Topic: ASICMINER: Entering the Future of ASIC Mining by Inventing It - page 1054. (Read 3917543 times)
Having hash rate near 50% is terrible for the network. This is because if someone DDoSes the next biggest pool like BTC Guild, then they go over 51% and this looks like a weakness in bitcoin and reduces confidence in the coin. This thereby reduces price of coin etc. even though they may not do anything with the attack, the point is that it's possible.
My research and conversation with smart dudes has led me to the conclusion that selling hardware is much more important than growing the mining farm. This is not to say that mining is worthless in comparison, bit that it's profitability is very temporary.
We need to be much more keen on hardware sales than begging AM to get to 50TH, 200TH, 1000TH.
Furthermore, it can be argued that AM should abuse its dominant position to the point of rapid commoditization of mining equipment, because that is where things will end up. It is better for them to reap the rewards, than to wait for more players to enter the market.
They should then use their resources to transcend the mining hardware/farm market altogether. Ideally they would time this right at the tipping point of total commoditization, and get into a tertiary market like custom decryption for governments, or alternative ASIC designs for other purposes than bitcoin.
We need to be much more keen on hardware sales than begging AM to get to 50TH, 200TH, 1000TH.
Furthermore, it can be argued that AM should abuse its dominant position to the point of rapid commoditization of mining equipment, because that is where things will end up. It is better for them to reap the rewards, than to wait for more players to enter the market.
They should then use their resources to transcend the mining hardware/farm market altogether. Ideally they would time this right at the tipping point of total commoditization, and get into a tertiary market like custom decryption for governments, or alternative ASIC designs for other purposes than bitcoin.
I've read some old threads that mining was a means of bootstrapping the company to sell hardware. It seems ATM that the volume of blade sales, while tasty, is not yet earth-shattering (when AM does most things so well expectations are high). This is due to setting a price point at which a handful of early adopters were willing to pay. A lower price point would certainly ship a ton more blades. The high price point of the moment seems to invite competition (100TH, KnCMiner and the open-source brigade, and yes even BFL and their crippleware) and disparaging remarks from the GPU crowd (even though I think if they properly accounted for their cost of operation they'd see blades are cheaper).
I can understand the viability of the commoditization strategy; perhaps it is too early for those of us looking in at AM from the outside to see exactly how it will be conducted. While things like the USB sticks will put ASICs in many hands, it won't discourage competition.
Perhaps it's better that we hoi-polloi investors aren't truly aware of how it will be done. I can imagine a casual friedcat announcement appearing in these pages in a few weeks that suddenly makes it clear to everyone exactly who the winners and losers in this game are.
You've got the right idea. See, AM does not have to sell "cheap" hardware, they must only be the cheapest currently. Right now, no one is shipping, so AM can choose between selling somewhat overpriced hardware, or mining with it themselves. For now, that mixed approach works.
However, scaling up a mining farm, exposes us to liabilities like depreciating hardware and infrastructure. So their approach must be calculated, always looking for when the time is right to lower hardware retail prices.
My research and conversation with smart dudes has led me to the conclusion that selling hardware is much more important than growing the mining farm. This is not to say that mining is worthless in comparison, bit that it's profitability is very temporary.
We need to be much more keen on hardware sales than begging AM to get to 50TH, 200TH, 1000TH.
Furthermore, it can be argued that AM should abuse its dominant position to the point of rapid commoditization of mining equipment, because that is where things will end up. It is better for them to reap the rewards, than to wait for more players to enter the market.
They should then use their resources to transcend the mining hardware/farm market altogether. Ideally they would time this right at the tipping point of total commoditization, and get into a tertiary market like custom decryption for governments, or alternative ASIC designs for other purposes than bitcoin.
We need to be much more keen on hardware sales than begging AM to get to 50TH, 200TH, 1000TH.
Furthermore, it can be argued that AM should abuse its dominant position to the point of rapid commoditization of mining equipment, because that is where things will end up. It is better for them to reap the rewards, than to wait for more players to enter the market.
They should then use their resources to transcend the mining hardware/farm market altogether. Ideally they would time this right at the tipping point of total commoditization, and get into a tertiary market like custom decryption for governments, or alternative ASIC designs for other purposes than bitcoin.
