Topic: Avalon batch #3 approaching "NO ROI" point (Read 4338 times)

True, my bad, for some reason I totally missed that post...

Agree on that, see my previous post.

Still, you paid in BTC and you'll get a BTC refund, so no issue there...

I think that there is at least a 72h timeframe to sell at 100... maybe even a little more (and maybe it's gonna skyrocket, who knows?)
You are more active in the wall thread than i'm

I think it's already too late, I don't see how this refund thing will be immediate, and double digits are knocking hard at Gox's door.

LOL, calm down... Get a refund, sell it on gox before it's too late and buy some happy miners with a sure negative ROI for sport later, just like i (and many others, i suppose) plan to do...

If I'm not mistaken when batch #3 opened (was it 26th or 27th of March?) Bitcoin was around the same exchange rate as per today, ie $100ish... Maybe a little bit less ($90?), really don't remember the exact figure, but I remember making the calculation that in USD it costed aprox. $7,000

Anyhow, I don't care - I spent BTC for a unit priced in BTC - what's this thing about "positive USD return"? Are you joking? Please be serious. Is like getting a USD refund for a pair shoes you paid in USD and thinking "well, I got a positive yen return".... LOL

I spent 75BTC and I get 75BTC back - full stop. That's break-even in my book. Or if you lend me 100BTC now you will be OK if I give back 100BTC to you in 6 months with no interest whatsoever, "because the USD/BTC exchange rate went up"? Very flawed logic.

So asking for a refund would give you a positive USD return...

fixed in BTC

Batch #3? BTC, there was never a price in USD for batch #3.

Anyway is the refund USD or btc fixed?

No. It has guaranteed break even. ROI or "return on investment" actually means that the investors get some profit or benefit from the investment.

I see that 99% of the folks in here use the term incorrectly, as it was a synonym for break-even, which is incorrect. FYI: https://en.wikipedia.org/wiki/Return_on_investment

ITT: people who don't realize Avalon batch 3 has guaranteed ROI thanks to refund policy. You don't think they're going to make ROI? Go for a refund and get instant break-even.

https://en.wikipedia.org/wiki/Special_pleading

People are often delusional or simply don't do the maths.

I bet that chips will be hashing in the wild before batch #3 is completed.

Sad, we paid the highest price for batch 3 and now the only option we have is to ask for a refund. I guess they will see many refund requests in the following weeks... And I guess they will just keep the units.

Some Batch3 bad news...
Looks like chips are going to ship alongside Batch3.

From Yifu:
https://bitcointalksearch.org/topic/m.2562419

I guess the good news is that you can still get a refund if desired.

https://bitcointalksearch.org/topic/m.2515773

Team Avalon on BTC Guild is just 3 Batch #1 units + 6 Batch #2 units + a another Batch #1 + some curious people that don't even own an avalon as they pull 30 GH/s or less

It has nothing to do with the testing Avalon is doing

Please tell me more about the refund offer.

We are really approaching "NO ROI", that's math. Each week "NO ROI" is closer. But ATM ROI is still possible. People is just hoping there won't be any further delays.

If Avalon Batch3 is approaching "NO ROI" you would think folks would opt for the refund that Yifu is offering.
So far as I know, NO ONE has taken him up on this offer (maybe B1-er anti76... but it doesn't look like it).

My guess is that if we really were approaching no roi, people would be heading for the exits with Batch3 and that doesn't seem to be the case.
At this point, I believe most folks will get their BTC investment back over the course of the next year.... and precious little after that.

I am so glad I've missed the batch 3# order! 

Batch#4 coming soon. Who's foolish enough to go for batch #4?

"Avalon" almost tripled hash rate this week at BTCGuild. Are those our unshipped batch#2 and batch#3 units?

+1

People should consider this exactly like a business, not a fire and forget operation. If they do, they'll get burned.

I will cross-post something I wrote in another thread and I think is relevant to the current discussion:


Not really. This is true for a short time, when there is a disruptive change in technology, as it just happened with the first ASIC - those machines create such an unbalance in the network dynamics, that the profit in running them is HUGE. Thus, you either sell them at a crazy price, or you just mine yourself.

If you were around before ASICs, you will know that mining has always been only marginally profitable. It's a very competitive business, where the profit basically lies in having free electricity and free storage, if your operational costs are above average you mine at a loss - because the market self-regulates itself.

Most of the time selling spades is more profitable than digging for gold, with some notable exceptions, as we had since February for the few folks that had the ASICs. As soon as the ASICs spread, network difficulty will balance, and everybody will be fighting for pennies again, as we did with GPUs and FPGAs.

