Topic: BFL Labs just like Get-rich-quick-schemes (Read 5154 times)

I have a feeling that some who ordered will get their order received after some others...and possibly in a way that will hurt their profitability.

Just saying...look at how many let downs we have had: MyBitcoin, Bitcoinica, etc...hacked exchanges...

Wouldn't be surprised...but I do know one thing....it won't affect bitcoin much.

Except the speed does matter. BFL simply does not have the resources to ship every current order that has been placed on the same date. Meaning no one entity will receive a large enough quantity to create an attack.

Edit: And my response is not to say you're incorrect. You (and the others) are completely correct in that it costs far less to gain 51% of the network hashrate, but the high level of accessibility is what increases the security. While BFL doesn't have millions of dollars in orders, they have enough that everyone will have a slice of the pie when ASIC hits. The point is to keep the pie in small slices instead of halves.

ChanceCoats123,

The speed doesn't matter. It is the total cost for the 51%. Do you think really think BFL got 7.8-13 million in orders? To be twice secure as before they would need to sell 15-26 million in gear!

My bet is probably closer to 1 - 2 million. 

The part that would blow your mind is if you take out their profit margin of just guessing 50%  then how much money would it take a few to do a 51% attack?

I'm not sure who you're agreeing with, but check my response to his post. It is theoretically easier to gain 51%+, but with all the orders already placed, the network hashrate will be exponentially larger by the time anyone has enough of the ASIC chips to attempt an attack on the network.

Agreed. The determinant of bitcoin security is its market cap. The more bitcoins are worth the more profitable it will be to mine (all else being equal), and the more money will be put into mining. Thus, a new miner entering the market would have to pay more to get 51% of the total hash rate.

Given BFL's penchant for big promises, who's to say they haven't committed to a decent sized wafer buy to get a decent deal on the up front costs? Pre-order money + possible mysterious investor money could fund development and a deposit on the wafer order.

I agree though, best odds are a FPGA conversion funded by hype.

Yes, but how complicated was the design, and did that cost figure include things such as the salaries of the designers and other costs besides just the mask+wafer NRE?

nope.

btw 180nm is the state of the are for small volumes (Like a single 9 wafer run)
130nm is premium and anything beyond that strictly high volume.


Get over it... no matter how you want it you are not getting full customs, those will be fpga mask transfers like already discussed.

Older process ASIC wouldn't be $10 million, seems $500000 to $1 million would be enough to produce a 130nm - 65nm ASIC. It's a risky endeavor though because the costs can really add up if there are a lot of design revisions. Wondering now if we will see the first custom SHA256 chips as translations of FPGA designs, cost and performance would still be a head above straight FPGA.

lol, yeah right. So in effect that anonymous investor is all supplying you with cheap asics.

dream on!

$10m to fund the research and development for producing an ASIC system.

except the volume is nowhere near 10mil USD.

Exactly. It's almost like the anticipated rate doubling when the block reward halves. It will more than likely fulfill itself. People expecting the market to rise will buy more coins, which raises the market. LOL

Plenty of people have thought of that, read some other BFL threads (dozens available to choose from).

I'm surprised no one has pointed this out yet (since I'm hardly an expert) BUT...

People wonder why BFL doesn't just mine instead of sell? The answer is simple. There is a very large up front development cost to producing the first Mini-Rig "SC". Some other thread estimated 10 million dollars to create the ASIC design.

There is tremendous business risk to investing $10m and then using it to mine, since the difficulty is sure to go up and BTC will go down significantly if the sudden appearance of a large amount of hashing resources "spooks" the network.

On the other hand, BFL business model of announcing powerful machines many months ahead of time and taking pre-orders is ideally suited to the large R&D cost of developing the rig. It is almost a self-fulfilling prophecy. Miners anticipating the future appearance of big hashing power have no choice but to either pre-order the devices or plan to exit the mining market.

If BFL can deliver as promised they are following the most logical course.

For $160, and the device does 2Gh/s or even 1.6Gh/s - not a big deal at all!
That smokes anything you can buy still.

I don't expect the 40Gh/s Single to do 40Gh/s at all. If it does 20Gh/s it still worthwhile.

But what if that power chord draws in 50W of power?
And what if they do 2 GH instead? What about 1.6 GH?

Right not this big of a deal  

So maybe the Jalapenos will need a power cord rather than just running off of USB. And maybe they will do 3 Gh instead of 3.5. Not a big deal IMO.

About the power usage stats and such, remember that the FPGA single was also supposed to push 1000mhash+ @ only 20 watts.

Yep, they can't

BFL is overexagerating, AGAIN. I'd rather wait for some reputable ASIC companies instead of BFL.

