Bitcoin Forum

Simple question, probably not so simple answers and predictions. Let's imagine Butterfly Labs are not going to deliver Bitcoin ASIC at all. The people preordering have lost money or btc. And the block reward is going down to 25BTC/block.

Will the Bitcoin price rise, fall or stay the same?

Essentially what you are asking is if the market has already taken into consideration the increase in difficulty due to the addition of ASIC hardware regarding the BTC to USD exchange rate (I'm assuming you are American....)

You might also want to consider if the market has already taken into consideration the halving of the mining reward. (That is, is the increase in BTC to USD related to ASIC hardware, reward halving, or something else?)

My opinion.. is it doesn't matter what BFL does. It won't affect the BTC to USD exchange rate. Why? Bitcoin proponents are optimists and a single company not delivering won't affect the exchange rate.

The increase in difficulty will only increase coin supply in short term until difficulty adjusts. The mass adoption of ASIC will only change who will get most of the newly mined coins. And what the new coin owners do with them. They keep them or sell them. If BFL does not deliver there will be no sudden shift in newly minted coin owners.

I dont know how much of the mined coins are sold or hoarded. If most of new coins are sold then reward halving will make the price go upwards. The BFL will have no influence on this.My guess are that majority of people buying/selling bitcoins are here either for speculation or using bitcoins as a medium of value transfer (SR).I'm not American at all but I use USD as a reference point. The Euro prices does not differ that much form USD prices.

The difficulty does not directly affect the value of bitcoins, mostly because the same reward is generated regardless of the difficulty. However, if BFL doesn't come through (which seems unlikely) then there will be some loss in faith in the bitcoin economy, prompting some number of people to sell, and that can have an effect on bitcoin value.

The increase in difficulty does not affect the supply of bitcoins over time but it may affect the cost to produce bitcoins. How much does it cost to produce a megahash? The cost tomorrow is unknown today. If the market believes the cost will increase the exchange rate should increase or the intrinsic value should increase.

If the cost tomorrow can be approximated today then there would be no affect on the value of btc.

The cost of mining a bitcoin is a little less than the value of the bitcoin, regardless of the exchange rate (except market fluctuations). There is an equilibrium.

If it gets cheaper to mine a bitcoin, there will be more miners, raising the difficulty, and thus returning the cost of mining back to the equilibrium level.

If it gets more expensive to mine a bitcoin, then miners will drop out because they can't make a profit. The difficulty will fall, and the cost or mining will drop back to the equilibrium level.

When the ASICs come online, they will have incredible hash rates even though they cost no more to operate than current mining hardware. The result is that neither the cost nor the reward will change, even though the difficulty will go up by a factor of 20 or so.

Either way, none of these scenarios affect the exchange rate for bitcoins.

Any big scam has a bearish influence.

But it is possible it is overshadowed by bullshish influences which we have plenty atm.

The Bitcoin price is not tied to difficulty or cost of mining. For some people it always will be free to mine. Some who is mining more expensive than current bitcoin price might hold the coins in hope the price rises in future or sell them below mining costs to lose a little than lose everything.

I think the BFL will not deliver the ASIC at all. Making a working FPGA ir one thing, but ASIC with such specifications is not possible unless they use the latest 22nm fabrication process combined with some other unknown technology. There is no working samples, no update on fabrication progress, nothing. Just preorder and promises too good to be true.

I still think it's very probable they deliver a FPGA conversion product and greatly underdeliver on hashes/jule and barely meet hashes/usd.
They have recuted enough suckers who will defend them and their 'investment' any way possible.

It's been ages since the product was designed hasn't it, sort of been in the "shipping" stage for months but nobody has any whatsoever.

Doesn't Moores Law, or the relevent part of the law of accelerating returns now make it impossible that the product can be competative, even if they had made some breakthroughs?

No, design to hardware is always a long process.  You don't want to make 10000 wafers with a bug.

As a "hardware guru" of sorts, I have to agree with the seriously questionable nature of these ASICs. First, they're going to be on what process node? 22nm is definitely out as Intel is the only one doing 22nm, and they don't fab for other people (especially something as small as a Bitcoin ASIC). Realistically, 2xnm and even 3xnm are highly unlikely as they're the state-of-the-art and that usually means harder to work with. So let's go with something reasonable like 40nm from TSMC.