If you have the luck to be in the front line during the change to a disruptive technology (FPGAs -> ASIC), of course it's more profitable to mine yourself. But once the market settles and difficulty adjusts to this new technology, long-term is much more profitable to sell the hardware and let the miners fight for their pennies.

The fact is that the (short) window in which mining with ASICs meant huge profit is finishing.

Even just 6 months of 8% exponential growth is enough to triple the difficulty and therefore reduce any profits by 66% from their current level.

Even if the difficulty growth completely flattens out to zero (it won't) after this growth, it still doesn't make most mining investments that profitable.

Good luck with that exponential growth of yours ;P We might see 6 months of 8% but once the market is saturated or unless BTC price increases massively growth will slow down a lot once current backlogs have been delivered.

I made a mistake earlier as my spreadsheet was still using the 15 million difficulty numbers.  

Plugging the 19 million difficulty, and assume a 8% per week compounded network difficulty growth for next 2 years.  A 50GH/h machine, will make 112 BTC in 52 weeks (and 113 BTC in 104 weeks) if you receive the machine today and start the mining. With this model, if you don't receive the machine in the next 5 weeks, you will miss the break even point.  If we change that to 10% compounded growth rate, the 104 weeks earning will only be at 90 bTC,  and you must get the machine in next 3 weeks to break even.

However,  I also had a model that is more optimistic, which assume the network difficulty will taper down in 20 weeks, and will only grow at 3% compounded per week after that.  In the optimistic model,  you can suffer up to 8 weeks delay in the shipment, and are still be able to break even, and still had a life time earning of close to 105 BTC.

BFL machines are cheaper, and hence can suffer a few more "2 weeks delay".

avalon is a legal scam, stop feeding them

Mmm... What kind of delay are you considering? If it arrives with difficulty above 35 million it won't break even. That difficulty will arrive in a few weeks.

You have nothing to worry if you pay less than 2BTC/GHs (in the case of batch 3 Avalon).

Even with the difficulty rising, you should still have no problem making at least 120BTC in the life span of the machine.   

I don't know what other investment can give you that kind of ROI these days.

Why u no can math? What is a "ASIC device" for a damn unit?

So we are quickly reaching the point where even making a sizeable investment in bitcoin would involve purchasing coins or running a service.

Actually this will only apply to the least power efficient ASIC's, which currently is everything not manufactured by BFL.

If no one creates a ASIC chip less then BFL's 65nm using less power only BFL ASICs will be left hashing the network as all others will be forced to mine at a loss, go bust and be forced to stop.

Avalon's , ASICminer self pool, their blades and usb sticks, will all be forced to quit as no commercial enterprise has free power.

Right now the smart choice is nothing to do with quick delivery, it's the quickest delivery for the lowest power consumption. This is why I have orders with BFL until someone produces a working competitive product that is proven to use less power. Then I will order that at that point.

I did not order my BFL until the first working jalepeno was on youtube showing it hashing @ 5G/H for under 30w.

M

On average. My ASIC is better than your ASIC anyway, so I'll make at least 0.2 while won't even make 0.1 :p

I hope that we could quickly reach the stage that ASIC devices are barely breakeven, so that development in bitcoin will again become more stable and healthy

It takes only 36000 ASIC devices to make each devices's daily return drop to less than 0.1 bitcoin, or 100 mbtc 

I agree, but I think think time around there are far more garden variety miners then institutional miners. The institutions that have a large setups are probably already by and large up and running (or will be soon). It's the rest of us home-miners that probably make up the vast bulk of the ASIC sales. These individuals are more likely in my opinion to mine at a loss simply because they aren't mining from a rational background in the first place. They are mining because they think one day they will be more valuable, and they are willing to keep sinking more money into their investment for the same reason people keep gambling when they are losing at the table.

I think it's going to be similar to the "mining rush" that happened during the 2011 bubble. Everybody hopped on the bandwagon expecting huge returns to then bitterly realize that without almost free power and no storage costs (some miners do not mine home but rent spaces to host their operations) it was very difficult to make any money at all. In fact we had a drop in the hashrate because mining was quite a big loss for many folks.

I expect the same situation to happen just now. The big winners were Avalon batch #1 customers and ASICminer first shareholders, the ones coming behind will just "pay for their party", unless until a new very superior technology arrives to the market.


No, they will just resell them for peanuts if they are unprofitable to run. Many people (most of people) cannot afford to mine at a loss.

The difference this time however is people won't be turning their ASIC's off like they did with GPU's. These machine do but one thing- and users aren't going to let them sit idle.

isn't it actually the same situation when CPU->GPU change was made?

