Yeah, sorry, I was kinda rambling a bit with that long post. Was too tired when I posted it.
I guess from BFL's perspective, they have USD costs for the devices and USD denominated revenues, so their business makes the same USD based profits from the sale of devices regardless of what BTC does. For buyers who paid with BTC that's not the case. But you're right, it's not very relevant. Maybe I'm just feeling guilty that I missed my chance to preorder due to stupid banking restrictions, and thus managed to realize those BTC gains entirely due to dumb luck.
Topic: If you preordered a BFL ASIC rig back in August and paid for it in Bitcoin... - page 2. (Read 3739 times)
December 09, 2012, 01:34:17 AM
December 08, 2012, 11:42:48 PM
One would think the preorder funds were needed to be expended to develop the new product...
According the some of the 'Business Scholars' in this forum, invested money floats around in Imagination land acquiring profits and dancing with the fairys.
O.o
December 08, 2012, 09:16:29 PM
One would think the preorder funds were needed to be expended to develop the new product...
December 08, 2012, 05:48:18 PM
It kills me to agree with Jutarul, but this is actually a pretty good way to measure it. The whole "If you bought BTC instead of XXXX device in YYY time, you would have made ZZZZ" is ludicrous and goes to show that the person making that argument does not understand how money works.
"Hindsight" wasn't my argument. BFL converts all BTC to USD, thus avoiding all currency risk. Buyers on the other hand preorder with BTC, and have their spent BTC sit in limbo until the product they purchase is finally delivered. True, BTC could have fallen instead of risen, which would have made those who have preordered much better off (and BTC did fall from $12 to $10.50 for a time), but this currency risk is taken on entirely by the customers. The decision to preorder a long time ago, which resulted from a huge opportunity cost, turned out to be a bad decision, but the main reason that decision was made to begin with was because BFL claimed that the delivery date was only a couple months away, i.e. BFL claimed that the currency risk would be smaller than it turned out to be. In the end, BFL was not affected, since it is not affected by BTC fluctuation due to holding USD, those who have preordered a long time ago have experienced a huge opportunity cost, and BFL is to blame. (If you think opportunity cost isn't a real cost, the extra $3,000USD worth of BTC that I have and that you don't says otherwise).
Now, I'm not saying that this is something that BFL needs to repay to those who have preordered. Currency exchange risk is often unpredictable, and something those who preordered (maybe) likely expected. I'm just pointing out that delays that happen when dealing with two currencies that fluxuate against each other do have very real costs, begin just annoyed customers and whining on forums.
By the way, it could have been MUCH worse if BFL had kept all their customer preorder funds in BTC instead, because if people asked for a refund, had BTC lost value, they could refund BTC, and had it gained value, sell it for the USD price equivalent and just return the USD, netting the BTC gains for themselves. It would have been an almost risk-free investment for them.
BTW, did BFL mention whether they are still keeping customer's preorder funds in a separate account? Because until they start shipping products, that money is still technically Unearned Revenue, and does not belong to them. I'm assuming that's what they are doing, since they are an LLC, will have to file taxes, and will have to declare it as such, lest they bring the wrath of IRS auditors upon their heads.
I guess I'm not understanding why/how you are applying this opportunity cost to only one side of the transaction, which then results in an unbalanced transaction. Yes, BFL is late and the opportunity cost is real, but it applies to both sides of the transaction (and thus cancels out). Saying BFL was not affected is the fundamental problem here - BFL is only not affected if the transaction is unilaterally applied to the customer and not BFL, which is not the case (as you point out in a later paragraph). BFL would have to hold on to the BTC and then issue refunds in USD for that to apply, and that is not what's happening. The opportunity cost that affects the customers also affects BFL. If we had held on to the BTC, we could have gained quite a bit (again, as you already pointed out). So yes, the opportunity cost is real in so far as "if someone had held on to the BTC, they'd have more USD value than they did before," but again that's only valid with hindsight, not with future predictions. If BFL had known that BTC was going to rise, BFL should have kept the BTC instead of the USD. Anyway, I'm rambling at this point... the take away from this is that the potential opportunity cost applies to both the customer and BFL and thus cancels each other out as providing an advantage to one party over another.
