Topic: here's just how screwed ASIC buyers are - READ THIS if you have a preorder - page 3. (Read 23377 times)

Nope, but I'm not going to let others use my words to call people retards, that is unacceptable. If you think I was angry at this post, please reread it and the one after it. The one that made me angry came later.

I do expect the opportunity for dialog on a forum, and if Des does not want to talk to me or address my many real points, then that is fine. I have tried repeatedly to engage in an honest, non-insulting, considered evaluation of the situation, but all I gets is "you're wrong?"

Puh-Lease.

I think it will be much higher difficulty jump than some people think.

Biggest difference over GPU/FPGA is the low electricity consumption.

60 ghash/sec for 60 watts is crazy. This means that when block halves to 25BTC assuming electricity costs of 0.15USD per kwatt/hour this means a theoretical Max hash rate of 11,000 terahashes/sec!
(25*6*24*365=1.3m BTC per year = 15m USD per year).
11,000 kilowatts would cost you 0.15*11,000*24*365=15million USD per year.
And you can get 11,000 terahash/sec with 11,000 kilowatts!
This is a difficulty of about 1,700,000,000

Assuming that people keep buying ASICS till the payback is more than one year.
In this case the electricity cost is insignificant so we can just do the following:
60 Ghash costs $1300
1 Ghash costs $22
So just divide the total revenue for year by 22 -> 15m/22=717,000
This is 717 terrahashes or a difficulty of 102,000,000 - a 30 fold increase!

So my prediction is difficulty will increase as fast a ASICS ship to 102,000,000 and will then slowly increase to 400,000,000. This increase could be MUCH faster if there is a price war between ASIC providers.
But will never get above 1,700,000,000 until there is a "New" technology.


And this assume a constant exchange rate! As rate goes up so do all the numbers.

Wow no angry masturbation allowed....... you are not the only person in the world who is allowed to express an opinion.

Hmm...my understanding was that BFL's overly complicated 1/3 shipment plan was only centered around pre-orders placed within the first month or so in addition to upgrade units. I'd surely not be a happy camper if I'd sent them funds in the spring and someone who ordered in Sept got a unit ahead of me.


I generally agree with you doggie, but I think you're off on this one. I don't see all that much downside to pre-ordering and there's potential to get a decent ROI in the short term.

Few of things here...
1) For your 'tag', are you referring to the randomly large order number? And you think that's the amount ordered?
2) BFL is shipping in 1/3rds...some of the early buyers, some mid-range, some recent...all at the same time to "even it out".
3) Typical returns on purchased hardware in the past have stuck to around 8-10 months, depending on what you buy and when. My guess is that this will stay relatively the same, but the network hash rates and BTC/USD prices will fluctuate to match it.

I got a shipment date from  BFL, just before doing a Pay Pal.

I decided based on what I was told , that I would NOT be placing an order.
Based on their own production figures quoted elsewhere and working backwards from the 'tag' i was given, means they are going to be dumping a SHIT load of product into the market before I receive mine.
Return on a 60GH rig would be over a year.

HC

If mining does not become profitable the companies that are creating the products to mine with will have no customers to sell to. The miners that stick it out over time with what they have and with the best products will profit and never need to upgrade.

I call that the plateau 

If the reward drops there will be less btc to mine and less btc to sell and that will increase demand and price of the btc. The other plateau will be the demand for the btc to retailers which will require customers in which most will be the miners. then you have the speculators that will be putting pressures on the price of the btc going up and down..


The way I see it if there is not enough reward to satisfy enough miners to keep the system going then the system will falter. BTC needs miners and the serious will stay.



The ones that stick it out will profit over time the rest will drop out or sell their stuff.

People buy houses on the top of the market and lose. It happens and people will continue.

If the risk is too much then by all means sit this round out and jump in when you feel more better. I appreciate the heads up and wish you well.


EDIT :I added a few more things

Scrybe please.

You might want to quit throwing stones there, Mr. Glass House. I did a lot less than that and you got your back up, why should you get special treatment?

If you don't provide ANY details of what I'm off on, how do you expect me to see your point? Remember, you told me I was screwed, not the other ways around. You have a burden of proof that I do not feel you have even approached. I just tried again to engage intelligently, and you have nothing specific to say? I even made a special effort to directly respond to your OP, with a quote, and provide you updated numbers that are higher than the ones you have published. If anything you should have to re-evaluate your model and tell us how much worse it got, maybe you are just guessing instead of analyzing?

