Topic: Why are people still pre-ordering asics? (Read 1548 times)

Yes, I've been talking about the second version, assuming the first has already been met. I've been assuming that a miner has paid for itself back, and then I was trying to figure out how long you could keep it mining while still remaining profitable.

A lot of people have done something similar with GPUs in the past few months. My GPUs have paid for themselves many times over, but I had to figure out when the difficulty got high enough or the price got low enough that I should shut them off. This was made even more complicated when I looked at undervolting at different speeds, but a quick excel sheet and we were in business.

I think you're both partially right, but neither of you have hit the nail on the head. The issue isn't whether you paid in BTC or USD. The issue that MANY people on the forums here are having is basing your ROI on BTC or USD? If you're looking strictly from a BTC perspective, it would take months to mine back the 200+ BTC it took to buy a first day BFL Single. However, if you're looking at a USD standpoint, it only takes less than 2 weeks to earn back the $1300 USD it took to buy a first day BFL Single. I get that you could hold those 200BTC and have a shit ton of money now, but we didn't know that then.

Coincidentally, this is part of the reason I think all those people spreading FUD about BFL running out of money any day now are all on crack. They could sell a small portion of the BTC they received and pay for all of their employee's salaries for a month. This is just me guessing, but I don't think I'm too far off.

Had you spent your dollars to buy btc directly you'd have made far more profit. You could have bought 23 btc which is now worth over $2400.

There are two different things people talk about when they talk about mining profitability. First, is whether the machine will ever make enough coins to cover the cost in purchasing it and running it. The second is whether it is currently making enough coins to cover the cost of electricity to contiune run it. I think we are mixing the two. Most ASICs will be profitable using the second definition for quite a long time because they are very power efficient. But it is the first kind of profitability that really matters. Avalons and BFLs bought at inflated prices today may never make back their initial investment even though they will be efficient enough to run for a long time.

There is no such thing as a free lunch. If there were an infinite number of BitFury and KNC miners available and they all shipped immediately, then enough will be sold that mining is just barely profitable for people who have cheap or free electricity. Difficulty would suddenly rise and quickly find an equilibrium where mining is just barely profitable for those who can afford to invest.

The only thing that makes mining profitable for the common miner is to get there FIRST. In other words, to have an early pre-order or take a risk by ordering from a company that promises something that others aren't delivering. Everyone who is late to the game will lose money. It can be argued that people who order BitFury or KNC later will lose out because the orders before them will cause the difficulty to rise too much. This is definitely true for Avalon and BFL. For BitFury and KNC we can't say because we don't know how many orders there have been and we have no idea when they are going to actually ship. FYI, I have early orders with both BitFury and KNC, I bought an Avalon Batch 2 second-hand (which may make ROI, hopefully), and October orders for multiple Jalapenos and Singles (I've only received the Jalapenos so far, of course). I also own ASICMiner shares (which have already quadrupled my initial investment!).

Mid last year the superior option for buying BFL devices was to use US dollars, not bitcoins.  As the price of bitcoins appreciated the number of bitcoins that must be generated by the ASIC device to achieve ROI decreased.  I took the US dollar option and have BFL units mining away.  ROI within four weeks because I chose not to pay with bitcoins.  

Would I order an ASIC now?  Not sure, but if I would, I would use dollars again.  Many people believe the value of bitcoins will go up, and the difficulty rate will also inevitably be much higher.  In both scenarios the only way to pay is with anything but bitcoins.  Paying with bitcoins for an ASIC devices makes ROI much more difficult versus just buying bitcoins, when ROI is compared BTC used to BTC generated.

Ok unlike your first post, you actually made some valid points there. However, I will still maintain that you're wrong on C). Long haul is what's important, and a lot of people don't realize it. Even you've been talking about it, but you didn't realize you were. Sure a Jalapeno can't remain competitive when the difficulty hits 2Billion, but a BitFury can. It remains profitable all the way up to almost 15Billion! We keep talking about BFL, but not all manufacturers are BFL. Avalon's will become not-profitable long before BFL equipment does, but KNC and BitFury will remain profitable long after both of them.

Check out my thread Here. It compares the long term costs of running hardware. Difficulty AND price are both irrelevant, as the numbers all assume the same hashrate for all vendors. Basically it's to show that not all hardware and hardware companies are equal. We keep using Jalapenos as an example, but in my numbers of buying you could save $30,000 is hardware and operational costs by buying a BitFury or KNC. Who knows when they will ship, but it can't be as bad as 12 months.