I've read some old threads that mining was a means of bootstrapping the company to sell hardware. It seems ATM that the volume of blade sales, while tasty, is not yet earth-shattering (when AM does most things so well expectations are high). This is due to setting a price point at which a handful of early adopters were willing to pay. A lower price point would certainly ship a ton more blades. The high price point of the moment seems to invite competition (100TH, KnCMiner and the open-source brigade, and yes even BFL and their crippleware) and disparaging remarks from the GPU crowd (even though I think if they properly accounted for their cost of operation they'd see blades are cheaper).
I can understand the viability of the commoditization strategy; perhaps it is too early for those of us looking in at AM from the outside to see exactly how it will be conducted. While things like the USB sticks will put ASICs in many hands, it won't discourage competition.
Perhaps it's better that we hoi-polloi investors aren't truly aware of how it will be done. I can imagine a casual friedcat announcement appearing in these pages in a few weeks that suddenly makes it clear to everyone exactly who the winners and losers in this game are.
You've got the right idea. See, AM does not have to sell "cheap" hardware, they must only be the cheapest currently. Right now, no one is shipping, so AM can choose between selling somewhat overpriced hardware, or mining with it themselves. For now, that mixed approach works.
However, scaling up a mining farm, exposes us to liabilities like depreciating hardware and infrastructure. So their approach must be calculated, always looking for when the time is right to lower hardware retail prices.
My research and conversation with smart dudes has led me to the conclusion that selling hardware is much more important than growing the mining farm. This is not to say that mining is worthless in comparison, bit that it's profitability is very temporary.
We need to be much more keen on hardware sales than begging AM to get to 50TH, 200TH, 1000TH.
Furthermore, it can be argued that AM should abuse its dominant position to the point of rapid commoditization of mining equipment, because that is where things will end up. It is better for them to reap the rewards, than to wait for more players to enter the market.
They should then use their resources to transcend the mining hardware/farm market altogether. Ideally they would time this right at the tipping point of total commoditization, and get into a tertiary market like custom decryption for governments, or alternative ASIC designs for other purposes than bitcoin.
We need to be much more keen on hardware sales than begging AM to get to 50TH, 200TH, 1000TH.
Furthermore, it can be argued that AM should abuse its dominant position to the point of rapid commoditization of mining equipment, because that is where things will end up. It is better for them to reap the rewards, than to wait for more players to enter the market.
They should then use their resources to transcend the mining hardware/farm market altogether. Ideally they would time this right at the tipping point of total commoditization, and get into a tertiary market like custom decryption for governments, or alternative ASIC designs for other purposes than bitcoin.
I've read some old threads that mining was a means of bootstrapping the company to sell hardware. It seems ATM that the volume of blade sales, while tasty, is not yet earth-shattering (when AM does most things so well expectations are high). This is due to setting a price point at which a handful of early adopters were willing to pay. A lower price point would certainly ship a ton more blades. The high price point of the moment seems to invite competition (100TH, KnCMiner and the open-source brigade, and yes even BFL and their crippleware) and disparaging remarks from the GPU crowd (even though I think if they properly accounted for their cost of operation they'd see blades are cheaper).
I can understand the viability of the commoditization strategy; perhaps it is too early for those of us looking in at AM from the outside to see exactly how it will be conducted. While things like the USB sticks will put ASICs in many hands, it won't discourage competition.
Perhaps it's better that we hoi-polloi investors aren't truly aware of how it will be done. I can imagine a casual friedcat announcement appearing in these pages in a few weeks that suddenly makes it clear to everyone exactly who the winners and losers in this game are.
My research and conversation with smart dudes has led me to the conclusion that selling hardware is much more important than growing the mining farm. This is not to say that mining is worthless in comparison, bit that it's profitability is very temporary.
We need to be much more keen on hardware sales than begging AM to get to 50TH, 200TH, 1000TH.
Furthermore, it can be argued that AM should abuse its dominant position to the point of rapid commoditization of mining equipment, because that is where things will end up. It is better for them to reap the rewards, than to wait for more players to enter the market.
They should then use their resources to transcend the mining hardware/farm market altogether. Ideally they would time this right at the tipping point of total commoditization, and get into a tertiary market like custom decryption for governments, or alternative ASIC designs for other purposes than bitcoin.
We need to be much more keen on hardware sales than begging AM to get to 50TH, 200TH, 1000TH.
Furthermore, it can be argued that AM should abuse its dominant position to the point of rapid commoditization of mining equipment, because that is where things will end up. It is better for them to reap the rewards, than to wait for more players to enter the market.
