No, if they start to play with different rules their mined blocks will be refused by everyone on the network and be worthless. That’s not what the issue is with concentrated mining power.
If they start to play with different rules, one of the hard fork remaining branches (or both) will be refused by everyone on the network and be worthless.
There's no telling whether it'd be the "hijacked" branch or the original one - assuming they control 50%+ of the mining power, there's a decent argument that the remaining miners would follow their lead if only to stay on the largest branch.
What miners do is irrelevant: the code known as bitcoin, with a 21M hard cap, simply will reject any block that creates more than its allowed bitcoins as invalid, the same way it rejects a random string of bytes as invalid.
Depending on your definitions this might or might no be true but it also might be totally irrelevant.
There is a protocol and system specification. There are implementations of that specifications. There is a distributed system running those implementations. And the distributed system has a state. Each of those can change and each of those or a combination of them could arguably be called Bitcoin.
If everyone would run new implementations with a different coin cap, you can argue that it is no longer Bitcoin because Bitcoin is a very specific specification with a 21M coin cap, but this would have little bearing on the actual situation.
This is like saying because some people own the majority of printing presses, money is worthless.
Money has worth because people accept it in exchange for goods and services.
Bitcoin has worth because people accept it in exchange for goods and services.
It’s not the miners that create value, it’s the merchants. If miners start some fork they’ll leave the main blockchain, which will run fine without them. And they have absolutely no way of forcing anyone to use their fork. Only if the merchants start accepting coins from the forked blockchain will it become valuable. But that’s up to the merchants, not the miners.
There are problems with one miner controlling over 50% of the mining power. This is not such a problem.
Cryptoheads really gone from "printed money is becoming worthless, we need currency with enforced scarcity" to "it's all arbitrary anyway".
It's been quite educational watching the whole cryptocurrency community re-invent economics 101 and find out the problem has never been technical, always been political.
The point is you need the economic majority to be on side in order to succeed with a hard fork. Just the top 50 miners switching on their own isn't enough.
Add 50 more - to reduce hash rate even more. Announce hard fork right after difficulty adjustment. And then, suddenly, these who have not forked will be stalled for several weeks. Instead of 10 minutes per block, the time will be 30 minutes and possibly more. And to adjust the difficulty those who have not forked would need... a hard fork?
Yes, these 100 miners are pools. But where pool participants will go then? Will pools who have not forked keep pool participation fees low?
Etc.
The game here is not quite simple. It is much more complex than appears at first sight.
It doesn't adjust immediately though. If a large majority of miner suddenly disappears then the block mining rate does indeed drop until the next difficulty adjustment.
So if 50% of the mining power left the next block would take on average about 20 minutes. Where it routinely takes about that long, because that’s just the way statistics work. A non issue.
Here’s a graph of the time blocks took over the last three years:
First, 20 minutes in average for power-distributed time-to-block would result in much, much higher peaks. In your chart I see 25 minutes for a block, then it will be 50 minutes.
Second, instead of two weeks to hash rate adjustment, it will take four weeks.
And if these staying with this slow bitcoin would decide to leave to more profitable currencies (not necessarily Bitcoin, there are other SHA256-based PoW schemes), that will push hash rate adjustment even further into future.
These 25 minute peaks were caused by a similar event, witness the also slow rates in the surrounding blocks. So that’s approximately how bad it would get in this ‘disastrous’ event.
In the sense that updating the code to do something else would make it “not Bitcoin”, sure. But I really don’t think this matters to much of anybody if the “OG Bitcoin” drops to zero and the hard fork with new behavior wins.
Developers of the core protocol would notice, add a flag and then miners/clients/exchanges who want to remain with the same dev team can signal they want to follow the "dev" chain instead of the "miner" chain.
Usually forks have checkpoints as well so things can't change willy-nilly.
If blocks in the "miner" chain break the rules of the "dev" chain, then no flag is required. You'll automatically stick with the chain that contains valid blocks, as determined by the implementation that you're running.
If they have the majority mining power they could equally well undermine the security of the original branch, rendering it worthless as well. Miners have interests, core developers have interests, bitcoin users have all kinds of interests, none of them on their own decides what will happen. Without miners there is no bitcoin, but neither is there without developers or without users.
Would you feel safe having your savings stored in the original bitcoin fork, knowing there is a mining cartel that holds 50% mining power? Some users will accept reasonable changes that weere lobbied for by the miners, if that means they get to enjoy the security provided by the miners.