To answer your question, yes we maintain preorder funds separate from expenditure funds.
December 08, 2012, 05:27:47 PM
It kills me to agree with Jutarul, but this is actually a pretty good way to measure it. The whole "If you bought BTC instead of XXXX device in YYY time, you would have made ZZZZ" is ludicrous and goes to show that the person making that argument does not understand how money works.
"Hindsight" wasn't my argument. BFL converts all BTC to USD, thus avoiding all currency risk. Buyers on the other hand preorder with BTC, and have their spent BTC sit in limbo until the product they purchase is finally delivered. True, BTC could have fallen instead of risen, which would have made those who have preordered much better off (and BTC did fall from $12 to $10.50 for a time), but this currency risk is taken on entirely by the customers. The decision to preorder a long time ago, which resulted from a huge opportunity cost, turned out to be a bad decision, but the main reason that decision was made to begin with was because BFL claimed that the delivery date was only a couple months away, i.e. BFL claimed that the currency risk would be smaller than it turned out to be. In the end, BFL was not affected, since it is not affected by BTC fluctuation due to holding USD, those who have preordered a long time ago have experienced a huge opportunity cost, and BFL is to blame. (If you think opportunity cost isn't a real cost, the extra $3,000USD worth of BTC that I have and that you don't says otherwise).
Now, I'm not saying that this is something that BFL needs to repay to those who have preordered. Currency exchange risk is often unpredictable, and something those who preordered (maybe) likely expected. I'm just pointing out that delays that happen when dealing with two currencies that fluxuate against each other do have very real costs, begin just annoyed customers and whining on forums.
By the way, it could have been MUCH worse if BFL had kept all their customer preorder funds in BTC instead, because if people asked for a refund, had BTC lost value, they could refund BTC, and had it gained value, sell it for the USD price equivalent and just return the USD, netting the BTC gains for themselves. It would have been an almost risk-free investment for them.
BTW, did BFL mention whether they are still keeping customer's preorder funds in a separate account? Because until they start shipping products, that money is still technically Unearned Revenue, and does not belong to them. I'm assuming that's what they are doing, since they are an LLC, will have to file taxes, and will have to declare it as such, lest they bring the wrath of IRS auditors upon their heads.
December 08, 2012, 02:23:50 PM
I would recomend a book Data Analysis & Decision Making with Microsoft Excel. By Albright, Winston and Zappe.
Seems to me a good investment if the asic s comming out on time
Seems to me a good investment if the asic s comming out on time
December 08, 2012, 02:10:20 PM
So in other words, if you think the value of something wil go up, you should be more careful about trading it away and if you think the value will go down, you should be more ready to trade it away. Are you a wizard or something?
December 08, 2012, 01:45:42 PM
It kills me to agree with Jutarul, but this is actually a pretty good way to measure it.
Thank you for the flowers. I learned it the hard way myself. I started mining when the price of BTC was ridiculously low, thus I paid a significant amount in opportunity cost, even though all the cards eventually broke even USD wise.The whole "If you bought BTC instead of XXXX device in YYY time, you would have made ZZZZ" is ludicrous and goes to show that the person making that argument does not understand how money works. I know it's already been said, but the value of BTC could have just as easily gone down and you would have made out ahead. Unless you have a crystal ball, saying "You would have made ZZZZ" after the fact is nothing but rhetoric. Sure, I can say that about ANY financial transaction that involves the exchange of money... if I had known AUD would have dropped so much since 2008, I would be a millionaire right now... however, I didn't know the USD would lose value as quickly as it did against AUD. Hindsight is great for making financial predictions, you are always 100% right.
Now you go apply that to the real world and see how you make out.
