Topic: why sell avalon box when they could mine themselves...? - page 2. (Read 3732 times)

The analogy with a goose was funny but bogus as well. There is a difference between having a goose and having a concept but no money to realize it.
One has to make a deal (money for the effects). You never know for sure that you will get the bitcoins earned by hosted devices or the device itself or, say, a TV bought by internet - it depends on honesty of the seller and on ability to punish him in case of no delivery.

Maybe Avalon (and maybe others) DID mine, enough to cover costs. For me, to see network hash rate spike in the end of December, and in general hashing raising now when we all expect ASICs, it's a bit strange.
Also a little funny is the hashing power of Avalon batches. Around 20TB 1st batch, 40TB 2nd one.
1st batch it's 50% of the network (GPU+FPGA+Avalon 1st batch), 2nd again 50% of the network (GPU+FPGA+Avalon 1st batch+Avalon 2nd batch). This when demand was grossly greater. It's like they took care not to have 51% (and seriously affect trust in bitcoin).

Utterly bogus analogy.

Because during the gold rush, it was the hardware vendors that made all the money, not the miners.

Why sell when you can mine with it? Because you are selling it at an (almost) unfair price to everyone but the first few customers.

By "There's been a big debate", do you really mean "I asked the same thing a month ago, and I still havn't learned a thing since then" ?

As others have said, this income would only be for the first month, as difficulty will skyrocket immediately. So your income will instantly decrease. If you sell the coins on the market, the price will probably decline as there aren't enough buyers for the majority of the coins you're trying to dump now. If you hold the coins and slowly put them on the market (similar to diamonds), you can artificially keep the value of bitcoin really high and get maximum profit from each one sold, however, it means that your wallet will be forever expanding as you can't sell them as fast as you make them.

Additionally, if the network realized that there was 1 entity (especially one that they paid money to for a product) that controlled most of the network, I have a feeling that many people would just walk away. They'd let bitcoin die with their preorders and that'd be the end for them. There wouldn't be any trust (or very little) left in the system if someone took over the network like that. Every new bitcoin company would be scrutinized thoroughly to the point that legitamate companies won't be able to startup.

In effect, they'll be killing their own market. Currently (and probably for several months), they can sell each unit at $1500, which means a constant return and constant profit. Whereas if they mined with each unit then their ROI for each unit produced will take longer than the last. The first batch of units will pay for themselves in a month or two, but the next batch will take 4-5 months, and the next will take 9-10, even with the first units adding their hashes to the later batches. Eventually you'll never make your ROI. Or, you could, as another user said, pass off this issue to customers and let them fight over ROI calculations while you continue to sell at your fixed cost and make your fixed profit.

The early ASIC miners will make a lot of money, the mid-pack ones will profit modestly and those late to the game will not even get their initial investment back. I am sure there are still people buying GPUs even today for the purpose of mining. Avalon and other ASIC manufacturers probably expect to be able to continue to make money selling to those late comers.

Why do those latecomers buy? They could be just stupid, or they could be motivated for reasons other than profit. For example, someone who already has tens of thousands of BTC might decide to buy 1 ASIC device simply to do his/her part to protect the BTC network, thereby protecting the value of their pre-existing stash.

Many people have asked this. It really comes down to how you want to run your business and what is growth. Do you want to be a miner. Or do you want to be a developer. I am pretty sure I read somewhere that Avalon would like to sell to a wholesaler here in the stats. This way they can focus on production/development and let someone else deal with the orders.

I think if one group was basically in charge of the network it might have a major impact on bitcoins and what they are worth.  Distributing the network goes more towards a free market idea, and a decentralized network.   

Think about this for a moment.  If they did start mining themselves with all of there hardware, and just kept producing more of it for them to mine, would you compete against them with your fpga or gpu?  They would kill the market and the network. 

That all being said if I were in their shoes I would have kept the first unit and turned it on to make a profit so they wouldn't have to be so weird about preorders and preorder funding for the second batch.  If I remember reading correctly the 1 unit given to Jeff makes about $240 a day.  They probably could have mined for a 2+ weeks, and proven they had the product while they were producing the remaining 300.  Once all of them were produced then they could ship all of them out to people at once and not given anyone other then themselves a distinct advantage (aside from geography and how long it takes you to receive something from China).

I don't know the exact reasons, but I can think of a couple possible ones.

Your numbers don't account for the rise in difficulty due to ASICs. The income will probably end up being much less than your estimates.

Manufacturing ASIC mining rigs requires a lot of money upfront. A bank is much more likely to loan to someone with pre-orders than to someone that is going to mine bitcoins.

There's been a big debate on this. Basically it makes no sense to sell cutting edge ASICs. But there's a lot of self-delusion and wishful thinking that makes a lot of people on here convinced that that they can buy them.

That's how much they could make at the current exchange rate and hashrate over the lifetime of the product. Of course they want to sell them, they make more money up front and let others incur the risk of competition. Then they can spend that money on NRE for better chips or whatever.

Hi,

60gh per box @ 300 boxes = way more money via bitcoins then selling them at $1299......

just a little common sense says something is not right here...why sell when you could make WAY more by mining them yourself.

60ghashes per box @ $1299 cost = 60000 million hashes = $6100 per month at current bitcoin exchange rate. $6100 per month per box * 300 boxes = $1.8 million.

LOL.