Topic: Why are people cheering that ASICMINER will bring 800-1000TH online this year? (Read 9219 times)

This.  The cost is relatively linear.  Electricity is perfectly linear, chip costs are nearly linear because as total production volume increases the % that is the fixed NRE declines.

So hypothetical numbers. 
ASICMiner has 40TH/s.  Network is 200 TH/s. 
Cost = X Network Share = 40/200 = 20% Revenue Share = 20%.
Revenue Share per unit of cost (X) = 20%/1 = 20%

ASICMiner adds 40 TH/s.
ASICMiner has 80TH/s.  Network is 240 TH/s.
Cost = 2X Network Share = 80/240 = 33% Revenue Share = 33%.
Revenue Share per unit of cost (x) = 33%/2 = 16%

ASICMiner adds another 80 TH/s.
ASICMiner has 160TH/s.  Network is 320 TH/s.
Cost = 4X Network Share = 160/320 = 50% Revenue Share = 50%.
Revenue Share per unit of cost (x) = 50%/4 = 12%

Each doubling of capacity produces less revenue for the same amount of cost. 

Why.  By any account ASICMiner shareholders have a huge stake of coins (unless they sold them). 

Man this is why I love all the PoW+PoS coins, thank you Sunny King for PPC and Balthazar for NVC.

The whole point of bitcoin is that it inverts the tragedy of the commons - everyone trying to take as much as they can actually makes the network stronger - the goal is to benefit the people holding the currency, not indefinitely allow miners to make massive profits.  The huge wealth was really only meant to go to the 'early' adopters, and we're no longer in the early adopter phase.


Friedcat can do it, so can any other rich person who can afford to fab their own chips. KnC, HashFast and could both easily.  They have superior chip technology and could easily push ASICMiner out.

And that's the problem with assuming that Friedcat could take over the network: If it's a 100% sure-fire way to make money, other people will try to do it as well.  BTCGarden is trying to startup with the same business model.

Anyway, it sounds like you're just mad he has a better cost structure then you.  In the GPU days, everyone had access to basically the same hardware at a pretty low unit cost. Now, people who can spend hundreds of thousands of millions of dollars in R&D costs can fab their own chips and blow the little guys out of the water.  

Does it suck for the average miner?  Obviously.  Is that how the free market works? Uh, yeah.  It is.

___

Also, there is a point of diminishing return when it comes to adding more hash, because if you make up a significant percentage of the network, adding capacity will add a significant amount to the difficutly.

So, for example if you have 90% of the network, and you double your capacity, you obviously cant have 180% of the network, right?   What you actually get is about 94.75%, about 5.5% more then what you started with.

If you own 20% of the network, and you double capacity while no one else does anything, you only you go from 20% to 33.3%, not 40%. So the cost relative to the share goes up as you try to increase your share.

i said 'yes?' because i wasn't sure, i had seen that # thrown around on the board

I recall seeing friedcat listed the total profits and stuff, i think it was ilke 180,000 BTC?

That's like 16.2 Mil, call half 8 Million.  If he's adding 200 TH only, that's 2 Million dollars.  So he's re-investing only 25% of the profit.. even though the ROI is fucking fantastic for him with his hardware costs?

Never said he is not entitled to it.  I'm simplying analyzing the numbers.  50% of the profits go to share holders, the other 50% to friedcat.

We don't know who else, how many people, etc are involved with ASICminer, I don't think we know anyones names, where they actually are (just somewhere in china, presumably), anything.

But it would be insanely trivial to just add your own hashing power, have the correct proxies/vpn/vps/anonmizing services in place, and split it up into reasonable "BFL miners" or "Avalon miners" on all various pools.  Launder the coins through a mixer, boom.  There's no limit to how much hashing power you can add, and they can do lip service to "preventing a 51% attack and holding up the 'integrity' of bitcoin."

However, if he can sell hardware at a 1000% markup, that may very well be more profitable at the current time.

I simply don't believe he would only spend say, 10% of his profits to make more miners.  Especially when his insanely low $/TH and power rates means that asicminer, and asicminer alone, can keep adding hardware long after it never makes sense for ANYONE else (i.e. 22,500$ or so for 1TH from KNC is the best you can get, Asicminer only pays 10,000$).  The only limit to when it stops making financial since is as he approaches something abusrd like 80%+ and he'd just be taking marginally less away from the scraps left over for everyone else.

We'll see how the next year or two plays out.  I bet he can hit 7,500$/TH or better with the next line

You got a source for this or did you just pull a number out of your ass?

By my (limited) calculations the total BTC mined per day is:

24 hours x 6 blocks per hour (maybe 7 in reality) x 25 coins per block = 3600 BTC (or maybe 4200).

The total value of these coins at the time of writing is about 3600 x US$87.9 (from BTC-e) = $316 440.

ASICMiner has about 10-20% of this which is $31 644 - $63 288 per day.

How do you know Friedcat takes half of ASICMiner's profit?  Isn't he entitled to make a lot of money since he had the balls and foresight to start up ASICMiner? This is a capitalist economy, if you don't like it get out of ASICMiner/BTC.

Disclaimer: I own ~1.4 AM shares. Yay me

https://bitcointalksearch.org/topic/m.2788821
Franchising of course

Right now Asic miner is milking one teet, leaving the other unmilked.  They can milk the cow even more just by pretending to be "regular users", they have literally no limit to how much of the network hashrate they control.