What about the following:

1) Make incredible claims about your future product promise 1 to 1 trade ins on your currently sold product
2) Point all your PR tools to talking favorably about your future product and minimizing your previous failure to meet pre-release numbers
3) Take peoples BTC for future orders, this combined with money not spent due to uncertainty reduces your competitors sales and thus available funds to develop their future products
4) Some profit
5) Do not plow any of that money into developing something that at least might, perhaps come close to your seat of the pants PR numbers
6) Declare bankruptcy
7) Return the money to everyone that paid by wire transfer. Fuck up all the greedy idiots stupid enough to preorder in BTC.
Still some profit
9) Move to some nice sunny place and enjoy.

Some thing I wonder:

ASICs said to use 1/4 of the power and provide 10 times performance than same size FPGA

Now a FPGA miner using 80W to generate 800MH/s
Same size of ASIC will use only 20W, while generate 8GH/s, devide by 2, still use 10W to generate 4GH/s. I don't understand how come a USB port can power 10W equipment?

Just laugh bro...chill I was only joking...

Some people on this forum are so uptight. 

I'm sorry to further de-rail this thread by adding another post about this topic, but seriously... Smoothie, are you fucking serious? His analogy fits the situation perfectly regardless of the fact that gold miners no longer use shovels. And FFS, did you call him out on using the word analogy because it has a root word of anal? You used the word too, you idiot.

We pardon the interruption. Your regularly scheduled programing will now resume.

Whatever floats your boat man lol

I dont swing that way bro...lol

An analogy is just that - an analogy. It doesnt matter if miners ACTUALLY use shovels now. It's the logic.

And the manual labor/software here is perfectly warranted too. Again, its the logic.

The cost/development of shovels from Miner Company is analogous to the cost/development of ASIC from BFL.
The selling of shovels is analogous to the selling of ASIC devices.
The chance of actually finding gold and selling it is analogous to the difficulty rate/block chain of bitcoin mining.

the logic, not the actual practicality is what matters 

Use pre-order money to make the production happen, good business model, especially now when loan generally are difficult to get

I guess BFL were difficult to cover their cost on FPGA operation,  FPGA devices do not really provide real performance leap over GPU, thus ignored by most of the users

And in their eyes, BTC is just a game, they are the gaming device maker, as long as they could make profit by making gaming console, they do not care about the rest, anyway profit in USD has much less risk. BTC's future is always a puzzle

Point #1: No one digs for gold (serious miners) with a shovel now days.

Point #2: Manual labor and running software can't be compared. One is physical and one is more virtual/electrical/automated.

Hardly a good analogy..lol

Yeah, going with that, a company might make more money digging for gold with the 5 shovels they themselves would need to mine than they would from selling just the 5 shovels. But if instead they don't mine and just sell thousands of shovels to all the miners out there, then they will likely make more than they could have by digging for themselves with 5 shovels. Analogous point for BFL.

But this all goes back to who makes more money........the miners or the guy selling you mining supplies.

1) Make incredible claims about your future product promise 1 to 1 trade ins on your currently sold product
2) Point all your PR tools to talking favorably about your future product and minimizing your previous failure to meet pre-release numbers
3) Take peoples $ for future orders, this combined with money not spent due to uncertainty reduces your competitors sales and thus available funds to develop their future products
4) Some profit
5) Plow some of that money into developing something that at least might, perhaps come close to your seat of the pants PR numbers
6)
7) More profit

Perhaps I should add:
Actually manage to produce great ASIC chips, make even more profit from mining during QA "testing"

If BFL only built 5 SC mini rigs and used them to mine "at a steady pace" for themselves, the cost of those 5 rigs would be extremely high. Sure, they could still pay them off and make a nice profit, but given the rate of orders we are seeing, it's very likely that they will make more money selling the hardware on a large scale rather than mining on a small scale with it. And of course they couldn't mine for themselves on a large scale since they would take over the network and this would undermine bitcoin and their profits. I suppose if nobody else ever brought ASICs online, BFL could eventually make more by mining on a small scale, but of course that wouldn't happen. BFL may be the first, but they certainly won't be the only, ASIC developer.

Mining themselves instead of selling would be so stupid that the word "retarded" is not even close to cover the stupidity of it. The Bitcoin network has one achilles heel and that is the 51% attack, if any one entity had that power confidence in Bitcoin would crash. Sure, they can mine while the value of one bitcoin is in the cents, but I doubt that their profits would be anywhere near where they will be now that they're selling those chips and keeping Bitcoin decentralized, as it should be.

