Topic: If you consider getting an ASIC machine, read this (Read 2218 times)

I'm sure i'm going to get schooled, but that's the point. Woulnd't it be profitable to mine an alt coin, say LiteCoin (just an example) and afterwards exchange into bitcoin.
Ofcourse, it may be a gamble, but in best-case scenario, you should be able to mine more Bitcoins via Litecoin. Mine 55 Litecoins in x days and exchange to 1 Bitcoin rather than mine Bitcoin directly for 2x/3x days.

Bitmain

What is the most wanted or most purchased ASIC machine these days? KNC, Zeus or what?

CCN
Gold is an excellent hedge of wealth in times of uncertainty and the temptation to sell off and reap the instant rewards should, wherever possible, be avoided. Too much gold entering the market might well cause a glut and lead to a price collapse. The fable told of the (golden goose) goose that laid the golden eggs gives voice to the inherent dangers of instant gratification.  Gold has always been special, synonymous with both misers as well as  the church. It fuses mystical alchemical forces with the principals of physics and maths as well as, and often better than, any cryptocurrency. Izabella Kaminska, writing in today’s Financial Times, has pointed out that the need to keep the golden goose alive, should not be lost on those companies that build our mining rigs.

We can debate all we like about the merits of Bitcoin as an investment in contrast to its merits as a currency, we can follow elderly Japanese engineers around and photograph their houses, we can argue about legislation and taxation, but we should allocate some time to discuss mining rigs and hash power. It is in fact mining rigs that, as Kaminska points out: “decides how and where wealth is allocated within the system. And that’s because they alone determine who gets brand new coins and who otherwise has to compete over existing coins instead.”  It can be argued that Bitcoin, especially historically, is fundamentally a market for hash power.  Hash-power which is now in the hands of large manufacturers that can’t even bother to ship their items in one piece. Now this raises an issue, if companies can build the next bright shiny mining rig, and many indeed do, why do they choose to sell them to us rather than use them themselves?  If you happen to own the goose that lays the golden eggs, why would you choose to sell bits of it? Kaminska points out:

“The only logical reason would either be because you know the productivity of the golden goose will go down over time — something which is the case for bitcoin because its hash rate doubles roughly every month — the goose was faulty or because someone was offering more than its value in the first place. Which means — unless you know how to make a rig yourself — chances are you won’t be making millions from a rig investment any time soon because the Bitcoin system is literally “rigged” against you from the outset.”

Perhaps the best option for harvesting golden eggs is to advertise the benefits of your mining rigs to the people who require mining rigs, but haven’t the capability to build one themselves, and take the money up-front. Welcome to a world where unsuspecting customers pay up-front for a mining rig, one that takes months to arrive, or even one that eventually arrives un-assembled. So the mining rig you’ve bought arrives months later, when the power required for successful mining has doubled or quadrupled in the intervening period. Therefore we have a market saturated with obsolete  mining rigs and miners fighting to gain a share in an ever increasingly competitive market.

Let us just hope that reality will soon set in, bearing in mind past experiences of the Bitcoin Foundation, and hash rate will be subject to a level of control. What we have now is not what Satoshi Nakamoto envisioned in 2009. That golden goose is beginning to look distinctly nervous.

The last 18% difficulty jump only confirms my statement. Buying ASIC is wasting money.

If you can't get your investment back, why would anyone mine bitcoin with S1?  There is no other reason to buy unless you can profit.

If you buy the hardware at the lowest price point or build your own, free power, free access to an existing NOC or data center with everything u need, why not?

I'm primarily doing it for the technical aspects as well as speculation. If you can do it on the cheap, go for it.

IMO, the only ASIC which might bring ROI in KNC Titan, under condition you get it first. Once they deliver the entire batch, scrypt mining ll be unprofitable for almost anyone.

I already mentioned this before https://bitcointalksearch.org/topic/why-would-anyone-sell-a-money-making-machine-498975

There is no machine out there right now that will get you more btc in return than you can just buy straight up with cash.  Even machine in the past have rarely ever actually made back their ROI.  I bought my Antminer S1's because it will get back close to its ROI but mostly because it's a hobby.  I like the machines and it helps me stay interested in Bitcoins.  Plus, if I would have just bought bitcoins, I would have probably traded a lot of them in for cash and spent it on stupid things by now.

I dont know that the golden goose logic is accurate 100% by economics as I am kind of a neophyte in that domain, but it definitely dumbs it down enough to make sense to me!

I just wish I had found this out ahead of time.

Mining will be always for everybody that has at least a working PC, mining with profit now is no longer a small player game.

Mining is no longer a small player game.

Think some of them delay shipping to their customers and use the ASIC to mine themselves.

Those miners have a profit margin of more than 20-25%.