I'm off by 2-3x? No, some of my models will be off by 20-30x in some areas, others will be closer. Until reality catches up with them they are just projections. This one is using the best available information on the forums, but you don't dispute the framework, or the data, or the methods, I'm just wrong? I acknowledge the fact that more than one thing can happen that will have major impact, and you say I am within 2-3x? COOL! Honestly anyone who thinks they can predict difficulty more than 3 months out right now with less than a 2-3x error range are very (over) confident in their model, I doubt my numbers a lot!

You have still ignored the most key point, time If I make 50% of the value of my unit cost back in 1 month, 25% the next, and it takes a year to get up to 100% then the risk is decreasing each month as well that things will go nuts and make the unit suddenly unprofitable. Early adopters have a good chance at this area under the curve, late adopters have little chance at it. Hence there is more profit opportunity with less risk by investing in ASIC now (diversified to prevent scams) than continuing to plan on GPU or FPGA in the long term, or investing in ASIC in January. Once we see the next hardware generation you will have a chance to get back on the train, but I think this is the cheapest a ticket will ever be.

You are not doing your case any favors, if you want to convince me (and most likely others as well) then you have a long way to go to build credibility for this argument.

Are you fucking retarded?  If I had one, I'd have sold it by now.  but I was smart enough to not get one in the first place, given BFL's past history with wrong specs and late releases.  Sounds like you're just mad that you're so utterly screwed.

By the way, there's so much wrong with Scythe's estimate that it's beyond all correcting.  He's off by a factor of 2-3x.

Just for grins I did the math for the $700k miner above assuming it comes out in a year with double the claimed efficiency of BFL SC Single (and likewise assuming that this will replace 100% of the current theoretical average 1Gh/s miners that were replaced by SC class devices in 2012 (~24,000) increased by 50% due to the profit opportunity of mining (they are worth $200!))

10,000w*2GH/w=>20TH/s * 36,000 miners=>720 Petahash = a difficulty a bit over 1 Billion.

average miner takes home 3BTC a month with this monster everywhere, BTC is going to have to be >$500 before it even pays for itself, but we could see some big gear happen if that block reward start becoming worth thousands of dollars or more. Honestly once BTC gets past $100 I'm going to start getting nervous that we will see REAL ASIC Wars when multinationals and governments start playing. (of course if this happens we can all get drinks in Monte Carlo if we have more than a few bitcents to rub together.

Yep, I think I mentioned that. The mining equipment is going to have to become cheaper, more powerful, or both. I fully expect a Single to pay back 2-3x (maybe up to 7x if things go nuts, or I lose that particular shirt) in the next 12 months but that is 80-90% of the BTC that it is ever likely to mine. It's trash (for BTC at least) in less than 2 years almost guaranteed.

The exception to this would be a skyroketing price that takes the block reward from $250 (assuming the price keeps falling to hit $10 today) to $5000 ($200/BTC) over 12 months. This would mean that a bASIC could be earning about $96 in January in (@$8.82/BTC) , but $220 in December (@$200/BTC), even though the profitibility in BTC has gone down by 90%. Assuming that this major price swing didn't impact difficulty even further.

I doubt such a thing will happen, but even if it does the exact scenario above will not play out since a LOT more mining gear will be able to be sold every for every block generated. Instead we will see shorter ROI cycles and more frequent gear purchases required to keep up with all the other folks who are getting "rich." I have been thinking about putting together an ASIC shipment model based on the value of bitcoin which would allow me to get more accurate, but until then I'll just have to say that I deduce that we would see difficulty spike up to something like 600-800M and 12 month ROI on a $700,000 miner the size of a refrigerator that consumes 10KW (well maybe with $1000 BTC)

I think that the easiest formula I have seen to capture this is a "Spend half my income on upgrades" model. After block halving this means that each month each miner will have a portion of a bit over BTC100,800 so if we add in the 50% rule we get ~BTC50k spent on mining equipment. At $10 this is $100k/month, at $200 this is $2M/month, at $1000 it's likely $5M/month,assuming more than 4 years to get there.) It's easy to do this with constant increases and an easy forecast just by adding mining capacity with a 2-6 week delay for ordering/shipping. Unfortunately the reality is to be useful it will require a basic P/L forecast analysis for every time period to see if it is a buy or hold period for hardware, hmmm.

