A Long-Term Bitcoin Concern and Discussion on Solutions

Dear r/Bitcoin.

I've been following Bitcoin since 2010 when my boss at the time (I was a lifeguard/camp counselor) told me about it and since he knew I had an Alienware PC (I enjoy playing video games) he suggested I mine it because faster computers could mine it faster. I downloaded a very rudimentary wallet and mining software, I frankly don't even remember which one it was but it kind of looked like Minesweeper in terms of the UI. I joined a pool and started mining. Throughout the years I've bought and sold and slowly grown my position (in terms of $USD relative to our net worth) so it's very much a significant part of our financial situation.

It's been an absolute pleasure to watch Bitcoin's journey and I do hope it can continue, not necessarily for financial gain but really to potentially bring a better technology to the world of financial products and transactions.

One thing that keeps me up at night these days is I cannot help thinking about the long term trend of mining becoming more centralized (I'm not talking about pools, I'm talking about individual miners). I believe the ramifications could lead to a serious departure of the technology and eventually result in somewhat of a centralized governance system which is somewhat antithetical to the original charter of Bitcoin (although who am I to say?).

Basically, my view is that energy efficiency per hash output is the most important metric today and the hardware race in terms of purpose-built SHA-256 mining chips has squeezed out the economic viability of mining with any other sort of compute. Sure you can mine at breakeven or even at a loss, but over time this is not sustainable. I worry this trend will further centralize mining as only large and well-capitalized companies and countries (perhaps some individuals) can access these chips and cheap energy in bulk.

One argument that this is not an issue is, well if instead of 120,000 people mine, if we have let's say 50 countries/companies/individuals mining and keeping each other in check, isn't that good enough? Valid reason to not be concerned. Another argument is that once mining becomes unprofitable, the difficulty will adjust downward. This one I don't agree with so much because the more efficient mining chips will always have an advantage over less efficient chips, regardless of the difficulty.

So perhaps this isn't a huge problem and does not need to be solved. If it does become potentially problematic, I believe there are solutions such as potentially having a parallel mining pool that limits the amount of hashrate per participant, thus equalizing the advantage that purpose-built chips would have had. You could have it such that every even-numbered block is awarded to the masses, and then every odd-numbered block is awarded to the hash-rate-per-participant-capped participants. Then you would again see a revival of individual mining and while it wouldn't contribute a lot in terms of hashrate, you would see it substantially contribute to network decentralization, at least in theory.

This probably isn't particularly well thought out, but thought I'd post it here for discussion... curious if anyone else has thought about it.