Topic: BitcoinOrama Report on the KnCminer/OrSoC Open-day Mon 10/06/13 (Stockholm) - page 14. (Read 55747 times)

It's also precisely why anyone using debt to finance any of these mining ventures is nuts!

Yes you're right, that is a scary thought.

How is it BitPay has been around this long and still so many people have no idea how the process works when you pay with Bitcoins...

I'm not sure I can answer that question. Email Sam and ask. I know BFL weren't forthcoming when I asked. After the forum Q&A's were asked, questions around this area did surface and numbers were thrown around by other forum members which were in line with what had been sold at that point (a week ago). I'm not sure if that was on, or off-record so I won't comment unless allowed to. It wasn't a worry at that point. As JohnyJ stated; 28nm will lead the chip production for the foreseeable future as the benchmark should they achieve this.

Thanks for that but I guess everybody would appreciate a concrete answer. What they plan to do? Firstly and foremost, how many TH/s are they planning to ship&deploy, and how fast? This is the very first step in a "paln" to make sure customers get a return.

I did ask and they said their customer's ROI is a priority. They can only sell items that give a return. That their pricing has never been too cheap, it's a case of predicting future global hashrate. They said they have a few options to make sure customers get a return.

It would be very useful to have an estimate on how many TH/s KnCMiner is planning to ship & deploy from September to the end the year. This is a very important point, as in the mining business if you deploy too many TH/s you are actually killing any ROI possibility for all your customers. I hope they have a plan to protect their customers investment - please advise.

I think this is a hugely important post. I have answers to your Q's to add later. I'm just waiting on Daggeteo to give me a green light on video...

Yes this is definitely true. But if what has been seen in the KnC miner thread is a general trend, there are a worrying amount of people who aren't using btc. They are using credit cards, bank transfers and apparently someone even paid with cash.
The price of btc has dropped more than 30% in the last week and is bouncing along at $100. I'm not sure there are many people around that have been in a market with this kind of volatility. The people that have to sell  to pay off their debt will sell at any profitable price as they have no idea where the price will be next week.


 

There is another potential ASIC investor scenario that would have the opposite effect of the one you describe.  The investor has BTC either bought or mined when bitcoins were "cheap".  They spend BTC to buy ASIC miners, in essence doubling down on their BTC investment.  Those BTC get converted to USD now creating selling pressure on the price.  If/when the ASICs arrive they then use the ASIC equipment to restock/"hoard" the BTC they spent on the machinery.

I think both scenarios will play out but I have no clue in what percentages they will exist.

ASIC hashrate will be limited by the same factor that limited GPU nad FPGA hashrate: money. The same people are converting their farms to ASICs, some new ones are investing in new farms (some poor souls jut bought their FPGAs/GPUS and might be out of the ASIC race), but overall, the money spent on ASICs will be roughly the same as the money spent on older technologies.

I expect the sharp raise in difficulty to top off in the 10-20x range, then resume the 10% increase, probably followed by a small dip (as seen in the GPU and FPGA ramp ups).

Small time miners will still be able to use GPUs if their electricity is cheap or they will be able to buy cheap 5GH/s miners at around 300 USD. The equipment will be less versatile, so it will indeed deter casual new entrants, but I don't think it will deter the more serious ones.

Also, I don't think the fire sale will happen. We might see an increase in BTC being converted by new entrants, but the bulk is still in the hands of the current miners who are just converting to ASICs to keep their revenue level, so I wouldn't worry too much. The current price is probably still inflated, so it might indeed crash, but I don't think it will be because of miners dumping their coins (besides, if it becomes unprofitable to mine, they will shutdown the equipment and the others will profit from a lower difficulty and a new cycle starts).

Three main factors

First, lots of current pre-orders, many of which bought with btc... those piles can't sit and have to be turned into chips, miners.  There will be sharp crashes like we saw a week ago.  Expect a few more.

Then later in the year, all these new miners will want to grab their ROI and you can have more selling and selling.   This will go until end of next winter.

but the third factor is the other way...  if more and more of the marketplace grows you can see the need for btc out pace or at least lessen the selloffs. 

