Just something that randomly came to my mind: what if, from the very early days, Bitcoin mining was made somehow ASIC-resistant? How would the network look like now, in terms of performance and decentralization?
Not too much different, but ASICs allow for more security at lower cost. It's a good thing all in all, even if the barrier of entry might be a little higher.
Interesting point of view, but I tend to disagree. I mean, I get the cost-effectiveness and security arguments, but after every difficulty adjustments we're heading more and more towards highly centralized mining operations. It's true that nodes can still validate transactions in a decentralized way, but I would not the entry barrier just "a little" higher.
Just look at how Litecoin is doing. It was designed to be GPU resistant when Bitcoin migrated away from CPU to GPU mining. By placing limitation on miners being able to hash as fast as they possibly can, you are weakening the network and its value.
The problem as I see it is ASIC miners are expensive and the lower priced ones even with favorable KWH rates won't turn a profit for the average person. The issue isn't that Bitcoin needs to be ASIC resistant. The issue is Bitcoin mining needs to be accessible and profitable for more people who can't sink a bunch of money into equipment and power. Anyone can mine, but the incentive is only there for a small section of that demographic.
What happens when ASIC miners are priced out of everyone's hands except corporations and governments? Do we really want governments to accumulate more than us, to use their wealth and continue their human rights abuses against us? Do we think this stops on a Bitcoin standard?
There are pleb miners doing very well for themselves. Centralization in corporate hands is a concern of mine as well but its a myth that plebs can't mine profitably. It isn't easy but there are folks doing it. Its really about energy sources. There are locations where it is easier than others but it can be done.
Yeah this is what I have been thinking about as well! I do think there are small scale ways to be profitable, but still require a decent chunk of cash to get into.
I imagine it would be pretty hard to get into profitable mining for less than ~$1000 USD. But that is just an arbitrary number I pulled out of my ass.
I do think that there is a way to be profitable with solar power (including all of the infrastructure costs to setup). This is if you run a setup with minimal batteries and use all of the power that you produce, essentially treating the ASICS as "batteries", similar to the digital energy analogy.
I'm fairly certain it would just be a lower profitability than at a large scale.
Checkout Pod256 if you like podcasts. This post is a good place to start as well.
You can pick up a used S9 for around $50-100 and learn how they work. They aren't profitable to mine with right now but they are low cost and simple. You can even use one as a space heater or pipe heat from the ASIC into your HVAC.
Profitability is relative to exchange price for bitcoin of course. Mining off solar is not likely to be profitable for some time. Now, if you are installing solar for other reasons it can make sense to mine with excess power. It is very complex to calculate so don't trust your gut or me. Solar has a high cap cost to get started and mining as well. There are pleb mining groups on telegram that are very helpful.
Just throwing out some napkin math numbers on small scale DIY solar setup:
$0.10/kWh from utility company
~ 3kW ASIC (pick your model)
3kW of panels (~$0.50/W new / ~$0.25/W used) $750-1500
5 max sun hours per day ($1.50/day of power produced / saved from utility (15kWh))
5kWh of battery cells ~$1500
5kW inverter ~$750
Cables/Fuses/Connectors/Switches ~$250
Total solar equipment $3250 - 4000
Time to ROI on just power production: 6 - 7.5 years. ($4000 / ($1.50/day) / 365 = 7.3 years)
Knock off 30% for the US federal solar tax credit that becomes 4.5-5 years.
Panels maintain 90% efficiency out to 25 years. Batteries last ~10 years.
~$400 S17 @ 73Th/s currently makes ~15000 sats/day but we only have 5 hours of equivalent max power so 15000 * 5/24 = 3125 sats/day or ~$1
The extra ~$1/day cuts down your ROI from 5 years to just over 3 years to pay off your combined solar + mining setup. Certainly able to optimize this more with better price and power efficiency.
As always with mining returns calculations, there are unknowns like BTC/USD price and difficulty adjustments. Having your own infrastructure is inherently valuable since your cost doesn't inflate AND you have more sovereignty because you don't rely on others to produce electricity.
I think these returns, as long as I am not missing something important, are good enough that's it's worth trying IMO.
There is certainly an economy of scale to mining operations, but there are also issues that are much harder to solve when you put more mining hardware in close proximity such as cooling and power supply. As the iteration cycles in ASIC production have grown longer, I’ve heard more stories about people running small mining operations off of self-owned renewable when they overproduce or during off-peak hours.
I feel like difficulty adjustment and block reward halvings will always lead to miners increasingly being those who have the capital to afford cheap electricity, hardware, infrastructure. Unless you can find some other advantage at a small scale.
Only those who have an advantage in some way will be profitable. The difficulty adjustment is constantly adjusting to reach an equillibrium where 50% of the hashrate is profitable and 50% is unprofitable.
Good point, that was my underlying reasoning while writing the original post. The problem is not ASICs per se, the problem is the fact that virtually no private individual can mine on the network without incurring huge losses.
To be honest, I am a bit surprised that core developers do not address this issue (which is a decentralization issue imho) somehow. I mean, one thing is being conservative in what innovations should be implemented and what not. But, this way, we’re all running toward a centralized future I think.
"the big attraction is that anybody can download Bitcoin and start mining with their laptop."
like it or not, but is the anti-ASIC, in fact.
And it's clear that since 2013 you can't just download Bitcoin and start mining.
Network would definitely look better in terms of decentralization if Bitcoin would be still mined on GPU.
But, as a curiosity - ethash was carefully planned as an ASIC-resitant algo, because their work was based on paper Hashimoto by Thaddeus Dryja (author of Lightning Network)
https://github.com/ethereum/wiki/wiki/Dagger-Hashimoto
So the necessity would be to have not ASIC-"resistant", but ASIC-proof design.
