Topic: ASIC Miner Sellers - Why do they exist? (Read 2155 times)

For Avalon seller I can understand.. 

Someone bought 2 Avalon miner, sell one for 30k U$ and mine with the other.. This make a 30k U$ availlable to buy any Gen 2 ASIC, wich should be arround 10k U$ each and mine at least few thousands MH/s

But, I would not be willing to sell such an item for paypal$.. this is too risky, I may sell for BTC, but not paypal$

Anyway, I'll always prefer to mine than buy/sell

UPFRONT COSTS !!!

hah if i were them i'd just buy miners from Avalon and send them to the preorders. Pocket the change, call it a day, why not? haha

Bfl already made up to 15000% return off the bitcoins they took in. heh

Suppose [insert ASIC producer here] has manufactured 10,000 units. Among their choices are to either sell those units, or, use them directly to mine bitcoins.

Which path would be the most profitable? There's not enough variables here to answer this question, so we would need to fill in some blanks.

Suppose they have a full 2016 blocks before the next difficulty adjustment. That's 50,400 bitcoins (25*2016), $5,797,000 USD at $115 USD/coin.

Suppose that each of the 10000 units is capable of running at 5GH/s. That would give them an effective hash rate of 50 TH/s.

Current estimated network hash rate is around 88 TH/s, giving a total network hash rate of 138 TH/s.

According to allchains:

MH/s: 50,000,000 (5000 * 10000)
Watts: 300,000 (30 * 10000)
$/KwH: 0.10
Cost/Day: $720
Difficulty: 11171715.45
Coin/Day: 2250.837
$/Coin: 114.01
Total profit: $255897.916 (per day)
Per unit: $25.6

A block is ideally generated every 10 minutes. That's 144 blocks per day, or 3600 bitcoins.

The next difficulty adjustment would occur in approximately 8 days. Per unit profit for that difficulty period would be about 8*25.6 = $204.8.

Assuming the network hash rate stays around 138 TH/s, the next difficulty adjustment would be about 19 million.

They would be pulling in about 1311 coins per day @ $148816 total profit, or $14.8 per unit. Assuming a full two weeks before the next adjustment (unlikely), that would result in $192.4 profit per unit.

Total per unit profit for the two periods is close to $400, assuming a lot of factors including the bitcoin price remaining steady and no other ASIC sellers doing the same thing.

Managing and configuring 10000 units is not a free exercise. At 5 minutes per unit, that's 34 full days of work, or 104 eight-hour days. Suppose that you could hire 104 people and pay them 20 an hour and get it done in a day, costing you about $16640, or about $1.66 per unit.

If the 5GH/s units were being sold @ $500 each, that means $500 now versus potentially $400 in a few weeks time.

Of course, BFL isn't selling for $500, they are selling for $274. Why might that be? I suspect it's because units aren't being shipped as they are ordered. Instead, anyone who orders now may not get a unit for several months. How much would you pay for a 5GH/s unit if you could get it in a couple days? $500? $1000?

i know. what you said is correct.

@superduh see edited post...

being a bit racist here
AM is chinese company who is actually doing things correctly
BFL is an american company who can't do things correctly

what it happening with the world?!

They exist? I thought ASIC's are scam?

All the above explanations are bullshit...

Because of all the ASIC DIYers out there and taking into account the 3 major ASIC producers competing w each other, one company mining w their ASIC tech provides little to no threat to the network. Also relevant to this point is the fact that ASICMINERS have already added 21 terahashes to the network w diff only increasing 30 perecent and their 14 TH added to BTC guild only jacking up that pools network share 6 percent...

"Sellers" exist for one primary reason only: it takes an insane amount of capital to design and produce custom BTC mining ASIC chips + create the hardware and software necessary to hash with these specialized ASIC chips. Early to mid last year there were no VCs with balls big enuff to invest in ASIC mining therefore we have "sellers" like Avalon and BFL who really just intiatiated pre-ordering as a means to raise the necessary capital...

Even ASICMINER/Bitfountian had to IPO shares in theyre company to raise captital and the only reasons they even decided to sell some of there first gen Blades is because they have a responsibility to shareholders/must pay dividends + raise additional capital for research and development of the next generatin ASIC hardware they plan to implement...

Because they'd then either need to a) build units when needed, not efficient to do because electronics are cheaper when bought in further bulk, plus it took time to design the chips, you want to ultimately reduce that cost by using said design as much as possible b) build loads of units and then sit on them until needed, but that's risky, you'd either run the risk that the face of bitcoin changes making your units useless or someone better comes along with a more efficient unit and yours ultimately won't make as much.

The whole point with the bitcoin network so far is you'll always have a top dog, either a company or a pool or an individual even who will have a leash on them being held by the rest of the network, you have to keep pace with that, either you go to fast and the network is gone or you go to slow and someone else becomes the top dog.

Of course coin generation is going to be determined by %hashing power of the entire mining pool but they're not the only producers of ASICs.

Can you explain what you mean by time-value of money in this context? Are you saying they'll make less money over time due to upfront costs?

I've already mentioned I'm unlikely to be the first to think of this and no it's not very clever at all. The question is, why do these companies exist.

My suspicions are that they exist because the lower value of Bitcoin previously and the belief that selling them would yield a bigger profit but I was wanting to see if anyone had any further information to add.


I'm not really sure what you mean by all this. Are you thinking further ahead than the conversation has gone? I can see this being relevant if you're making assumptions like they would build 1000 of these things and have them all running, thereby causing the situation you've arrived at but I'm making none of those assumptions.



Why would you do that? Why not bring units 'online' as and when the difficulty increase is caused by other players in the market (e.g. Avalon)?

you do realize the only reason they can get 1 BTC every 6 days is because BFL has only released a few of their ASIC, right?

Aside from your arithmetic failing to take the time-value of money into account...

I wonder what percentage of bitcoin's current hashing power is owned by the producers of ASIC miners.  Using, as you have, BFL as an example; have you noticed the huge spike in the U.S. map on the Web GL Globe - centered square on Kansas City?

If I were BFL, I would certainly want to thoroughly test each and every unit before shipping.     But I certainly wouldn't want to over-mine, either.  There's that pesky time-value of money thing again...

yeah, sadly, I don't know if you think your clever being the 'first' to think of this... if you searched the forums or bitcoin.stackexchange.com you'd know the rough answer already.

The bitcoin network requires that there can't be a majority share to one person or the network is compromised... the point being, if the trust of the network is gone so why would anyone else want any bitcoins? and what's the point of a virtual currency that only one person can get hold of because no one else would be able to mine?

Sure, BFL probably are mining with the things but the moment they do the difficulty rises and no one else is making money anymore so most people would leave the currency for other options, it's quite simple.

From the Wired article, one of the BFL units produces a Bitcoin every 6 days (less than that but let's be pessimistic here to illustrate a point).

The current price of a Bitcoin is around $114 currently. Let's say it's $100 to take into account any minor selloffs.

At a cost of $245 per unit, BFL could be mining their way into profit after 15 days. In the first month they would have made $250 of profit and in the second month $500.

I can't think of a reason why anyone selling these things would actually do so.

I realise this has probably been mentioned in one of the 'BFL are scammers' threads but I'm wondering if anyone else feels that by simple economics, these companies shouldn't exist because it would be far more profitable for them to mine Bitcoin instead.


Before anyone things I'm targeting a specific manufacturer, I'm not. I'm just using BFL as an example as the Wired article provides numbers that I can work off.