Bitcoin expert Andreas Antonopoulos explains why faster mining chips and slamming into the Moore’s Law “wall” will be “a very good thing” for decentralization moving forward.
Mining Arms Race Slows at 16nm Chips
Speaking at D10E event in San Francisco in July 2016, Andreas Antonopoulos focused on the architecture of power and the trade-offs between centralization and decentralization. When any type of system scales, it becomes more corrupt, he explains. Fortunately, network protocols have enabled to take decentralized systems and scale efficiently. However, “efficiency is a trade-off,” Antonopoulos continues. “And the trade-off you’re making is liberty.”
One of the crucial components of the Bitcoin network that has been the subject of the centralization vs. decentralization debate is mining. The centralization of mining is of particular concern since Bitcoin’s integrity depends on its proof-of-work consensus mechanism. The network could be at risk of an attack if at least 51% of the mining hash rate colludes against the network.
Today, the mining pool distribution looks as follows:
At the same time, there has been a mining equipment ‘arms race’ of sorts, resulting in increasingly efficient mining chips. In 2016, 16 nanometer chips are quickly becoming the norm following BitFury’s announcement of its 16nm ASIC (application specific integrated circuit) chip or the “fastest chip ever created” at the time.
Interestingly, a 14nm ASIC was, in fact, announced by China-based Bi Wang (BW) in late 2015, though it appears that Moore’s law is reaching a ceiling as 14nm chips are still not commercially viable while 10nm still appears to be years away.
‘Very Good Thing’ for Decentralization
After years of blistering progress from 55nm to 28nm and smaller, Anonopoulos sees the slow down in the race to the bottom as “a very good thing,” if you’re a proponent of decentralization. When asked by an audience member whether he sees the 14nm mining chip being “good for decentralization,” Antonopoulos replied:
It’s a very good thing for decentralization. What it does is it extends the shelf life of mining equipment from 2-3 months of useable life cycle to almost 2 years, which levels the playing field among all participants in the system.
This extended period will not only provide respite for the manufacturers but will also increase decentralization considering the extra time now available for physical delivery and distribution. Compare this to before — when faster chips were released every few months — a successful miner was someone who had their operation set up “within 100 kilometers” of the semi conductor lab.
“Because if you try to put it on a ship and take it across water, it leaves your shores as fantastic mining equipment and arrives in California as scrap metal 3 months later,” he continues. “But if you have a 2 year shelf life, you can now re-decentralize mining to take advantage of differences in electricity costs.”
Today, a mining operator can set up shop in a geographical location where electricity is not only cheaper but also renewable such as in Iceland. It is this type of “fixed production” renewable solar, wind or hydrothermal energy that Antonopoulos believes could truly decentralize mining, making it a household practice to produce some passive income.
“What do you do with the extra capacity?” he asks. “One thing is to take it and use it to mine bitcoin when it’s not used for consumption. Essentially, that energy would be generating anyway, that would be completely lost, and now you can convert that into bitcoin.” He concludes:
Effectively, bitcoin is a battery on the virtual blockchain.
Do you think faster chips are better for decentralization? Share your thoughts in the comments section below!