of that changes what I said.

As pointed out above, subsequent generations of ASICS will reduce the "cheap hardware" edge as optimizations become fewer and further between. Bitmain will not dominate the market forever as they have for the past 3-4 years. Also, the days of government-subsidized mining in China seem to be coming to an end, which seems to be pushing miners to different localities including Canada, Switzerland and others. Indeed, miners need cheap electricity, but for example, all of Hydro Quebec cryptocurrency customers get the same rate across Quebec: $0.0394/kwh (3.94 U.S. cents).