Profits are cut in half. It's still profit. What am I missing?!
What you are missing is the difference between the concept referred to as "revenue" and the concept referred to as "profit".
Revenues are cut in half. You might be making "good profit" at a BTC/USD $12 when there are 50 BTC per block, but you might be losing your ass at $12 when there are then only 25 BTC per block.
With GPUs, it nearly entirely depends on what your cost of electricity is. If it is low, like $0.07 per kWh or lower, you will likely still be able to mine profitably with GPU even after the block reward drop, but the wildcard is when the ASICs start shipping.
So most of the "be afraid, be very afraid" talk (which I espouse myself) is directed to those mining with GPUs who are continuing to add GPU hashing capacity at this late stage in the game.
The problem with the ASICs is nobody knows how many of the things have been ordered, how man will ship initially and from which manufacturers.
I got an asic on pre-order that's going to do 40 gh/s.
By the way, you got a free upgrade, 60 gh/s now.
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http://www.butterflylabs.com/order-form-bitforce-sc-single/Also, what you are missing is the concept of opportunity cost.
If you were one of the first to order a BFL SC Single back in June you then plunked down 162 BTC for a BFL SC Single (at BTC/USD of around $8) then you don't technically break even on the investment until it has mined 162 BTC plus the cost of electricity (though this is minimal for BFL SC ASICs), plus the cost of capital (if you put that $1,299 in a bank you would have received interest on it so this investment has at least that expense), plus your time, etc.
Now let's say ASICMINER happens to go live first, and difficulty skyrockets by the time you get your BFL SC. You'll probably wish that you still had that 162 BTC because getting to breakeven, could end up being more than a year or more away! That's opportunity cost. You lost the opportunity to hold 162 BTC yet today, and instead you have a claim check for a piece of hardware which is promised to yield 60 Ghash/s.
Or the bet might pay off and you are among the first to get the SC delivered and it ends up being the most profitable investment you've ever made.
The thing is, it is pure speculation at this point either way. Nobody knows how it is going to play out. What is known is that it is now near the end of October (the original shipping estimate provided by BFL) and ASICs don't yet exist for Bitcoin mining (from any manufacturer) as far as anyone can tell.