All that mining does is give the person with the most hashrate more voting power in which transactions will be accepted. Innovation in mining hardware and data centers does not in any way increase bitcoin's security.
This is completely wrong. The higher the difficulty, the harder it becomes to attack the network, which is a critical feature. If anyone who rented a data center could attack Bitcoin at this point, it would be even less stable (much less!) than it has been already.
If everyone can use technology to push a higher hashrate, then what has changed? The people who can get their hands on new mining chips first have an advantage for a little while, but in the end it's a zero-sum game. The pie is 100% of hashing power/block validation power. How can you divide a pie into more than 100%?
It might encourage others to compete, and the arms race continues. But if too much of the network is controlled by a minority, then it's not automatically more secure.
Not sure exactly what you mean here - mining, and mining faster, generally increases the computational resources another third party would need to 51% attack the network.
The only way to make a 51% attack impractically expensive is to make the network impractically expensive to run.
But, and this is arguably one of the cleverest parts of Bitcoin's design: Who is going to get all that compute setup to mine Bitcoin, and then break the very system that makes it worth having?
Not saying there couldn't ever be scenarios where it happens, but its a pretty good first deterrent to bad behavior - and its clearly intentional, mentioned in the original Bitcoin paper:
"If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth."
In some ways, the existence of custom mining hardware is a bad thing, by reducing the spread of participants who can mine cost-effectively - essentially un-democratising the running of the system. But on the other hand, its meant that an attacker has to invest in a lot of special-purpose hardware to attack the system (rather than just being able to e.g. rent enough EC2 nodes, or turn their entire government's cluster against Bitcoin, or whatever); which probably increases the cost of (then) destroying the system, and makes Satoshi's original Incentive argument stronger, imo.
But I can imagine scenarios where its game theory might not hold - because "profitable" is measured in bitcoins. For example, Bitcoin might not be suitable for use as a reserve currency if doing so would create "political profit" for destablising bitcoin that might exceed the monetary cost.
You seem to be implying total centralization, which is not at all true.