They should then use their resources to transcend the mining hardware/farm market altogether. Ideally they would time this right at the tipping point of total commoditization, and get into a tertiary market like custom decryption for governments, or alternative ASIC designs for other purposes than bitcoin.
One thought that has come across my mind a few times is the possibility of AM making sales with fiat currency and that could lead to the possibility of being listed on a regulated stock exchange. He could open himself up to new investors and use the funds to dump back into development.. ?
With regard to growing Asicminer's total hash rate to more than the current 20s%...
An attacker who controls 30% of the network has a 20% chance of solving 6 blocks in a row...so even though we are not the dreaded 51% attacker, the network would still be exposed to some risk by friedcat having 30%.
Moreover - if friedcat does get 30%, imagine that competitor pools of total size 40% gets taken out (eg ddos). Now Asicminer's 30% suddenly becomes 50% of the total, and again we are the attacker.
An attacker who controls 30% of the network has a 20% chance of solving 6 blocks in a row...so even though we are not the dreaded 51% attacker, the network would still be exposed to some risk by friedcat having 30%.
Moreover - if friedcat does get 30%, imagine that competitor pools of total size 40% gets taken out (eg ddos). Now Asicminer's 30% suddenly becomes 50% of the total, and again we are the attacker.
Following your logic... But that some competitor pool would have 40% is OK?
EDIT: Sorry that I cannot type as quickly as you are editing your post without tracking.
I believe the highest priority should be getting our hashrate to near 50% and implementing a scheme like Endlessa's where we detect the network hashrate and always stay a safe % below 50 turning on and off machines automatically as necessary. Using the funds gained from mining, we should continue to ensure hashrate dominance by building newer and more efficient miners to ensure maximum profitability off the maximum hashrate we can control. This ensures the company and its investors will receive ~50% of the millions of bitcoins that are yet to be created, and also access to transaction fees per block, which should become more substantial as adoption increases. Bitcoin has the potential to become one of the most valuable resources in the coming years and we would be unwise to shift our focus away from being the dominant miner of it. Thanks to friedcat and co's brilliant maneuvers we already have a substantial hashrate which gives us the leverage we need to go all the way, all that remains is to do a little more deployment of machines already designed, built, and delivered.
With that being said, I must say I am disappointed to see that we will seemingly not reach the stated goal of 50TH/s deployed by June 1. As a project manager I understand things come up and sometimes goals can not be met but I do wish that the investors would have received a heads up that the goal was no longer feasible when problems arose. While proving to be a useful source of one time income, I hope that the sales of hardware have not been the cause of our delayed deployment of hashing power. There is a lot of competition hashpower set to deploy soon and I would hate to see us squander our current superior position.
My take on the current situation, was not my intention to preach or tell Friedcat or anyone what to do. Was meant to contribute to a discussion of the company and its current status.
With that being said, I must say I am disappointed to see that we will seemingly not reach the stated goal of 50TH/s deployed by June 1. As a project manager I understand things come up and sometimes goals can not be met but I do wish that the investors would have received a heads up that the goal was no longer feasible when problems arose. While proving to be a useful source of one time income, I hope that the sales of hardware have not been the cause of our delayed deployment of hashing power. There is a lot of competition hashpower set to deploy soon and I would hate to see us squander our current superior position.
My take on the current situation, was not my intention to preach or tell Friedcat or anyone what to do. Was meant to contribute to a discussion of the company and its current status.
With regard to growing Asicminer's total hash rate to more than the current 20s%...
An attacker who controls 30% of the network has a 20% chance of solving 6 blocks in a row...so even though we are not the dreaded 51% attacker, the network would still be exposed to some risk by friedcat having 30%.
Moreover - if friedcat does get 30%, imagine that competitor pools of total size 40% gets taken out (eg ddos). Now Asicminer's 30% suddenly becomes 50% of the total, and again we are the attacker.
An attacker who controls 30% of the network has a 20% chance of solving 6 blocks in a row...so even though we are not the dreaded 51% attacker, the network would still be exposed to some risk by friedcat having 30%.
Moreover - if friedcat does get 30%, imagine that competitor pools of total size 40% gets taken out (eg ddos). Now Asicminer's 30% suddenly becomes 50% of the total, and again we are the attacker.
My research and conversation with smart dudes has led me to the conclusion that selling hardware is much more important than growing the mining farm. This is not to say that mining is worthless in comparison, bit that it's profitability is very temporary.
We need to be much more keen on hardware sales than begging AM to get to 50TH, 200TH, 1000TH.