1) Parables aren't meant to be taken literally. I think the point of that story is that you shouldn't take the gifts that God gave you for granted. It's not really about money at all. There are certainly people who buy and hold silver these days, and for some it has been a good investment. If you believe in bitcoin, the best way to support it is to buy bitcoins. If everyone mined and no one bought bitcoin, the bitcoin economy would crash.

2) Sorry I didn't mean to insult you. Here is the scenario we currently face:

A. You could have bought a Jalapeno last year for the equivalent of 15 BTC (when they were $150 and bitcoins were $10). You'll probably make 15 BTC from your Jalapeno if you ordered early enough, but you won't make much more than that. It's not a bad investment, but not a big win. Also you probably waited almost a year before you even received your Jalapeno.

B. You are buying a second-hand Jalapeno now for 20+ BTC ($2k+). You'll probably never make 20 BTC back, but you might get lucky

C. You are placing a preorder for a Jalapeno now for about 3 BTC ($300). If you got the Jalapeno today, yes, you'd do pretty well. The issue is you aren't likely to receive that Jalapeno until spring of next year, if you ever receive it all (there is a significant chance BFL will go under before then). At that point there will be 500k+ Avalon discrete chips out there, Avalon batch 3, KNCMiners, Bitfury Miners, 60,000+ BFL orders, plus whatever ASICMiner adds. Difficulty will be easily in the hundreds of millions. Maybe 300-500 million. Some estimates place it at about a billion. Remember that KNCMiner and Bitfury are selling 400GH/s miners of which they've had thousands of preorders so far. At 500,000,000 difficulty your Jalapeno will make only 0.0070 BTC per day. And that number will only continue to go down. At that rate it will take over a year and a half to make back your 3 BTC. And since difficult will only continue to rise it is very likely you will never make your 3 BTC back. Even at 250 million difficulty, your ROI time is still longer than six months. And again, that is assuming difficulty stays stagnant. Your Jalapeno has no chance of paying for itself and would be a horrible investment.

3) Mining isn't about the long haul really anymore. It was when we have GPU miners since there weren't major GPU upgrades that changed the mining environment. What we are seeing now is companies coming out with faster and cheaper and more power efficient ASICs. The early ASICs won't look too attractive in a few months as KNCMiner and Bitfury begin to ship. Avalon, which was arguably the first available ASIC is 82Gh/s for 750w. Bitfury is claiming 400Gh/s for 400w and costs less than an Avalon does now. The actually cost of an ASIC is very cheap once you've paid off the NRE. ASIC prices will continue to drop as the market is flooded with them and difficulty rises. Eventually everyone will be able to buy miners in the 100's of GH/s for just hundreds of dollars. Running your Jalapeno which cost $300 and takes 35w for 7Gh/s won't make sense anymore. It will pay for it's own electricity for a while but it will have more and more trouble making back that $300. Most ASIC miners will make the vast majority of their money in the first 3 months after they are purchased. After that diminishing returns will make them more and more irrelevant until they are simply shut off. My BFL FPGA used to make me $20 a day earlier this year. Now it makes me just $1.25. The electricity still only costs pennies to run it so I leave it on, but I don't care so much if it gets shut off now.

1) I don't mean to get religion involved a whole lot with my dealings here on the forums, but my best argument against buying and sitting actually comes from a story in the Bible. Matthew 25:18. I don't think sticking coins in a wallet and waiting for 5 years to see what he price ends up at is the most profitable course of action. Remember, this is long-term. The longer you let coins sit in a wallet, the amount doesn't increase. The longer you mine, the more coins you get. If you go from 5 years to 10 years, mining becomes even that much more profitable.

2) Yes, I do have a quite solid grasp on the relationships between mining, difficulty, network growth, price estimates, and ROI. I find it insulting that you think I don't, especially when you think a Jalapeno isn't even profitable. Really? Assuming the price stays what it's at today, the difficulty would have to be at least 1.5Billion before Jalapenos stop being profitable. And by then, you will have mined more than your 3BTC back.

3) I do have several BFL pre-orders, some of which have been delivered, some haven't. However, I never looked at them as a get-rich-quick scheme. Mining can be SOOO much more than just the first 1-3 months. The goal is to make mining profitable in the long-haul. If you can't do that, then you prolly won't last long.

