10/ This means that there will always be some miners at these low-cost-electricity locations, who could take advantage of these older chips that are not profitable for others, and this will create a healthy second-hard market for older ASICs.
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11/ Case in point is market value for Antminers S7 & S5, despite the S9’s two-year dominance.
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12/ Factor #2: Even if energy technology gets so good & *energy becomes practically free in most places*, older ASICs could still retain their value because the supply of new, state-of-the art chips is finite.
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13/ A rational miner will deploy all new chips he can get his hands on first. And THEN deploy his older ASICs that are still profitable.
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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.1 reply 0 retweets 1 likeShow 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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