This is exactly my point, and different algorithms when fully optimized come to different balances of electricity cost vs. equipment cost. SHA256 mining when optimized creates a cost structure that is dominated by electricity costs (>90%), which puts those with low cost electricity at a significant advantage. Other algorithms when fully optimized will come to a different balance, if that balanced is dominated by equipment costs we have a more fair system.
That is a good point, though I am not convinced that a different POW would bring about more expensive equipment costs. Though I am not well informed enough to know these things, I would have thought that the initial development costs would be high but chips could then be mass produced at a similar cost, keeping in mind that the complexity of the rest of the unit would not be that different. Though I am at least wise enough to recognize the limits of my knowledge, I do not know enough about the intricacies of chip manufacturing and the economies of scale involved.
My tendency was to think that the more decentralized manufacturing is, the more competitive and large of an industry it became. The more egalitarian it would become because of the forces of competition. That this is more likely to bring about a situation where electricity costs are better balanced compared to equipment costs, like you say.
Though I do not think that this will ever be the case that mining will not centralize around places with low electricity cost, that is just how mining works. This also makes much economic sense, I think that the only time when mining is more about equipment cost then electricity cost are in those rare opportunistic moments. Like the golden days of Bitcoin mining. I just do not think that this is a sustainable reality. This is even the case with GPU mining now, it only became highly profitable again when Ethereum was launched, which I would consider one of those rare opportunistic moments where it just takes time for more infrastructure to be build up so that it returns to a competitive equilibrium, where most GPU mining is done in large GPU server farms. Which once Ethereum switches to POS or even before that I suspect, this will happen again with the present GPU mining space.
True, but as long as the "economic unit" is small enough then it is still profitable for small miners to participate.
I do see how this is relevant, we can still have small "economic units" with ASICs, we can even have smaller units that are possible with ASICs compared to CPU and GPU, remember the ASIC USB miners? It all just depends on the market and demand for ASICs which I think is still maturing and improving in Bitcoin.
Let's use your example of large scale GPU farms. If let's say GPU was the optimal efficiency point, then yes we would see some large scale farms. But since the base unit is the GPU small scale miners with 1-2 GPUs could participate in the system as well.
I think you are mistaken in this assesment. There is no difference in terms of efficiency of scale when it comes to mining. It is no different when GPU mining compared to ASIC mining, what matters is equipment cost and electricity cost, in a healthy market these should be very similar for ASICS and GPU's.
The amount that avarage users contribute with a few GPU's is very small I think the vast majority of the GPU mining power are coming from more serous mining operations like my own, as opposed to gamers doing some mining over night for instance with their GPU. It is hard to get a good grip on these numbers but I suspect that is already the case with GPU mining today.
Unless you live in the netherlands, where I am residing at the moment, where the more energy you consume as a business the less tax you pay over it which accounts for two thirds of the cost by the way. This is an exception to the point that I am making but I will put this more down to social engineering then free market dynamics.
SHA256 ASIC mining is the same, although there are large farms the base unit is a 1U sized board which small miners can compete with. The problem though is unless you have cheap electricity you will be at a disadvantage.
Yes my point exactly, I would argue that it is the same for GPU mining. I have a few GPU rigs setup next to my ASICs, which had a three year ROI, which would not have been profitable if I did not have a competitive electricity rate, this was before Ethereum was released, since then they have ROI'd mainly due to Ethereum, this was less then a year ago that I set them up. My point here is that even with GPU mining this centralization towards cheap electricity still happens. Though I would consider many competing miners "centralized" in places with cheap electricity still decentralized.
As someone who as ported multiple software algorithms to ASIC implementations I have to disagree. There are most definitely code paths that do not translate well to a hardware implementation and are best done by a generic CPU core. Unless you have spent a lot of time in VHDL and Verilog it may seem as if everything can be ported, but there are significant limitations in what can be done in hardware blocks. Anyone who has spent significant time with VHDL or Verilog who disagrees with that I'm happy to dig into it with and happy to provide you code that I'd love to see if you could port efficiently.
Sounds like you do have far more technical knowledge on this subject then I have. Like I said I am open to being proven wrong.
I will take that discussion offline to
@bitcartel 's thread, but I have to strongly disagree ASIC resistance it is not possible.
I think ASIC resistance is possible just not a completely ASIC proof algorithm, though I am sure that is what you meant. Like I said I am open to being proven wrong on this point.
Maybe there should be two chain forks of Bitcoin, one with the original POW and one with the new POW. If people feel strongly enough about this. You can already see the beginnings of the splintering, hold on to those original chain keys people, there might be multiple spin offs in the future that could be worth a lot, by holding the original keys you hold keys to all of the chains that are spawned off from it, like branches in a tree.