No

No one would kill a milking cow.They smart enough to keep on milking. Balance is inevitable.

ASICMIner makes something like 720,000$ per day, yes?

Half goes directly to friedcat.

320,000$ per day

Asicminer can add 1 TH for 10,000$.
Asicminer pays ~0.02 c/kWh (Industrial rates)

There is not ONE. SINGLE. COMPETITOR. ANYWHERE CLOSE TO THIS MARGINAL COST

ONLY a company that BOTH DIRECTLY CAN BUY CHIPS FROM TSMC AND MINES THEMSELVES COULD EVER HOPE TO MATCH THEM

That means he can afford to add 32 Terahash PER DAY based on his income.

He's supposedly adding "only" 200 TH this year?

That's literally less than ONE WEEK of profit.

And you fucking believe him?

Do you have any fucking clue how EASY it is to add hardware and RUN IT PRETENDING TO BE SOMEONE ELSE?

Do you seriously think they're immune to the greed and tragedy of the fucking commons that literally is the fucking lifeblood and driving force behind all bitcoin mining?

It is a shady organization, of which we know only one person's online alias, probably only a small handful of people, based in china that nobody knows anything about.  You are LITERALLY trusting in him to "please, don't keep adding mining hardware despite the fact it's 5x more profitable for you than for anyone else.  Please don't lie and mine as someone else"


reminder : conspiracy theories require a grand involvement of lots of people.  This would require about 1 days work of the small group of people involved at ASICminer.  You'd never be able to detect it, you'd never be able to find out, you'd never be able to stop it, and it's literally the difference of millions of dollars of extra profit for them.  Why WOULDN'T THEY FUCKING DO IT?

Every single miner on this board would do it, if they could.

Of course, that also requires they not do anything that might damage the price of bitcoin, like getting 51% of the network (Although they could split their hashrate among several pools to hide that fact if they wanted - In fact, they'd also be hiding it from their shareholders as well)

On the other hand, it also means they might take some of their money and invest it in promoting bitcoin, to help get the price up.


I think a lot of people are just upset that chip companies aren't lining up to sell them ASIC hardware as cheaply as possible, with just a few % of profit for themselves, the way CPUs/GPUs/etc are sold.

But Intel and AMD can't make any money hording their own chips. And mostly they're just used for entertainment anyway. (PC games and the like).  And they can't compete with companies like Google and Amazon, because those companies spent tons of money on special software, and already have market share.

But with bitcoin it's not like that.  There's not much reason for a company to sell you a chip with a low margin, unless they're taking pre-orders to fund development (like KnC, Avalon and - lol - BFL)

So the thing is, small miners are simply at a serious competitive disadvantage. With GPUs and FPGAs - there was a nearly linear ratio between investment and return: buy X GPUs for $X*Y, pay X*Z in electricity and make BTCX*B.  The minimal investment was just the cost of a GPU (plus mobo, etc)

With ASICs the initial NRE is huge, and miners who don't have tens, hundreds or even millions of dollars can't compete at all.

At least with bitcoin, there really disincentives for companies to own too much of the network - since the network is stronger when you have a huge number of individual participants.

Well, well well, how things change in a few months. I am sure friedcat was much misquoted originally and intended to put online 200TH when he was expecting the entire network to hit a petahash....

SINCE he said that though, KNC has popped up, as have Bitfury, and VMC although there in the background before has announced ASICs of their own. That all points to having about 3 or 4 Petahash if it all gets delivered and online by end of 2013.

And then, hashfast, well they seem to be shooting for Pluto, if they only hit the moon, it's bad. Missing targets by a factor a four would still see them churning out multiple times the hash of the network.

So if friedcat didn't originally intend to put up a petahash, he should be seriously thinking about it now, and that might not even have AM with 10% of the network in early 2014.

Upshot of that is, don't freak out that friedcat might have a petahash up his sleeve, freak out that we're gonna be talking 10s of petahash going into 2014

They are. Planes are expected starting November-December this year.

With the asic genie out of the bottle, I have trouble believing they are going to be able to maintain anything close to 20% much less 50%.  Its easy to horse races when you are driving a car around the track.  In about 3 months, everyone else will have cars as well... I hope they are working on planes or they are going to be left way behind.

Friedcat has now announced franchising plans to avoid directly controlling too much of the network as ASICMiner grows in the future:

https://bitcointalksearch.org/topic/m.2810185

9/800th more to the board 

Be an ASICMINER shareholder then. I'm happy to own 1/800th of ASICMINER.

The CPC doesn't seem to want to bring down bitcoin. They've been pushing it on their state TV:
https://bitcointalksearch.org/topic/2013-05-03-bitcoin-on-china-central-television-194937
http://www.forexminute.com/bitcoin/china-loves-bitcoins-7723

There is always risk, but Friedcat is dealing with this:

TL;DR -> people is cheering ASICMiner deployment plan because they are heavily invested in it.

So far, ASICMiner managed flawlessy their business - taken into consideration how good they managed their venture so far, you can be quite sure they won't do any stupid thing to destroy their own investment (like owning a too high % of the network).

Thus, this thread is mostly FUD fueled by people who missed the AM train.