Furthermore, it can be argued that AM should abuse its dominant position to the point of rapid commoditization of mining equipment, because that is where things will end up. It is better for them to reap the rewards, than to wait for more players to enter the market.
They should then use their resources to transcend the mining hardware/farm market altogether. Ideally they would time this right at the tipping point of total commoditization, and get into a tertiary market like custom decryption for governments, or alternative ASIC designs for other purposes than bitcoin.
We need to be much more keen on hardware sales than begging AM to get to 50TH, 200TH, 1000TH.
Furthermore, it can be argued that AM should abuse its dominant position to the point of rapid commoditization of mining equipment, because that is where things will end up. It is better for them to reap the rewards, than to wait for more players to enter the market.
They should then use their resources to transcend the mining hardware/farm market altogether. Ideally they would time this right at the tipping point of total commoditization, and get into a tertiary market like custom decryption for governments, or alternative ASIC designs for other purposes than bitcoin.
(...) At 40% AM would receive 2400 a day on average (40% of the average of 6000 coins per day) (...)
Just a small correction on this: 25 BTC per block * 6 blocks per hour * 24 hours per day = 3600 BTC per day.
40% of 3600 = 1440.
(Assuming steady-state difficulty and hashrate.)
Now please continue with your previously scheduled discussion...
Also as a side note geological/governmental diversity would not hurt. Find the most bitcoin friendly places in the world and distribute the hardware accordingly. This prevents "Doomsday" scenarios (government interference/geological disaster) from completely erasing the business. Again, another issue I have not heard much about.
Anyhow that my .02 BTC
hope it spawns some meaningful discussion
Anyhow that my .02 BTC
hope it spawns some meaningful discussion Yes, the DR/failover issue has only been discussed briefly before and probably could be explored further; not that AM are making strategic business planning decisions based on the combined wisdom of this august forum.
As it happens I work in a large data/communications centre owned by a big telco in a geologically and politically stable area a long way from China. I'm sure we could squeeze a couple of thousand blades in and no one would mind.
Friedcat has very good reasons NOT to deploy more hash power as long as AM hold the current high % of the global Bitcoin hashrate, and it's already close to 30%, so there is little margin here. Approaching 50%, let alone going over it would definitely (and rightfully) be seen as a threat to the security of the network (basically AM could decide what makes it to the blockchain or not, and double spend at wish), creating big FUD on BTC and probably plummeting the exchange rate. Friedcat does not want that to happen of course...
And that's not the only problem, it also wouldn't make sense economically. Always keep in mind that the money supply is constant (less the random variance, and difficulty retargeting every 2000 blocks window, that is removed when considering longer time frames). Let's suppose AM gets close to 100% of the hashrate at, say 200 Thash/sec. Then if it starts hashing at 400 Thash/sec, it would still earn close(r) to 100% and earn... just the same, but with twice the hardware costs, same for electricity costs. See the problem here?
And that's not the only problem, it also wouldn't make sense economically. Always keep in mind that the money supply is constant (less the random variance, and difficulty retargeting every 2000 blocks window, that is removed when considering longer time frames). Let's suppose AM gets close to 100% of the hashrate at, say 200 Thash/sec. Then if it starts hashing at 400 Thash/sec, it would still earn close(r) to 100% and earn... just the same, but with twice the hardware costs, same for electricity costs. See the problem here?
you are exactly right. I think the most hashrate that AM should deploy is around 35 percent of the network. More than that would be harmful to the bitcoin enviroment and economy.
Has friedcat stated his position on this?
In my opinion, if ASICMiner doesn't want to increase its hash rate with hardware it already has (which makes sense), it should sell this hardware instead.
In two years it will be worth nothing (or very little).
I thought its pretty clear that i meant the business aspect. A company doesnt stop targetting to earn more money because its already doing fine.
Sorry, I edited.I was quite surprised of reading some strange notion from you, in fact.
I edited my post now too to make it more clear...
Everything you've said sounds reasonable, which makes me wonder if that really is the problem, as it seems like friedcat and his team would have taken steps to ameliorate it if it was the issue (OK, you can't just snap your fingers and make a data centre appear, but you still must be able to acquire rack space in a city the size of Shenzhen at short notice).
I've also read that the hardware costs about $10K per THash. AM are supposed to have about 50THash on hand that hasn't yet been deployed.