I'm all for people buying BTC and driving the price up. If you're looking to sell in 1-6 months, then buying BTC might work better. If you're looking at 1 or more years, then I think Mining would be better. I realize BFL has had their delays, but lets apply that same 12 month delay to everyone (which I think is unlikely. Avalon and ASICMiner followed their time tables pretty close). You order BitFury's 400GH/s miner, wait 12 months to get it. You think it couldn't mine the 85BTC it cost to buy over the next 4 years? So exactly 5 years from today, you would come out ahead? I know the difficulty would be tons higher than it is today, but it's lower power consumption would keep it profitable for longer that some of the other Miners. *Cough*Avalon*Cough*.

The blinders are definitely on for many with the "gold rush" mentality.

At least BitFury has shown their prototypes, unlike KnC and many others who are all talk and no substance.

But no idea really why so many are so eager to throw their hard earned Bitcoin at blatant scams and otherwise scammy/unprofessional enterprises. There is no problem with crowd-funding a new startup, but they way most of them go about it is just terrible. I pulled my BFL order on moral ground mostly because they are a company that calls their customers and investors idiots and repeatedly lied to everyone for over a year. Demand and short supply do funny things to people's better minds I guess.

I've been waiting to buy until I feel some trust in these options, instead of blindly investing and that company being a repeat of the BFL fiasco. BitFury seems to be on the level, which is my top choice of vendor as I plan out my own operation, but we shall see.

Then it seems to me that its very unlikely we won't be at least over $100 a bitcoin by next year so why aren't more people investing it bitcoin. It seems like the only for sure thing of making some profit. It could still take you well over a year to receive a bfl product and there is no proof otherwise. What if all these preorder companies take a similar amount of time or don't produce anything. Are you forgetting that BFL said they would deliver in august of 2012, honest abe said so. History says you can't take any of these companies word for it, especially when they aren't willing to put up their own money and need to piggyback on your investment to make it happen. I was hoping for something more of a reason to sending random people an irreversible currency than they have the cheapest product. When it doesn't exist, its more like gambling on the hopes of making it rich. Now that to me seems stupid

If you "truly believe in Bitcoins" the best investment is to simply buy bitcoins. I don't know why you don't believe that is a valid long term option. Especially if you believe in bitcoins.

And you need to do the math on how difficulty increases and mining works. If your Jalapeno is not profitable now it definitely will not be over a period of 5 years. If your Jalapeno is going to make a profit, it will do so in the first few months of owning it. A year from now, a Jalapeno will be making pennies a month and that will only continue to go down. 4 more years of making pennies is not going to make a dent in the Jalapenos value.

The truth is you probably missed out on making money by mining. To make money you needed to be in Avalon batch 1 or 2 or a very early BFL purchaser. You may make money from KNC or Bitfury but you are taking a big risk. It might even be too late for them either. And even if you do make money, it's not going to be the money Avalon batch 1 customers made.

Jalapenos aren't 25BTC anymore. They're more like 3. And those Block Erupters really are a terrible investment. They are WAY too overpriced. Anyone recommending them is usually either A) stupid, or B) counting on mining on them for a small period of time and then reselling, which is hard to do just right.

For me, it's a simple question: what other alternatives are there? If I truly believe in Bitcoins, and want to mine and keep mining for several years, what's the best way to accumulate the currency?

Switching to LTC does nothing to help BTC, so I avoid LTC as a matter of principle. Buy BTC and hold? That only works if the price is guaranteed to increase, and isn't a good long-term option. It might take a year for a Jalapeno to mine back those BTC, but what if I mine that Jalapeno for 5 years? I come out ahead. You could buy ASICMiner shares, but I dont consider them good for all of BTC. WAY too centralized. If you want to mine BTC, ASICs are the only real, viable option for the long-term.

Now I'm talking about mining here, and there are always other options to invest BTC to make BTC. You could give out small loans and make money on the interest. You could invest in a small startup that sells good for BTC. There are probably hundreds of ways to make BTC that aren't mining.

I don't understand why people are paying for kncminer and bitfury preorders. I remember last year and I almost bought a BFL jalapeno for 25 bitcoin. Would I have 5gigahash right now if I had, yeah probably. But I backed out at the last second because it was too good to be true. Will anyone with a BFL jalapeno mine 25BTC? Maybe but it will take them well over a year. So why is everyone ready to throw money at devices that don't exist? Not only that but these same people who are buying preorders tell people buying block erupters they are wasting their money. At least their devices actually exist. Not only that, but the prices look like a bargain compared to 25BTC jalepeno's