[pmalynin]

I wonder about the effects of such establishments on the Bitcoin ecosystem as a whole. In theory, they're supposed to strengthen the network by providing more hashing power. But what worries me is the onset of mega-pools composed of such factories that will gain >51% of the network's computational power effectively gaining a monopoly on Bitcoin.

[EStudley]

There is no reason factories like this would WANT to disrupt the Bitcoin network if it's their source of income.. If any organization can get enough hashrate to topple the network, they will lose all that money by toppling the network.

[wsxcde]

> factories like this would WANT to disrupt the Bitcoin network

You're assuming the people disrupting the network for short term gain are the same as those who made the up front investment into the operation.

This is not true. GHash's past double-spend attack was carried out by a rogue employee. The BGP-hijacking attack which was in the news a few days ago shows another route to a 51% attack. An attacker who can trick a bunch of big miners to mine for him instead of themselves could just as easily have tricked them into performing a doublespend attack.

[ceejayoz]

Toppling it isn't the only option, though. Threatening to topple it could be pretty lucrative for a while.

[bdcravens]

That's the one thing that keeps eating at me. Would it not be trivial for a large corporation or government entity to throw enough money around to accomplish this? The only response I hear is that the market will magically prevent this.

[mrb]

For starters, the incentives are just not there to destroy Bitcoin. Most governments are either positive or neutral toward Bitcoin. The ones that are hostile toward it would rather make it illegal to fight it with the law instead of with technical attacks. Financial corporations? The smart ones would realize they would benefit more from embracing Bitcoin than fighting it. And the non-smart ones don't even realize how much of a threat Bitcoin may be to their business models.

But let's just go with your assumption that some entity with big pockets decide to run a majority attack against Bitcoin miners. How much effort and money would it require?

1 year and 20 billion dollars; here is why:

The best 20-28nm mining ASICs require about 1 watt per Ghash/sec. The network is currently at 170,000,000 Ghash/sec so it would require at least 170 megawatt of ASICs, or a ~200 megawatt datacenter (with PUE = 1.15). The fastest TOP500 supercomputer facilities barely reach 20 megawatt. The biggest datacenters in the world are just about 100 megawatt. So the attacker would require two of the world's most powerful datacenters (in terms of electricity and cooling) to attack Bitcoin. But it would take at least 1 year to plan, design, build, and deploy the hardware in two such facilities. And the Bitcoin network will continue to grow during this time. It has grown by 400x in the last year (400,000 to 170,000,000 Ghash/sec). By the lowest estimate, the network will grow at least by 10x in the next year (170,000,000 Ghash/sec to 1,700,000,000 Ghash/sec). So you need to plan to build not 2, but 20 world-class 100 megawatt datacenters by August 2015 to be ready to have a chance to majority-attack Bitcoin. Knowing that a 100 megawatt datacenter costs $1 billion [1], you need pockets with $20 billion in them. And if you under-estimate the growth of the Bitcoin network in the next 12 months, you will have failed and wasted $20 billion for nothing.

[1] http://www.greendatacenternews.org/articles/share/416983/

[Estragon]

The hope I've heard from cryptocurrency enthusiasts is that they stay under the radar until they're too big for any traditional organization to overpower the network.

It would certainly still be feasible for the US government to overpower the network, but it would not be cheap. The Minerscube 15 is due to ship next month, and will get you about 1.666 GH/s/$ [0]. The current speed of the bitcoin network is about 160,000 TH/s [1]. Duplicating this would cost about $96M, assuming you could get that many Minerscube 15 chips at that price, and assuming the infrastructure costs are trivial. So I would say it's still doable, but far from trivial.

  [0] https://en.bitcoin.it/wiki/Mining_hardware_comparison#ASIC
  [1] http://bitcoin.sipa.be/

[patio11]

Subverting the entire Bitcoin network is almost certainly not as much as a 1 ACE problem. (Aircraft Carrier Equivalent)

[jafaku]

Except the network can adapt by modifying the code, so calculating the cost of destroying Bitcoin is not trivial. The security of the network is not static, because it's also made of people with economic incentives, the same way any other system is also made of people, eg: When a website is under a DOS attack, their administrators will do various things to mitigate or completely stop the attack.

[sfk]

That, and for all we know, bitcoin was started by $FRIENDLY_GOV in the first place.

[yutah]

they can change the client's code at any time (this might be a Bitcoin flaw)

[yutah]

for example, they fixed critical bugs in clients updates... new bugs could easily be introduced (on purpose or not)...