Topic: When will Butterfly Labs (BFL) run out of money? (Read 12394 times)

Here's the latest summary in that post:
https://bitcointalk.org/index.php?topic=110805.640

When BFL is firing and forcing refunds on their publicly vocal and frustrated early customers, it could be argued something is fundamentally amiss and should raise a red flag.

It is indeed, "redicilous"   

The story of this company seems more and more redicilous.

From the BFL Forum:

link it.

I just read about the CEO of Butterfly Labs being a convicted felon, pleading guilty to mail fraud of over $20 million.

What's worse, he strung his victims along by mailing some of them checks. The vast majority, however, lost money. See any correlation?

You've got to be kidding me with this company.

edit: https://bitcointalksearch.org/topic/re-butterfly-labs-ceo-25-million-usd-mail-fraud-a-concise-summary-of-evidence-110805

In before all the BFL devices shipped thus far are just frankensteined Avalons.

Exactly. They sold vaporware knowing full well their product was neither fully designed or tested, which prompted a last minute redesign at our collective expense. Pretty fraudulent if you ask me to sell what you don't have for a year. Everything they do is sideways and unclear. I even started a "you suck" thread over there because apparently I can't even change my shipping address without sending a request to their customer service black hole, which has so far been 3 weeks ago now. Unbelievable.

Very, very amateur at best.

Just this alone should deter any new customer from ordering with BFL.

Obviously they have no common sense when it comes to designing, prototyping, testing anything.

1. Build a ton of shit you think you will need.

2. Find out you dont need it anymore because your product is too fucking big.

3. Repeat 1 & 2.

So funny because Josh even eluded/hinted that they had a prototype in November of 2012 that was going to get FCC stamp of approval etc.

And to this day only < 40 Jally's shipped.

More delays, excuses.

I just noticed that if you look at my history of postings from January you will see that it was BLATANTLY obvious that BFL could not and would not be shipping anywhere near their estimates.

That would be IF you're creating an ASIC.

Better business model: you create a front -> ship a few cheap parts -> pocket the millions -> pay some fake suppliers (you own, so you're just taking the cash) -> front goes bankrupt -> you = margaritas on the beach.

EDIT: you have to make it look legit though. Don't rush it, take a few months. As long as the money is coming in sufficient qty, keep going (milking).

Don't forget other business costs. Rent, salaries, accounting, employees, equipment, marketing, website.... the list goes on.

Oh that's quite simple: Just ask them BFL Cowboys how they did it.

- always blindly trust your subcontractors
- do no Project Management at all
- waste money on (unnecessary) bullet runs
- go mass production (50.000 chips), then do a prototype, then figure out your design is borked, then redesign, ...
- make tons of boxes with fans, that you can all throw away because your devices need much bigger casings (because of heat issues)
- and the list goes on and on ...

Seriously dude, just ask BFL how to get from one big fail to the next big fail. And the next. And the next ...





 

you can look that up on Wikipedia.  estimates to produce a 65 nm ASIC easily run 2 to 5 million.  if I had an rtl I could get the Avalon reproduced in less than six months, but that is not a very sophisticated chip.

Please describe the ASIC design process in detail and the associated costs?  I would like to learn how you can burn through several million dollars in a few months.

Nope obviously he doesn't realize that.

All he sees is "Millions of $". 

well you do realize that creating an testing a 65 nm ASIC can consume millions of dollars pretty quickly, like within months, right?

And if they had to send stuff back (because they designed it poorly not because of manufacturer defect) that cost them a couple hundred grand right there.  Yea?

I doubt if BFL need cash, unless they have been bleeding it dry, they will have received several $million in pre-paid orders over the last 10mths.

Price increase is probably to make folks think twice before ordering a refund.

I'd say, given the recent media frenzy that they started, and the "all sales are final" agreements the pre order customers had to accept, they run out of money even before October.

Avalon is 110nm

BFL was always been working on 65nm

This is the second time they've produced the ASICs, they already rejected the first batch because the ran too hot and then had them repackaged.
The old ASIC had a plastic package, the new one has a copper package to improve thermal conductivity.

We're now waiting for the second edition of the motherboard, the original one didn't have strong enough power regulators, to handle the chips unexpected power requirements. The old motherboard are still going to be used to produce the first batch of Bitforce 5's though.