(and I know how to design such algo, it seems... ;)
this is a valid point and confirms a feeling that I was having while thinking about this. I mean, the more it gets difficult to mine BTC, the more mining operations will centralize in the hands of a few big companies. Not sure if I like this kind of future for Bitcoin, to be honest...
You're making the mistake of assuming that operations wouldn't be heavily specialized without ASICs. They would still be, they just wouldn't use ASICs but other special hardware, you certainly wouldn't be able to mine profitably on an off the shelf laptop.
I get it and you are totally right, but at least you take something out of the equation. Then we will probably have a very different GPU market, but that's another story I guess...
Anyone can still start mining with their laptop - by buying hashrate
ASICs are here to stay and they will continue to be installed near cheap power. Mining decentralization doesn't require bitcoiners to run an ASIC alongside their node - it can occur once there's a 100% rug-proof way to buy hashrate and mine with it, either directly or sending to the mining pool of your choice.
Hashrate is a digital commodity, its the raw material used to make bitcoin.
Much like you don't need to start your own farm to enjoy corn, you don't need to have your own ASIC to enjoy mining some bitcoin. The spirit of "anyone can download Bitcoin and start mining" and "one cpu one vote" only requires hashrate.
you don't need to start your own farm to enjoy corn, but if you really enjoy corn - it's the big attraction if you can see your own, slow-food, healthy corn rising in your farm :)
We would still have ASICs by now, and mining might be more centralized.
ASIC-resistance is a mirage. A device specifically engineered to only do one thing will always beat general computation devices. ASIC-resistance just makes it harder and more expensive to design one. Yet, as the exchange rate of Bitcoin increased, making one would have at some point been economically viable for someone. That manufacturer would then have had a monopoly on dedicated mining hardware and easily cornered the entire hardware market or directly the mining market. It is actually in our interest that the hashing algorithm is ASIC-friendly. It makes it easier for multiple producers to operate in the market and dedicated devices being the only viable hardware for mining means that miners are literally invested in the success of the Bitcoin project. Their hardware is useless for anything else, they cannot hop to other currencies as the exchange rates fluctuate or bet on multiple horses. An ASIC-friendly network also does not need to contend with sudden hashrate spikes from botnets turning their attention at the network and leaving just as suddenly.
Either way, the downsides of ASIC-resistance clearly outweigh the upsides. Introduction would have taken a hard-fork, disenfranchised a set of stakeholders in the Bitcoin network overnight by obsoleting all existing hashing investments, and yielded only uncertain benefits.
As a reply to your last sentence, I think the author meant: 'what if the Bitcoin protocol was designed as ASICs resistant from day-1'? I might be wrong, but I see this post as a thinking exercise.
Also, don't most ASICs allow to switch between different PoW chains? If so, they could technically hop to other currencies, they just don't do it because of Bitcoin's unique selling points compared to other shitcoins.
what if, from the very early days, Bitcoin mining was made somehow ASIC-resistant?
to mean “in the first few month or years, but not from Genesis”. I would expect that OP would have otherwise stated “from the start” or a similar phrasing.
Also, don't most ASICs allow to switch between different PoW chains?
No, ASICs generally can only compute specific hash functions. Bitcoin uses SHA-256d. Most other networks use a different hash function, e.g. Scrypt (Litecoin Dogecoin), Equihash (Zcash), CryptoNight (Monero), X11 (Dash), etc. It’s generally a security issue to use the same hash function as a network with a much larger mining reward as that exposes the smaller network to majority attacks (aka 51%-attack). While there are a few other coins that use SHA-256d, their mining reward is too low for even a minuscule portion of the Bitcoin hashrate to profitably switch over.
We briefly saw a lot of hashrate hopping after BCH split off, but even BCH’s mining reward is now around ~0.7% of Bitcoin’s.
Lol it would be monero, and how long would it remain asic resistant, if you're not constantly changing the hashing algo eventually an ASIC will come into pay or they are and doing it covertly so might as well let them hash away
Honestly I've never understood ASIC resistance stuff. Monero claims this. If anything the Monero ASIC resistance to me proves there isn't nearly enough market demand for Monero. If there were, this resistance would be broken or worked around. I don't know enough about how this resistance works to say this for sure but I wouldn't trust it to work.
Here's what I don't get about it. What is this accomplishing? It doesn't accomplish decentralization if that's what people think. If demand increases you would have massive miners enter the space and figure out ways to mine more bitcoin. It seems to me that this only adds an unnecessary distortion to the system.
this would of been a terrible decision to make. it would have resulted in periodically having to change the mining algorithm in bitcoin to combat the 'new ASIC' that someone, somewhere was using to mine it.
this change would be extremely difficult to undertake (hard to reach consensus in bitcoin) and i imagine it would have created countless amount of btc off-shoot forks.
ASICs are good because they make it so miners are all-in exclusively to Bitcoin. All the capital investment it takes to be competitive, and in hardware that only has one use, means that they are committed to mining bitcoin and only bitcoin. So they are less likely to fuck around and attack in some way.
ASIC, as the name stands for, is an Application-Specific Integrated Circuit.
So, there's nothing in theory you could do to make an algorithm "resistant" to an ASIC.
Given any algorithm, you can design an ASIC for it. An ASIC is simply hardware made to run a specific algorithm as efficiently as possible.
One possible way to make something ASIC "resistant" would be to basically change the algorithm frequently, so that you don't have the time to design and build an ASIC. But that doesn't make too much sense to me.