The wouldn't have to raise the difficulty much to mine a significant amount of bitcoins. You assume that I was thinking they should mine like crazy and that wasn't what i was saying. Just like buying bitcoins one should buy slowly...just like mining with an advantageous set of hardware...mine at a nice steady rate.

You're forgetting that they are hardware manufacturers that are developing hardware (not just software) for a relatively unpredictable market.
If they were to keep it all a "secret" and just mine themselves, they'd be shooting themselves in the feet.
Why?

If they were to, they start mining like crazy. They, single handedly, raise the difficulty level. Sure, they get some marginal profits initially, but because no one else owns this technology or "secret" - they won't be able to make any SIGNIFICANT money for themselves. Because who knows?  Their bitcoins after their shenangains might not be worth anywhere near as much as their investment into the technology to begin with if difficulty for mining shoots up, no one can mine for bitcoin, prices may or may not change drastically, mining would either stop or halt because this HUGE unknown is pouring out hundreds of Th/s of hash from their "secret" ASIC farms and no one else can hold a candle to it. I mean, this is hypothetical but I cannot see how far off it would be one "group/individual" were to just suddenly be pulling Th/s out of thin air with no one else to compete.

They're making a much larger and SOLID profit by selling the hardware. Bitcoin could flourish in their favor, but it could completely bomb too and they would never recuperate their own ROI on dev. Their profit on most the hardware initially will be full proof. Their selling hardware for profit, not creating hardware for themselves to hypothetically make money on an unpredictable market.

200Thash is a figure I took from a separate thread, which was a rough estimate of the network hashrate two months after the ASIC's are shipped. I'm no future-seer as I know you are not either. No one knows or can know the exact network hashrate once ASIC hits. That said, your idea is correct in its theory, but almost completely impossible. You say it would only take 6M USD, which is true, but that's 200 of the SC mini rig units. If BFL, within the first 2 months of shipping the first units, will be able to send out 200 of their largest, most powerful units to a single buyer while dealing with other orders, then I'll eat my hat.

How is it more secure? Going to take the less money to buy 50%+ as it always has in your 200Thash scenario. 6 million. (30k for 1TH box)

Current speed of 13THash using $600-1,000 a gh is 7.8 million to 13 million. (best FPGA to new GPUs)

Total bitcoin market cap is: 67.13 million http://blockchain.info/stats

They are "sharing" their products with us for the cheap because they will make large amounts of money from the initial sales. People will then realize that a single jalapeno sounded great when the difficulty was 1.7M, but oh no, I need more hashing power now that the network is over 200Thash. Hell they are only $150, let's get a couple more!

Before we know it, the ROI time will be years and no one will be earning well. On the brightside, bitcoin as a currency will be very secure.

I can't wait to see what the secondary market for these SC devices will look like. Super premiums or dumping rigs, who knows?

there is a user called burnin at EclipseMC


Also VC wants something back .... they don't lend u a certain amount of money just for the kicks. One part may be that so called "preorder / Exchange program" that were seeing for the second time

But awww what do i care about.Ill just throw more precious BTC at them

Private funding allows for them to get these manufactured. less people in on the pie means bigger pie for you.

I guess we should be "thankful" they are wanting to "share" their creation(s) with all of us.

Legitimately, these would need to be "burned in" by mining.  So they can do a little of both -- mine some for themselves (while difficulty is low).

Watch for shipments to be timed right at each difficulty adjustment.  (e.g., mine before the difficulty change, then ship, then start the prep for the next batch for shipment 2,106 blocks later).

But they probably could never get the investment funding necessary to design and build these if they weren't pre-selling.  So even though this route does leave potential profit on the table (from not mining themselves), it does allow them to not just remain in the mining hardware vendor space but to remain the leader.

That makes sense...but still getting private funding without making a public ruckus would still net them a HUGE advantage over the rest of the market.

I was under the impression that they are only able to afford production because of all the pre-orders.

Butterfly labs are essentially doing the same thing that say day trading "get-rich-quick-schemes" do. They sell a product to help you make more money or in this case "mine more coins" with "1000 GH.s"...when they could easily use it to their advantage and keep a hold on the "secret".

The same question gets asked about forex software trading robots/software that are going to make you a ton of money, yet the creator of the software is selling it to you instead of just using it themselves.

BFL is doing the same. They have claimed to have created a product that can do "1000 GH/s" and are selling it for $30,000 when they could easily keep their secret to themselves and create just 5 rigs like that and make bank on bitcoins for the LONG-TERM!

This question of "why dont you just mine instead of selling?" is answered by (paraphrasing) "we don't mine, we are hardware enthusiasts and this is what we do".

I will believe the product when I see it. And if I am wrong and they do deliver, then they are retarded for selling their secret.