5a/ Let’s look at the following 2 statements: “The new chip improved on the energy efficiency of the old chip by enough that it would be inefficient to use the old chip for mining even if it were free. The market price of the old chips will therefore be NEGLIGIBLE.”
14/ Factor #3: Another thing to keep in mind is that even ASICs that are not profitable today can still be profitable *in the future*, i.e., when Bitcoin price rises. Smart miners won’t give away older ASICs for free, even if they are not deployable today.
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15/ So in summary, the true price of an old ASIC will have to take into account all these factors: i/ some miners can profitably mine using older ASICs ii/ supply of new ASICs is finite & iii/ expectation of a rise in Bitcoin’s future price. This price is not “negligible”.
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16/ There’s no such thing as ASICs that are “not economically efficient for mining but are efficient enough for the purpose of an attack.” (?!)
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17/ As long as there is a robust second-hand market for older ASICs (and I suspect this market will improve with time), the cost of using old ASICs or new ASICs for an attack (or honest mining) should be the same. And it’s a stock cost, not flow cost.
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18/ The entire paper is built on the assumption that the cost of 51% attacks is flow-based, not stock-based. So if the flow-based assumption is incorrect, the collapse theories advanced by the paper are invalid.
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19/ P.S.: The other thing the paper hugely underestimates is Bitcoin community's ability in dealing with such an attack. h/t
@nic__carter One only has to look at last year's UASF movement in dealing with Segwit2x. But this is a separate topic.Show this thread -
20/ P.S. #2: I want to say that regardless of the validity of the points discussed here, Budish's paper raises a very important topic. It forces us to look deeper into Bitcoin's security model & likely develop better pricing models. For that, it's a huge win.
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