Until ASIC at least comes out and we see the first difficulty change or 2 I'm going to stand pat, and continue to calculate on BTC based ROI. Any fiat based bonuses I get due to exchange rate are awesome, but I'm not counting on them.

Well, that's all well and good, but if, say, the hashrate went up to a nice 1.65PH/s (an average of your two extremes) the difficulty would be a nice 213,125,000,000 (rough estimate of course). That would mean at an exchange rate of $200 a coin, you'd be making a sexy $10.33 per year with your $1300 Single SC....losing it all to energy costs (or if you have free electricity, it would only take 126 years to break even).

But on the bright side, if that Single was $1 it would take just over a month to break even.

My point is that something has to give in order to support high hashing rates.


A wise man, this investor is.

OP is mad that he can't afford/doesn't have the guts to pre-order. That's all.

I'm assuming that the folks who claim that BTC is not tied to mining are correct and BTC will mostly follow it's own price path based on the value of goods and services that are traded with it. The only real control over the exchange rate that mining plays directly is pressure based on how fast or slow the collective miners sell their BTC, but that population often sells at market rate which exerts no real force. Block halving may cause this second factor to get more important, but I doubt it.

In my most common model for BTC price model I'm assuming that BTC will get higher than $16 around halving day, crash down to $6-8 sometime in the new year, and climb back to $25 by midyear (and with a lot of drama) making it to $50 before the next year is out. This is based on an overall model that has the overall BTC market cap at $20Bn by the end of 2016. A more pessimistic model I use only has a max of $200 in the same time frame, but what fun is that!?

Honestly I'm in BTC for the long term, so the BTC rate really only impacts my re-buy schedule and eventual portfolio value. Of course it impacts everyone's investment rate in mining equipment so it is an important factor and I recommend putting at least 1-2 crashes of price into your model to ensure that your strategy can keep up with them. It's a strategy so it requires tactical adjustment based on reality, but knowing what actions you are likely to need/want to take when the forecast looks certain ways will arm you to recognize them more easily. (FYI, there is an intellectual trap where you can get caught up in your models and miss reality though, so it is important to keep updating and refactoring your models to help avoid the trap.

An old (and successful) investor friend once told me that models are great, as long as you know that they are all flawed in some way. When you start believing that you have everything accounted for you are about to lose your shirt.

Great post scrybe. A whole lot of smart people begin their speculative musings with something like "difficulty = x and therefore pre-orders are screwed", but they fail to include a time element. I think you're correct, barring a huge scam scenario it is the pre-orders that will have a best opportunity to make a quick ROI and the subsequent batch orderers that should carefully consider the landscape before they invest.

Interesting. How does the BTC/USD price point react to such scenarios? I'm assuming you've included economic modeling into your hash rate predictions?

That's a good restatement SgtSpike, thanks.

There is a big difference between most of those scams and this scenario. Pirate offered nice returns by investing in a ponzi and operating a pass-through, it was a scam from the start. 3 of 5 ASIC projects to sell to customers have been selling gear already, so they have given us some indication of their morals. I'd score the current situation like this:

Morality: 4 of 10
Caught: 4 of 10
Revenue: 9 of 10 >10:1 difference in risk/reward

Aggregate that together and you still have a better than even chance that they will not cheat. and I think the morality and caught scores should be higher given the level of scrutiny. If we did the same thing with Pirate (when trusted) it might be 9, 1, 1, resulting in a 66% chance he was going to rip folks off. Either way we will see as it plays out. Remember what I said about lawsuits next year...

Yes - we have a list of variables that influence the decision of a manufacturer to decide to mine on the hardware:

Manufacturer morality
Likelihood to get caught (and the event of being caught leading to an unknown loss on revenue due to angry customers)
Pre-order and future revenue of selling the units
Additional revenue by mining for themselves

Whether it is illogical for a manufacturer to mine is a function of ALL variables. All variables are extremely uncertain and we have found to disagree on at least two of them.