ASIC Resistance and Decentralization

Recent events in China have highlighted some of the fundamental issues around ASIC mining. While I know I am a bit late to the party but, as the CEO of Crypto Caverns LLC, a company focused on growing sustainably decentralized cryptocurrencies, I think it’s important that I address some of the existing arguments in favor of ASICs and explain why I believe that GPUs, or more accurately commodity hardware, mining is so important.

First off I want to discuss the argument that proof-of-work schemes ought to be as simple and dependent on raw computational power as possible. That is to say, a proof-of-work system should tend toward the thermodynamic limit as quickly and directly as possible, which I see often pushed by many early Bitcoin adopters, and was formally written up (click here to read it) by Andrew Pelstra from Blockstream.

No offense to Andrew, but this paper embodies some of the most widely held and least well thought out views I tend to see around ASICs. The fact that the centralization of mining is an economic phenomenon and not a physical phenomenon seems all too often lost in the debate held by these early Bitcoiners and the crypto community as a whole. Using physics to argue the matter by claiming that ASICs provide an incentive to decentralize the production due to heat dissipation etc is incredibly out of touch with the issue at hand and can not go unquestioned.

The physics are entirely disconnected from the threat of a 51% attack, such an attack would not be coming from 51% of the…