Once they sell those miners, the cash is free up for their next patch of sales.

And they will keep selling miners until the network difficulty reaches so high that the market no longer support additional miners and most of their previous buyers may not even ROI.

People, you need to factor in that most of these companies PRE-sell ASIC. Then deliver it once the difficulty goes up big time so the purpose of buying is quite dubious.
I would like to see some estimated profit chart comparing all these producers. At least at current crypto prices.

Because tomorrow morning when you wake up bitcoin might be worth less than a doge.
That's why they continue to sell the machines. Sure they could manufacture and mine with all the gear.
Bank away all the bitcoins they mine and hope the market gets back to 1k a btc and cash in.
Or they can mine some and sell some and still be ahead of the game .
Who is investing millions in a digital currency and sitting on the coin? Not any smart investor..
Does that cryptocoinnews actually produce any good reads? Seems like a spamazine..

The article reads like something written by a person who doesn't have a very firm grasp of finance.  Why would a company sell a "golden goose" machine?  Well one answer is the same reason why a company might sell commercial paper or bonds with a face value worth more then they are selling them for.  Cash up front is worth more then cash tomorrow or the next day or the day after that.  Perhaps the company has other investments they believe will bring a bigger return than mining?  Risk.  There is a certain risk involved with mining.  We don't know what btc will be worth tomorrow or the day after, but we have a pretty good idea what dollars will be worth.  Selling machines passes the risk on to the miner who takes a premium for absorbing that risk.  Of course, mining also takes effort, and has costs associated with it.  It is entirely possible for them to sell machines profitably to customers who are better positioned to handle these costs. 
In short, none of this means buying machines is a good (or bad) idea.  What it does mean is that there a lots of legit reasons why a company might sell machines to miners in a mutually beneficial transaction. 

But most of companies that mine oil have their own teams which explore oil. Why would they let somebody else do this. This is a very bad example.

Exactly. This whole line of reasoning is the most naive view of market economics imaginable. If we are to accept these assumptions, then we should expect that every single market in the known universe would be completely vertically integrated.

My idea is that at this round also a reputable asic player like KnC is doing this dirty thing (they are pushing at the limit the delivery date, end of q2, to squeeze the profit)

Lots of happy pre-order customers on this forum...

If my machine's cost was $100 and I could print $1000 out of its lifecycle, I would print $700 out of it and then sell it for $200.
The customer would be happy that he paid $200 and printed $300

That's what BFL-like companies are doing in ASIC pre-orders.

If my customer was a mint, then yes 

If you had a machine that literally printed money, would you sell it?

with mining they would need to take the risk of bitcoin mining, they also would need to hire IT guys to setup the network, buy space to put the ASICs, be always informed about btc market, and so on. Plus most ASIC makers are on China, so there is always a risk of buy such a huge thing and btc be baned, or they don't have how to sell it.

Why the enterprises that do stuff to explore oil don't explore oil themselves ?


But i agree that in ASIC community there are scams, so better be aware

That would be Butterfly Labs (BFL). Correct me if I'm wrong but I think those guys are being indicted and the subject of a massive class action lawsuit.

Most of these manufacturers state reaching ROI in about 3-6 months. If this is really the case, only a total fool would sell instead of mine, regardless of any obstacle they might face.
Apart from reasons already stated, the only reason to sell which comes to my mind is that most of these companies are not sufficiently capitalized to develop their own products. To overcome this, they sell preorders, get your money, develop the product, use it for MINING for a few months and then deliver to you when it almost useless.

An excellent business model, whoever started this first should be nominated for Nobel prize in economics.

This is a very naive perspective that misapplies the experience of a small basement operation to a large enterprise.

Once you're talking about the volume that an ASIC manufacturer would produce, there are two EXTREMELY critical issues that come into play --

(1) Building equipment in order to mine instead of sell exposes the manufacturer to an additional level of risk that they might not be interested in taking on;

(2) It's not trivial at all to design and administer a facility in which to house all of this mining equipment.

Jap the days of easy mining are long gone

I ve read a very nice piece on Bitcoin mining these days, basically comparing mining rig to a golden goose, very interesting. It sums up to the following, why would ASIC manufacturers sell their machines if they can use them for mining:

“The only logical reason would either be because you know the productivity of the golden goose (ASIC) will go down over time — something which is the case for bitcoin because its hash rate doubles roughly every month — the goose was faulty or because someone was offering more than its value in the first place. Which means — unless you know how to make a rig yourself — chances are you won’t be making millions from a rig investment any time soon because the Bitcoin system is literally “rigged” against you from the outset.”

Here is the entire piece:

http://www.cryptocoinsnews.com/news/mining-rigs-killed-golden-goose/2014/05/20

Think twice before buying.