Quote from: zaphod on June 25, 2011, 10:54:25 PM

Lots of Dells and Apples and HP's used by average Joe's have Radeon 5xxx and 6xxx cards in them, but I think you missed my point. I'm thinking of 6 months from now when, if BTC doesn't appreciate significantly, mining won't pay for the electricity required to do it. At that point, if the computational growth from legitimate miners slows or goes negative, and mining becomes mostly a botnet business, those same folks will have the power to turn BTC upside down at will. I'm not saying that they're want to or that they could profit from it, but it's a real possibility.

I agree. If the difficulty level is adjusted to keep an average rate of 1 block every 10 minutes then the number of blocks created is 144 blocks/day regardless of the number of miners. At $20/BTC and 50 BTC/block, that's $144,000/day. That is then split among the total number of miners relative to the amount of processing each does. With perfect information and perfect competition, equilibrium is when the costs of GPU and electricity are equal to revenue from Bitcoins.

With a botnet this breaks down completely. The cost of GPU's and electricity to the herder is zero, so the number of miners from botnets will continue to increase without bound (economically). As the number of botnet miners increases or the value of a Bitcoin decreases the number of legitimate miners will decrease to maintain equilibrium. Botnets could conceivably have incredible amount of power.

BTW. This also implies a minimum transaction cost that must be maintained when Bitcoins are no longer created.