Also as a side note geological/governmental diversity would not hurt. Find the most bitcoin friendly places in the world and distribute the hardware accordingly. This prevents "Doomsday" scenarios (government interference/geological disaster) from completely erasing the business. Again, another issue I have not heard much about.
Anyhow that my .02 BTC
hope it spawns some meaningful discussion So that being addressed, you can satisfy the core business needs (mining with hardware for BTC) with math. Anytime hardware arrives and is not need to maintain the hash rate buffer, it can be sold. The price should be set in a way (which again is math against supply and demand) that ensures all surplus units are sold. This would additionally allow a certain level of SLA to be maintained with the channels producing the hardware. My understanding is this hardware (didn't I read it costs around $100 USD to make) can be produced and priced competitively to compete with the other vendors who seem to be coming online.
Anyhow, that's how I would do it.
Edit: grammar and clarity
Everything you've said sounds reasonable, which makes me wonder if that really is the problem, as it seems like friedcat and his team would have taken steps to ameliorate it if it was the issue (OK, you can't just snap your fingers and make a data centre appear, but you still must be able to acquire rack space in a city the size of Shenzhen at short notice).
I've also read that the hardware costs about $10K per THash. AM are supposed to have about 50THash on hand that hasn't yet been deployed.
I thought its pretty clear that i meant the business aspect. A company doesnt stop targetting to earn more money because its already doing fine.
Sorry, I edited.I was quite surprised of reading some strange notion from you, in fact.
some stuff
Your avatar looks like a Mandelbrot set - do you have a larger version so I can see what's on the right hand side of it? Just curious.
some stuff
Your avatar looks like a Mandelbrot set - do you have a larger version so I can see what's on the right hand side of it? Just curious.
Assuming that AM haven't gone higher for the reasons you've articulated, what do you think the fix would be? Deploying kit in separate data centres? Having multiple pools for solo mining? I think I've read that they are in 2 data centres at the moment, or at least they switched from one to another.
It appears that the hardware selling, while reasonably successful, is not going to shift vast quantities of blades (unless the price drops over time), so AM are going to have to solve the problem of deploying vast quantities of blades, if it is in fact the issue that they have at the moment.
Without the details of the psu and network problems, I'll assume them to be solvable. At 40% AM would receive 2400 a day on average (40% of the average of 6000 coins per day), this would be worth $288,000 USD ($120 USD market). Lets make this easy math and say we are currently doing half that $144,000. It seems feasible to scale this out to multiple data centers or separated network racks in a single center. Essentially find the stable network, power and hardware levels and duplicate. For the additional $144,000/1200 bitcoins this seems to be profitable scenario.
An additional solution, that would assist with time to deploy as hash rate/network luck changes, I would keep a 10% (or whatever makes sense) additional hash rate capability deployed (to be explained momentarily).
I have bitcoind running on my desktop monitoring the blockchain inside of hand-rolled workflow framework interfacing with json rpc api of bitcoind. It is easily doable to monitor the number of blocks being generated and (assuming there are soft controls for the mining hardware) ensure that you are receiving on average 2.4 (40%) Blocks of 6 Blocks generated per hour. As the 10% additional hash becomes utilized consistently due to network growth, you deploy more hardware to maintain the 10% buffer. This avoids reactionary deployment and potential loss of income. It allows dynamic adjustment to the network and stable income. It also saves power and wear on hardware, by powering down unnecessary hardware when not needed and maintains the bitcoin network integrity by not surpassing 40% (or whatever) targeted income goal. Also, it should allow you stabilize buffer hardware deployments prior to the need to utilize them to maintain income. (you can test them by re-prioritizing them in the hardware pool, let me know if you want a brain dump on that)
So that being addressed, you can satisfy the core business needs (mining with hardware for BTC) with math. Anytime hardware arrives and is not need to maintain the hash rate buffer, it can be sold. The price should be set in a way (which again is math against supply and demand) that ensures all surplus units are sold. This would additionally allow a certain level of SLA to be maintained with the channels producing the hardware. My understanding is this hardware (didn't I read it costs around $100 USD to make) can be produced and priced competitively to compete with the other vendors who seem to be coming online.
Anyhow, that's how I would do it.
Edit: grammar and clarity
No. Even more than 30% could be dangerous or seen as an attempt to overwhelm the network. The company is doing more than fine, there's no need to be so greedy.
+1Comparing it to google is so senseless I'm wondering if the guy has any idea how mining works.
I thought its pretty clear that i meant the business aspect. A company doesnt stop targetting to earn more money because its already doing fine.
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