It is worrying how hard they are advertising for new customers, the doubling of prices, the high order number 60k, and how few Bitforce 5's shipped from 6 wafers.

It looks like a company that needs more cash.

Uhhhhh... Is this not what happened? They have 5000 chips that are not at power spec, and have to wait to get more from the foundry. I'm pretty sure they're switching from 65n to 110..

The new boards are at least 1 week out according to Josh, so maybe they'll show up some time in June.




















I mean June 2013.  June 2014 is the redesigned case.

Definitely not the redesigned boards then.

I have no idea. Found them here: http://mineforeman.com/2013/03/12/butterfly-labs-photos-of-asic-chips-on-boards/
Its from 1 month ago.

Those aren't the redesigned boards are they?

Jalapeno, Minirig, singles etc are all built on the same board. I can`t help but think that they are running a ponzi scheme where they can only buy new chips when they recieve money. Or use the chips they own to rather mine themselves to cash in big bucks while just pushing out small batches of Jalapenos to keep most cards to themselves. After all, they are sitting on a gold mine...

The PCB
http://mineforeman.com/wp-content/uploads/2013/03/Bare1.png

1 ASIC chip, 4.5GH/s = Jalapeno
http://mineforeman.com/wp-content/uploads/2013/03/Jalapeno1.png

Now a complete board with 4 ASIC chips that will soon be a 30 GH/s Bitcoin Miner (BitForce Little Single SC)
http://mineforeman.com/wp-content/uploads/2013/03/LittleSingle1.png

And finally we see a fully populated board with 8 ASIC chips that will be used both in the 60 GH/s Bitcoin Miner (BitForce Single SC) and the 1,500 GH/s Bitcoin Miner (BitForce Mini Rig SC).
http://mineforeman.com/wp-content/uploads/2013/03/Minirig1.png

Seems like Josh just confirmed my conjecture:

https://forums.butterflylabs.com/bfl-forum-miscellaneous/2003-petition-get-butterfly-labs-attention.html#post26648

A Zork avatar LOL

see:

SELL ALL YOUR BELONGINGS!!!!

BUY BFL MINERS!!!!

Gosh, I just read it, wow. I think it is tough to say where we are headed.

Organofcorti mentioned that he thinks the hashrate will go too high for people to make returns (I visualise it like the recent speculation bubble), and I agree that it looks like this will happen (possibly before next year) at the moment. If bitcoin falls back below 100, I don't like to think about some reckless people getting their children repossessed by debt collectors along with their Avalons- but this might screw miners, and buying would probably halt until hashing power gets cheaper. If the USD/BTC exchange rate rises from now, people might still be buying loads of ASICs in November, and I think this is certain to carry us past 1 bil difficulty by early 2014. The interesting thing about this is, even if mining is barely worth the electricity late this year- people will still keep their units online, because they can't be easily sold for other purposes, just to make back a little bit of their investment. These people will effectively have donated funds to the security of the network.

In short: I think we'll get close(ish) to 1bil by new year if btc stays the same, we might hit it before new year if BTC rockets, and we'll probably hit it eventually, but the difficulty is going sky high no-matter what happens to BTC this year.

Same sources you are seeing... just a guess based upon pattern of Avalon ASIC chip sales per my posts in Org's analysis thread.  It's your question he answered... where do YOU think we're headed?

I really hope that isn't this year. Have you got a citation or calculation for this?

There is also the fact that lots of people wont take the risk or pre-ordering and delays. They will wait until the product is flowing out the doors nicely with reasonable time from order placement to shipping eg. a couple of weeks, before forking out for the products. Then you have a second wave of buyers if they are happy with the product, will want to order another one.

So in a nutshell, the faster they can complete the pre-orders and get then out the door, the more orders they will get from careful buyers and repeat business.

With that in mind it would pay for BFL to outsource volume production.

It's going to 1 billion.  Plug that into the calculator and see what spits out....

The difficulty is going to jump higher than anyone really imagined this summer (or before), if they can't even get their bigger units near the specs (or shipping date) of avalon batch 3 (which might struggle to make a profit) they are completely toast (like their passive cooling prototypes).

"What are those employes actually doing?"

exactly my conclusion.  nice sexy office with lots of people doing nothing.  all the work is done overseas.  all they need is a shipping manifest and a third party... boy their investors are going to be pissed.

