So, let me get this straight....
in return for bare chips, delivered the same time as the first fully operational hardware boxes, we are to pay 0.85BTC per chip (25GH). At $150/BTC, that's $127.50 per 25 GH, or $5.1/GH. No guarantee that all 32 engines are working on every chip purchased, at least so far as I can see. Mining dashboard says that difficulty would have to stay below an increase of 80% per month to reach 0-ROI, some time in APRIL, so the chip costs eat up the first 90 days income, even if power costs are ZERO.
At these prices, I think this is a very expensive hobby.
Kinda hard to see how anyone would make a successful business out of it, unless chip prices were dropped into the $3-4/GH range, and even then a 2 week slip in delivery destroys all the expected profit for the life of the product, and then some.
Ah, well - I've had more expensive hobbies, I suppose.
All excellent points, but in some respects this buy from Zefir allows us to get a smaller number of chips not 500 as Bitmine offers up. I think at this point Zefir's the only one trying to keep the DIY stream going and that we should be thankful for. Even if it is expensive at this point being able to develop and bring to the community something that is DIY is I think still an important aspect for Bitcoin and Altcoins. There will be a future point where the difficulty will level out and project experiences now could be very important for groups of DIYers later as long as the chips are actually shipped and specs are provided. We all learned a horrible lesson with Avalon... and we are now learning about the difficulty wall vs. the cost of production. Break even might be the only thing one can shoot for with these units but as DIYers that might be enough. Also pretty keen to have you working with us in the Wasp project DickMS... I think this DIY hobby will be a lot of fun and terrifying as well.
Bik, I wasn't complaining about zefir's prices - I am very grateful that he's selling small batches, and think that his prices are reasonable for that - nobody expects prototypes to make money. My point was simply that - given even optimistic assumptions about difficulty, and even considering Bitmine's CPP - there's no apparent way that
anyone can make 0-ROI on anything made from chips that cost $5/GH in December. And, even if Bitmine drops the price to $3/GH in December, for the first batch, 0-ROI depends on them making their delivery dates nearly perfectly. Even a 1 week slip means loss of most of the revenue expected from the entire lifetime of the miner. 2 weeks late means that every dollar put into making a miner will only return $0.80 or less, over its entire lifetime. No-one can make a successful commercial product line at those prices which will be attractive to the well-financed professional miner - those people can and do run the numbers, and don't invest in anything that won't return a profit under
any circumstances (unless they are running a money laundering business, where a negative ROI is normal). No big buys and no repeat business means no chip company, and a loss to their investors.
My guess is that the A1 batch will cost about $40/chip, with the exotic new package and some reasonable development & NRE amortization. That's a little over $1.5/GH, and even a $2.5/GH sales price, in December, first batch, would give them a good return on their investment while allowing their customers to shoulder some reasonable risk with reasonable rewards possible. These are conditions for big investments, and for return business. Selling boxes at $6-7/GH that will never pay off unless all the competitors stop delivering will only sell to hobbyists who don't care about ROI. There aren't that many of them, and they probably won't absorb 50,000 chips from the first batch. Certainly not enough to give Bitmine's investors a return for their development costs.
I love designing embedded systems, building them and programming them. I've been doing it as a professional since 1982, and have built systems that will never generate any money, just for fun, as well. Those were toys, and a hobby. Bitmine needs to price its chips at a point where well-funded professionals can make money for their risk, or it's just in the toy business. Just my prediction, based on nothing more than professional experience, with no insider information - no need to do anything but wait a few short months to see how accurate it is. I'd love to be proven wrong by Giorgio dropping the chip price from $5 to $3 for the December deliveries, and then to $2.5/GH for deliveries in January. Til then, others with more money to spend on their hobbies will have to take my place in the buyers' line.
Amen!
+1!
I've been trying to say the same on the other thread, and actually running some totally optimistic utopia numbers I came to even scarier conclusions -
Given all that - the December delivery for those chips would make them not worth even a try at prices above $10/chip.
If we presume the $10/chip price + $15 manufacturing cost and that it takes only 3 weeks from chips delivery to finished devices - that gives you $25/chip devices in mid-January. By the time you ship it to the customers and they start running it it will be Feb/1. In the utopia scenario customers will reach a peak of $28-44 income in 4-6 months.
Did I miss anything?
Please - someone explain and show me how this chip will ever make profit or at least achieve ROI?
Oh and the best part was the reply:
You're missing that $160/BTC was hit today, and that fact invalidated all of your just mentioned theory and calculations.
That's the amazing part of the Bitcoin world, it's just soooooo much unpredictable!
So - there you have it -
keep hoping that Bitcoin stays unpredictable and you end up on the winning side.
I think we may as well just play Lotto - at least the chances of winning are known in advance.
I invested several thousand dollars in just parts and materials developing the (bitfury-based) NanoFury board and I'm not even mentioning the hundreds of man-hours work here. And all of that just to find out that I had gotten into the classic
bait-and-switch scheme - when I started October chips were promised at $20/chip, but in mid-September all of a sudden they became $30/chip. That minor change made any NanoFury devices nearly unsellable.
It appears that the CoinCraft chip is going to get into the same if not even worse scenario - it makes me want to look away from it and not even bother looking at the specs as I know that even if manufactured at zero cost it won't make ROI ... which situation ironically is actually better as at least we know all that in advance.
I don't see any option in which I can design something with those chips and sell it at profit.
The sad reality is that this chip should've been on the market 3-6 months earlier. With so many competitors (Avalon/bitfury/BFL/KNC/etc) looking to get a piece of the cake I don't see the difficulty rise slowing down any time soon. The half-life of any chips and devices on the market is currently one-two months the most.
With that said - even one week slippage in the delivery can be a disaster.