Well of course.  Nothing can grow exponentially forever.   

Yeah, you are right. A "bubble burst" would imply a lot of hashrate leaving the network, which won't happen. With "bubble burst" I just meant the end of exponential increase and the resuming of linear increase, probably with a smallish drop in hashrate as we had in 2011. This obviously is not a bubble burst from a technical point of view, but in any case the final outcome will be quite similar: a lot of people burnt because they spent more money they could afford to lose just because they were blinded by a promise of golden profits that will never happen.

I know you agree, you have been preaching that ROI was dead for Batch #2 since months ago

I don't think that this bubble will "burst" any time soon. Also, it will not stop from inflating, anytime soon... If the btc price drops to 30$, that will only stop new hardware from coming online, but existing asic miners will stay still.

I really think we are in the middle of a mining bubble that will burst very soon. Just look at the hashrate chart:



I see a lot of people entering the mining business like there's no tomorrow, blinded by the promise of profits like those that Avalon batch #1 customers and ASICminer shareholders had. This people just do not realize that difficulty is going up like crazy, and they are making their calculations at current difficulty, without even understanding what "yearly profitability decline" means. In fact, I see myriads of noobs (and "hero" members auctioning their units) that just leave the "0.61" that comes by default in the "yearly profitability decline" variable at http://bitcoinx.com/profit

That's so much failure, because it would mean that difficulty won't even double in the 12 months following the deployment of their mining equipment. I can just LOL at how wrong is that assumption.

There's a huge amount of people that do not realize that mining is ultra-competitive, ROI is not easy and that you really have to look at your power and storage costs in order to be able to mine at a small profit. In most of the cases, just buying and holding BTC is more profitable unless you pay nothing for storage and a small price for power. As I said earlier, we're going back to the point we had in 2012 with GPUs and FPGAs. Only the most competitive will survive and will only make a tiny profit, the huge return days are gone for good.

It seems that the delay is because of this:

https://bitcointalksearch.org/topic/is-avalon-mining-with-customer-hardware-answer-is-here-236348

asic chip cost already too much, they should be halved in price, difficulty is rising very fast

Only to be forced to go across the same path in the future? no, thanks.

I think that you will receive your batch 3 units during the next month, they started delivering in mass and said that they would be able to ship 50 units/day once they reached that point... With a 1500 units on backlog, that's 30 days.

What you should be angry for is us finally having proof of them mining with our units.

Some guy's behavior is killing the whole economic environment of Bitcoin.
Shall we change to Litecoin or some other coin which do not have such disgusting thing?

When I saw the steep increase on Avalon's batch #3 price compared to batch #2 I was upset, and I had a public argument with Yifu. Here go a couple of excerpts:



I thought: OK, we will get our unit in May, thus a 10/12 million difficulty is reasonable. You will remember that Yifu set the batch #3 price doubling the difficulty we had at that time (slightly less than 5 million), which gave a 30 days ROI for a batch #3 unit priced at 75BTC (Avalon expected difficulty to be around 10 million when we were going to receive our batch #3 units). I accepted that explanation as an honest proposal. Avalon was disappointed by the fact that some of his batch #1 customers were selling their units on Ebay with a huge mark-up, while Bitsyncom was probably still in red, so they made batch #3 customers to pay the profits for the other batches too. That was very OK to me if the units were delivered in May as promised. One month delay is acceptable too in this crazy ASIC world. But I'm afraid batch #3 customers still have a looooong way before receiving their units (July? August perhaps?), thus I'm afraid that ROI is gone for good.

Unfortunately everything happened upside down: batch #1 customers looked at the biggest potential profit, but they were charged less than any other customer because nobody was sure if Avalon was going to be able to deliver ASIC. As soon as they proved to be legit, batch #3 customers were charged a very hefty price that made ROI possible only if all the promises (delivery date basically) were kept, but they were not - therefore, batch #3 customers will very likely mine at a loss.

And by the way, difficulty is going to go x6 between end of March (when the above argument was held) and June (see bolded part). I would say it's not Yifu's fault, in fact I admire his work for having delivered the first ASICs to consumer hands, and that was greed (not his greed, but everybody's greed in this market) what set Avalon's batch #3 price tag. Nevertheless, we are approaching very fast the point in which mining will be a very competitive endeavour, where ROI is only achieved by saving every penny on electricity/storage, and where a 5% decrease in the exchange rate really shakes the miner's business plan. Making a long story short, we're going back very quickly to the same point we had just a few months ago (pre-bubble) with GPUs.