Now you go apply that to the real world and see how you make out.
In the spirit "everything has been discussed before - somehow":
https://bitcointalksearch.org/topic/m.1313267
The graphs in the linked post tell you something about the intrinsic bitcoin generating power for the first ASICs, which seems to be around 1000-2000 BTC per 100 BTC invested (at $13 exchange rate and a 4x increase in difficulty). However that figure will go down fast with the date of the delivery. The good news is that it will take a significant amount of hash power to push the profitability down to less than 100% (>40x). Thus ASICs in 2013 could be considered a safe investment - given that your concern is the accumulation of bitcoin.
Caveat emptor.
December 08, 2012, 12:56:41 PM
... that means...
($13.50 - $10.50) / $10.50 = 28.5%
$30,000 * 28.5% = $8,550
...you have lost $8,550 of potential bitcoin capital gains, or that a BFL ASIC Rig would have cost you $8,550, or that had BFL keept ASIC Rig customers' preorders in bitcoin, it would have owed each of them $8,550 by now.
... Is this in any way relevant?
($13.50 - $10.50) / $10.50 = 28.5%
$30,000 * 28.5% = $8,550
...you have lost $8,550 of potential bitcoin capital gains, or that a BFL ASIC Rig would have cost you $8,550, or that had BFL keept ASIC Rig customers' preorders in bitcoin, it would have owed each of them $8,550 by now.
... Is this in any way relevant?
When you do your profitability calculation for mining hardware you need to denominate in BTC, not in USD. The question is: how long does it take the hardware to generate the amount of bitcoin (ROI break even) you'd spend at that time for the hardware purchase. This is exchange rate independent.
Now - the reduced profitability (longer ROI break even) due to all the delays in delivery are a completely different story...
It kills me to agree with Jutarul, but this is actually a pretty good way to measure it. The whole "If you bought BTC instead of XXXX device in YYY time, you would have made ZZZZ" is ludicrous and goes to show that the person making that argument does not understand how money works. I know it's already been said, but the value of BTC could have just as easily gone down and you would have made out ahead. Unless you have a crystal ball, saying "You would have made ZZZZ" after the fact is nothing but rhetoric. Sure, I can say that about ANY financial transaction that involves the exchange of money... if I had known AUD would have dropped so much since 2008, I would be a millionaire right now... however, I didn't know the USD would lose value as quickly as it did against AUD. Hindsight is great for making financial predictions, you are always 100% right.
Now you go apply that to the real world and see how you make out.
December 08, 2012, 08:31:15 AM
And my family went on vacation while BTC was $30 last summer. By all accounts, I lost $20,000 by being away from home when I could have sold.
December 08, 2012, 04:08:42 AM
What If I bought BTC at $15? how much would I have lost?
December 08, 2012, 03:40:42 AM
BTC is a currency, meant to be traded and used to purchase things, so that's what most people will do with them.
+1
December 08, 2012, 03:12:02 AM
It's as realistic as it gets. Opportunity cost is still a cost and had BFL shipped in October you'd be sitting pretty right now with a paid off ASIC, but they screwed you on that one too. Don't worry though it wasn't their fault, it was those damn clock buffers.
You don't get it,do you..........I have lost nothing,I spent my BTC at the time I needed to spend it.For all you knew,BTC could have decreased in value,then what "haha,we got one over on BFL,they got ripped off by the lower BTC prices",no they would not have.The value at the time is just that
It's an investment,my product will arrive when it arrives & I will profit from it...... & you won't,haha
December 08, 2012, 03:01:53 AM
... that means...
($13.50 - $10.50) / $10.50 = 28.5%
$30,000 * 28.5% = $8,550
...you have lost $8,550 of potential bitcoin capital gains, or that a BFL ASIC Rig would have cost you $8,550, or that had BFL keept ASIC Rig customers' preorders in bitcoin, it would have owed each of them $8,550 by now.
... Is this in any way relevant?
