How will the Bitcoin network look after BFL ASIC hardware shipments?

There have been over 7000 pre-orders of BFL SC series mining machines, with the cheapest one supposedly running at 3.5 GH/s and the most expensive being 1000GH/s thats a lot of hashes about to be added to the network, these machines are set to ship late october-early novermber. Also in the month following that the number of btc released in a block will be cut to 25. these two events will likely cause a lot of turbulence in the bit coin economy. How will these events affect the Bitcoin network and its economy?

Ian

Posted 2012-09-26T23:36:32.440

Reputation: 89

1Would you be able to share where you heard about the 7000 pre-orders? – Highly Irregular – 2012-09-26T23:49:53.227

2This question was worded as a request for discussion, which is a poor fit for the Q&A format of SE (it must be able to have a reasonably definitive answer). We really need to reword the question or it will be closed. I've had a go at doing it for you. – Highly Irregular – 2012-09-26T23:51:16.297

Thank you for letting me know, I did not intend to start a discussion, I just wanted some opinions on the possible future – Ian – 2012-09-26T23:56:33.360

Answers

The number of bitcoins issued each day is targeted to at 7,200 BTC per day. Beginning with block 210,000 that number will drop to 3,600 BTC per day.

The distribution as to which miners will be getting the newly issued coins will change once ASICs are out, but the actual quantities issued will not. (Well, there could be a few thousand extra coins for a few days but then it will readjust back to the target).

Therefore, there will be very little impact on the "Bitcoin economy" due to the introduction of massively greater hashing capacity that will come from ASIC designs entering Bitcoin mining production.

As far as the block reward subsidy drop from 50 BTC per block to 25, that is already known -- the date might vary a week or so earlier than the current target (November 30th, 2012), but generally it is known when and to what degree (50 to 25) it will happen so it is likely already priced in for the most part.

Thus again, the "Bitcoin economy" probably won't be impacted by speculators or miners rushing to buy.

Stephen Gornick

Posted 2012-09-26T23:36:32.440

Reputation: 26 118

I believe a jump in the network hash rate could have some other effects:

assuming those 7000 ASIC-containing orders are widely dispersed, it should make it more difficult for a 51% attack.
the reliability of txn processing is improved. While nothing will happen faster, as blocks will still be generated at the same frequency, the blocks will be more difficult to generate.
a lot of hardware will become obsolete for bitcoin mining, and repurposed elsewhere.

John

Posted 2012-09-26T23:36:32.440

Reputation: 51