Too much faith in free market detected.

I don't think anyone will be able to invest another 1+ million USD when the BitCorp ( copyrighted name Vladimir, you have to pay licensing ) already did so and has their 10 ghash/s for $10 design and owns most of the network.

if bitcoin market cap goes up, mining will be a multi billion industry, and 1M invest will be nothing compared

Well after the subsidy cut the network will produce 1.3M BTC per year.  For that to be a billion dollars in revenue would require BTC price to be $761 ea.    So sure BTC mining may "someday" be a billion dollar industry but we are likely a ways from that.

Conciously no but companies are motivated to maximize profits.  If you could spend 10% more on your hashing farm and double your profits would you?  Obviously you would but you can't because your 0.001% to 1% of network doesn't have that option.

If someone got within striking range you would very quickly see the "justifications".  Well doing this makes Bitcoin more efficient, doing this allows us to keep more hashing power in reserve to fight an attack, doing this still keeps Bitcoin decentralized in theory, doing this is no different than MtGox having 90% of BTC:fiat trade, etc.

Would Bitcoin collapse?   How many miners use Deepbit despite the danger that creates (hell DB almost had 51% of network at one point).  How many traders use MtGox despite the 90%+ centralization that causes?  Do you think Silk Road users really care if mining is centralized?  Do you think they would even know?  Do "trades" (who honestly are just unregulated gamblers) really care who runs the network?

Your belief that
a) people would know once an entity gets 51%
b) everyone would abandon it once an entity hits 51%
c) the operators would take the risk of a & b and value it higher than DOUBLING profits.

will all happen guaranteed (as in a 0.00000000000000000000000000000% chance of one of the above not happening) is at the very least naive.

Most likely Bitcoin would continue to operate even if an entity achieved a monopoly.  There may be a short term sell off but most of the activity on Bitcoin is speculation and one can speculate just as easy with a single miner than 1000+ miners.  Some would bet againsts, when price gets low enough some would bet for.  In time the network could adapt to a single CURRENT operator.  If the operator failed the network wouldn't fail so it would still remain decentralized at least in theory.

To say it is "fucking retarded" is silly.  It is a risk but investing $1M into Bitcoin is also a risk.


The other potential  is an outside force leveraging the 20%+ network.  Say Vlad go aproached by Chase who said "it looks like you have spent $2M so far and the NPV of your future revenue stream is $3.8M.  We want to buy your company out to monopolize Bitcoin.  Either Bitcoin continues to operate and we own it or it fails and we eliminated a threat.  We will buyout your company for $7.6M (an instant 100% profit to you and your investors), keep you and your staff on (maybe with some nice 300% increase in salary).  Spend another $1M or so and gain 51% = 100% control of the network.  

Maybe Vlad would tell Chase and their $7,600,000 check to pack sand but maybe just maybe he wouldn't.

TL/DR version:
Selling ASIC processors (even at a healthy profit) on open market furthers decentralization, building massive private hashing farms on scale never seen before only furthers centralization.  That can't be refuted.

You assume that the coins are hoarded, and not spent on the market. How long can the market sustain the sale of the coins generated from having 50% of the mining power continuously?

It only equals 100% when you purposely do bad things with it, such as orphaning blocks by fiddling with your timestamps.

If you were to become 100% by doing bad things with your hash power, why wouldn't the system collapse around itself? How would it stay up?

I don't think you could maintain any such "illusion" for long. Such an event happening would remove any remaining faith in the system, besides all the extra coins dragging the market down to ~nil.

Why does the market price of Bitcoin matter?  If anything a private company could control the flow of coins to reduce volatility increasing the utility to merchants and users.

watching closely