I'm sure there's an obsolete pallet of Nexus 7s collecting dust in their warehouse, for those won't be used for anything since the $29,995.00 minirig won't be produced, although she, cleverly dubbed the Marilyn Monroe model, was snowcased at CES.

I think bfl is done too, they made their own grave.  (see my sig)

Pics of FPGA Single assembly last year:

https://bitcointalksearch.org/topic/wondering-where-your-bfl-singles-are-90333

Right around the time people realise this: https://bitcointalksearch.org/topic/490000-avalon-chips-already-ordered-150t-hashrate-spike-coming-in-august-181982

Prerecords of what? YouTube Videos channel or line in the queue for next year eventually?
But as i already told they will probably will not run out of money in that case

they'll be fine. the recent demo unit hype will ensure plenty of preorders.

Considering they have a working chip and the amount of orders they have been bringing in before they even had a working product, they would have no problem finding additional VC funding at this point. A start up project being literally sold out before you even have a prototype is almost unheard of.

Had the chip on the other hand been a bust and needed a complete redesign then this discussion would have been a lot more interesting. The only thing atm that could be a bit worrisome is the actual cost of making each pre-order unit, this is more about how fast they can make back the initial RnD costs though.

The answer is simple. As long people are putting more and more money into BFL venture they will no run out of money anytime soon. As long people want a refund 100% of the customers the had run out of money a LONG time ago  

You never have enough threads when doing calculations that can be computed massively parallel!

I think that depends on the price of Bitcoin. I'm pretty sure they leveraged their way into the rally to remain profitable, but now that's over it might go down pretty quick.

To be honest I am surprised they even got that far as producing two of their low end products. Might have been assembled with a skillet and toaster oven technique... At this rate.. oh well.  

When will you run out of BFL threads?

I would like to discuss the probability of Butterfly Labs running out of money.

This would have serious implications:
- no more refunds
- no ASIC products
- no support for FGPA products

I don't know when their Venture Capital partners put an end to it (they surely won't wait forever to see a return on invest), so this discussion will be solely about pre order money.

While watching Butterfly Labs Company Video I was thinking: What are those employes actually doing? Besides looking busy on the soldering stations for the video and moving (empty?) boxes around with forklifters ...

6 months have passed since BFLs estimated ASIC shipping date (October 2012) and they have not shipped as single ASIC product to one of their customers. What did BFL workers do all day long in the last 6 month?
Labor costs must be a huge cash burner for BFL.

Yesterday BFL has finally managed to ship something that's supposed to be a Jalapeno to a technical reviewer: BFL Jalapeno Unboxing and Demo. Although it's not passively cooled any more and needs way more than the 5 Watt it was originally designed for.

It seems BFL simply took a Single SC casing, heatsink and fan for this Jalapeno2.0 thingy. While watching this video I noticed how incredibly loud the fan was. It seems to be running at maximum speed. Which means it's barely able to handle the 30 Watt of this device.

A few calculations: 5.5GHs at 30 Watt means:
- Jalapeno: 5.5GH/s at 30 Watt
- Little Single SC: 30GH/s at 163 Watt
- Single SC: 60GH/s at 327 Watt
- Mini Rig SC: 1500GH/s at 8181 Watt (!!!)

If the fan/heatsink is barely able to handle 30 Watt, how is it supposed to handle 163 or 327 Watt? No way in hell can it do that!

Which means, besides the Mini Rig Casings, BFL can also throw away all their Single and Little Single casings, PCBs, fans and heatsinks. Or maybe reuse a few of them for the "new" Jalapeno2.0.

Which means: More (of our pre order) money down the drain ...

My best guess is that BFL starts shipping what they have: Jalapenos. And only Jalapenos. Which will leave lots of angry Single, Little Single and Mini Rig customers behind.

I highly doubt they can manage to ship 400 units a day (Josh brought that number up) - I fear it will be more like 40 per day. Or 4 ;-)

Summarized:
- lots of angry Single, Little Single and Mini Rig customers want a refund: negative cashflow
- existing Jalapeno customers get their products: negative cashflow (because BFL already has the pre order money, but has to pay labor costs)
- a few new Jalapeno customers: positive cashflow

But will that be enough for BFL to survive?
What do you think?

Disclaimer: All this is of course speculation, based on the little facts that are available from BFL.