I agree that is the dynamics of Bitcoin mining, but I fail to see how it is a Tragedy of the Common. That miners become more efficient is a desirable outcome.

I forsee a lot of Distributed Denial of Service attacks in the future.

Consolidating pools is a pretty bad idea, but I suppose they will have to learn their lesson the hard way.

I really gotta stop coming here. This sounds like a community full of haters. Who gives a shit how much he spent on his investment? Why is he an idiot? Is it cause hes about to smoke half of your rigs? Really can't we just say "nice" and move along, instead of over analyzing his 10k investment (which is joke money to people who have it) and saying how stupid he is?

wow, maybe you are jealous? or just a rude child? I can't tell which.

A little math: 50BTC*6/h*24h/day*20$/BTC*30day/month = 4.320.000$/month (dimensions check). This is the total size of the monthly mining pie until 2013, at current BTC prices.
Even if you don't earn much the first few months, just by merely increasing the difficulty up to the point where GPU can't compete, you are quickly putting them out of business. Especially if you are so effective they don't get to recoup electricity, and so have no chance of recovering the sunken hardware cost. If they are rational they will go offline and wait for better times, if not it will take some time to convince themselves they are wasting money.

Once you get a big chunk of the revenue stream and reinvest it in hardware, there's little chance for anyone to catch up. The only reason why investors are not doing this is the high volatility of the BTC price, there's no way to know you can recover the high fixed costs of designing an ASIC and the custom boards. Once that happens, it's bye bye GPU, the market will be dominated by a few (one) ASIC miners.

Assuming one entity does control more than half of the hashing speed, it's anyone guess what might happen. Common sense suggest it will not use it's new double spend capabilities for it will drive people off Bitcoin and endanger it's substantial mining revenue. In any case, the security model of Bitcoin will no longer work.

If such a point does come along that it is actually profitable and reasonable for a company to do this, we'll all be so rich it wouldn't matter for us.

The amount of fail at math here is pretty awesome.  You guys can't even come up with a number resembling anything remotely close to what this gear actually cost, and you think you can predict future profitability for this guy?

Hint: newegg gives distributor pricing to large accounts.  Hell, 10 seconds of google and you'd figure this out.  You are not likely to get much better pricing unless you are buying in lot-sized quantities directly from AMD (which you can't, because you're a hater posting on the bitcoin forums  Having made buys similar to this from both Newegg, their competitors, and directly from distributors like MALabs, Ingram, etc. I can say the discount off of most high-volume items is negligible at best.

This also is pocket change for many folks who run tech/R&D consulting groups - an interesting investment from the geek side, hire a couple high-schoolers to put it together for you, spend a night or two scripting your installs/pool/whatever and then let it run for a few months without ever having to touch it.  Pay said high-schoolers to come by once a day and swap out any dead gear.  

Free money, or not - but very little effort or work required to start a relatively risk-free investment.  It fails and you lose every single dollar you put into it (not likely)?  Guess what, you just reduced your tax base for 2011 with a nice sized write off.

Many folks also have blank lab space - just like this - to do projects a lot like these (I have one, but not quite this size).  Given some personal knowledge of this specific situation, I'd say this is some guy with disposable income who finds this sort of thing fun, and happened to have most of the infrastructure handy and unused so it was convenient.

Basically I'm saying more is spent on a fun weekend in Vegas quite regularly, and this has hell of a lot better chance of payback than that does!  Plus, it's a lot more fun to some people

Edit: spelling

I don't understand what the big deal is...he has about 70 5770's that I can see and/or estimate, and even at pretty high overclocks he will be pushing around 16.8G/hash. You guys act like he is going to disrupt the whole network with his rigs coming online. Maybe I'm not seeing something here, but it doesn't look like those numbers are that crazy. And yes I know I can't see everything in the picture, but neither can any of you.

Pretty sure you're reading waay too much into what you know. AFAIK that pic came off twitter and was reposted and titled on reddit by someone unrelated to the venture.

I don't know if what this guy is doing or not doing makes much sense. I do know that mining represents a form of the prisoner's dilemma and that game theory suggests that other miners should discourage this behavior. So I don't put too much stock in what people say about the practice on the Internet. Those that suggest it's a good idea either probably don't know enough about the economics or don't understand enough about their own position to know they should discourage it. And those that suggest it's a bad idea likely understand that they should say that whether or not it's true.