That's why I tell anyone who already made small fortures in btc that they would be better off expanding the marketplace than to double down and try to mine in this next phase.   They can gain so much more in protecting and expanding what their current wealth already is, instead of risking it just squeeze more coin out and then even if they do, the support can shrink and then what do they have?

One of the main reasons btc has value is in the EFFORT that is put in to use it.  Just because there will only be 21 million does not create value, it restricts it from being debased.  The efforts on using it is what really translates into the value of the coin

Ya, that's pretty much exactly how it could play out.  It took 2 years since the last run-up, plus a financial crisis, to produce this hyperbolic run-up ... how many years till the next hyperbolic run-up?  Since these ASICs wouldn't work on LTC mining, perhaps we'll see a shift to LTC after the dust settles.

Thanks for the info Bitcoinorama and all the other folks that contributed. I think I've made up my mind about KnC and asic purchasing in general.

The way I see it. The arrival of asics in rapid and large scale as Knc and several others propose will kill profitability in the short to medium term. People who have invested thousand of dollars in asics will try to dump their bitcoin as soon as they mine it to pay for their investments before the dif goes through the roof. This will create a buyers market and the price of btc will plummet.

The smart players and long term investors will hoard and bottom feed but they will be the few. Many many more will sell as long as its still profitable for fear of losses. Unfortunately human nature being what it is a lot of people have jumped in feet first thinking this would be an endless source of easy money, probably going into debt to fund it. They will be the first to panic and flood the market with cheap coin. This will probably start a snowball effect that will collapse the market for months until things level out. The proverbial "fire sale"

And when the dust settles the time for small miners will be gone. Unless you are willing to constantly upgrade and treat this as a business you will eventually have a nice warm metal brick sitting in your garage. Bitcoin will be dominated by those with deep pockets and ebay will be flooded with cheap asics.

This might sound alarmist but this has a similar feel to the dotcom and housing bubbles that many people lost their shirts in. People saw a rising market and jumped in without looking at the fundamentals betting more than they could afford on the promise of easy cash. Not that long ago btc was at $260 probably for the same reason. Fools rushing in.

Personally, I'll just keep my renderfarm (12gh) chugging away at ltc and leave asics to the gamblers, for now.

I am in with 4 shares = 2 BTC

What I would like to see is groups of collectives with shared hashrate spread far and wide across the globe. Rewarding investment in pools. That's the way ahead. Not shared hashrate dominated by just a few main players. That becomes too corporate and centralised and is at risk from corruption/government intervention.

Absolutely right on the first point.  And, in fact, it's unlikely that any would be based in USA, or even, as it is looking, the European Union countries.  Whatever the marginal cost per Thps boils down to (AM indicated to stockholders not long ago they were around 10K USD per terra hash), anyone who can get within the ballpark of the others could form up.  The point is, absolute hash capacity will be meaningless; the metric will be economic relative hash rate.   

The period of scamming that is happening right now won't last forever.  As soon as the dreams of wealth beyond avarice that a BFL Mini was going to provide twelve months ago fade away, and BTC begins to enter a period of being treated as an investment, the scammers will move elsewhere.  There's always someplace for them to go.

I think I agree with this outcome, though the distribution needs to be global at least. You cannot have 3-4 entities only. They could be shut off so much easier by government intervention. Also, some people want a whirring electronic miner processing transactions in their home. Just for the fair distribution and geekiness alone. I do!

Sorry to tell you this, but it already is, not everybody has $1000's or 10s of $1000's to drop on multi GH/s hardware.

You forgot bitfury. 

IMO, the only model that makes sense forward is Asicminer's.  KNC has spoken of it, as has bitfury.  Instead of pools where individual, decentralized P2P nodes are mining from basements and bedrooms, there evolve a relatively small number of massive, rapidly scalable farms, collectively owned by many small holders, sharing the network hash rate against each other, in a game-theoretic equilibrium.

If these groups control their own chip supplies, then there is no incentive for any one group to try to poach a larger share of the network by bring more power on line, since that would be met by competitive response from the others.

In my mind, that wouldn't be too dismal a future.