($13.50 - $10.50) / $10.50 = 28.5%
$30,000 * 28.5% = $8,550
...you have lost $8,550 of potential bitcoin capital gains, or that a BFL ASIC Rig would have cost you $8,550, or that had BFL keept ASIC Rig customers' preorders in bitcoin, it would have owed each of them $8,550 by now.
... Is this in any way relevant?
When you do your profitability calculation for mining hardware you need to denominate in BTC, not in USD. The question is: how long does it take the hardware to generate the amount of bitcoin (ROI break even) you'd spend at that time for the hardware purchase. This is exchange rate independent.
Now - the reduced profitability (longer ROI break even) due to all the delays in delivery are a completely different story...
December 08, 2012, 02:20:41 AM
I did purchase BLFs by selling BTC at ~6$ because I had all of my money invested into BTC.
There's always a cost in having money tied into something, This time the lost opportunities are MASSIVE !
There's always a cost in having money tied into something, This time the lost opportunities are MASSIVE !
December 08, 2012, 01:42:24 AM
It's as realistic as it gets. Opportunity cost is still a cost and had BFL shipped in October you'd be sitting pretty right now with a paid off ASIC, but they screwed you on that one too. Don't worry though it wasn't their fault, it was those damn clock buffers.
December 07, 2012, 11:41:23 PM
At the time I preordered my BFL units,BTC was @ $6.30.No,I didn't "lose" anything.
Oh, but you did. If you bought a Single, you spent rougly 200 BTC for a place in line, and when BFL starts shipping, they'll go through all pre-orders pretty quick. Someone ordering today will get their rig at nearly the same time, but it'll only cost them 100 BTC. BFL suckered you into giving them an extra 100 BTC for nothing.
That's an interesting (albeit somewhat harsh) way of looking at it. So is an early pre-order spot worth 100+BTC? I wonder...
Assuming that BFL can put out about 21THash / week (their claim), you would need to be roughly within the first 2 batches to go out for it to be worth the 100BTC hole you start out with, assuming that BFL ships first, and capacity goes online in discret 21THash chunks/week, rather than continuous addition as they suggest they will do after first batch of ?? Thash. Or in other words, it would be cost-effective to cancel your spot in the pre-orders and re-order today if you are later than that in the pre-order list and originally paid with bitcoin.
Does Tom suffer from this same issue?
#s wise, the third batch only makes roughly 96BTC back before the late order comes online. This is of course subject to a great deal of supposition regarding timing of orders, and rate of fulfillment
By that reasoning,noone would spend BTC for fear of it rising,like it has & losing money
I lost nothing....I paid with my digital currency & helped the BTC economy.
I see what your saying,but your not seeing it from a "realistic" point of view...........
December 07, 2012, 10:04:06 PM
My calculator must be broken, it shows something different.
I think you mean ($13.50 - $10.50) / $10.50 = 28.5%
I think you mean ($13.50 - $10.50) / $10.50 = 28.5%
Thanks. My boss walked in and interrupted me as I was writing that out (had the result on my calculator) and I got distracted half way through the formula. OP fixed.
December 07, 2012, 09:16:08 PM
Or in other words, it would be cost-effective to cancel your spot in the pre-orders and re-order today if you are later than that in the pre-order list and originally paid with bitcoin.
That won't help. No matter how many BTC you sent them, you'll get 100 BTC back today if you cancel. Early pre-order people are screwed.
Oh really, they send you back the equivalent exchange rate amount of coins rather than the number of coins you paid? That's a shame. Then yeah, nevermind. Some people will do ok, some people will be boned. Guess it's good that they have a "you win some you lose some" attitude.
December 07, 2012, 09:10:41 PM
Or in other words, it would be cost-effective to cancel your spot in the pre-orders and re-order today if you are later than that in the pre-order list and originally paid with bitcoin.
That won't help. No matter how many BTC you sent them, you'll get 100 BTC back today if you cancel. Early pre-order people are screwed.
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