Second: Anyone remember all the issues with NVIDIA and AMD transitioning to 40nm back in the day? And those are big, experienced companies, not some fly-by-night group. NVIDIA was very late to 40nm, and their initial chips (e.g. GTX 480) were underwhelming. It wasn't until the GTX 580 that NVIDIA really got the hang of all the things to consider with TSMC 40nm. AMD meanwhile transitioned to 40nm with a smaller chip first, learned some lessons, and they were prepared for the idiosyncrasies when they created the Evergreen family of GPUs. BFL (and the other ASIC groups) have none of this experience, so they're basically flying blind right now and hoping for the best.

Butterfly Labs may have some awesome computer models of how their ASICs will perform on 40nm (or 32nm or 28nm or whatever), but when they finally tape out and get first silicon I can pretty much guarantee the things won't work. Then they have to debug (which requires some pretty serious hardware if you're encountering chip errors), come up with a revision that will fix the problems, resubmit, and maybe the second revision they can get hardware working. Then the clock speeds get dropped because the chips don't run as fast as they wanted without overheating or other errors, and you end up with maybe half of the promised performance if you're lucky.

Third: Even if everything works out well and BFL (or some other group) can deliver a working ASIC that will do 60 Gh/s at 60W, the amount of money required to design, test, validate, code, etc. such a device will be far higher than what we're seeing in terms of pricing. Several million dollars would be my minimum estimate, and if they sell to people at a 100% markup, they need to likely sell more than $10 million worth of ASICs. At a current pre-order price of $1300, do they really have 8000 orders lined up? From there, those people buying will need quite some time to recoup their investment. Even if pricing stays at $12/BTC, with the block halving they would need to mine every BTC for about eight months just to break even.

TL;DR: ASICs sound like the next big thing, but the claims of 60Gh/s at 60W for $1300 (or less!) are simply too good to be true. Bitcoinica/Zhoutong got out of BTC with how much money "stolen"? BS&T/Pirateat40 took how much BTC/money from investors with his ponzi? I could see BFL topping both of those by the time all is said and done. For ASICs to make sense, I think BTC has to have a much higher price and much higher usage in the real world -- and it would need to cut ties with the anarchistic groups that are currently in love with it and somehow get big investors and banks involved (which is something most of the current users would oppose). ASICs might come eventually, but I'll be shocked to see anyone doing 60Gh/s on a single chip in 2013, let alone in the next three months!

No one said they have ASIC's that do 60Gh/s on a single chip :D

Assumed that Single SC have 8 chips

http://codinginmysleep.com/first-look-at-bfls-asic-hardware/

Okay, so eight ASICs instead of one. That's fine, and it does work better with a 40nm Bulk SOI process, but now that link is showing a computer render of the board and chips. They need to get the board back, get the chips back, and start testing. From software concepts to working hardware is generally NOT a two month process. I'm still saying 60Gh/s at 60W in 2013 will leave me shocked. Even 30Gh/s at 60W would be damn impressive. If they do ship hardware in 2013 (which I'm still not convinced will happen), 15Gh/s at 120W is more in line with what I expect. And that's still basically an order of magnitude speedup over the current fastest GPU mining.

Who said they only had two months to design this?

Pretend for a second that BFL doesn't deliver.

How WOULD that affect the market? I'm curious, really. I assume a lot of pools are counting on them to repay loans for ASIC pre-orders?

Their website says estimated ship date is November/December. Now perhaps my math is faulty here, but that seems like two months or less from now. </sarcasm>

If the devices have taped out and they've received initial samples and are well into the debugging and validation process, I sure haven't seen any clear indication of this. There's a wafer shot, sure, but if that's the BFL-SC wafer and it's manufactured on a modern 300mm wafer, those chips are very big! There are around 300 (give or take -- I count about 270 that aren't clipped by the edge) usable chips on that wafer shot (http://www.butterflylabs.com/wp-content/uploads/2012/05/BFL-SC.jpg), so they would be at least 210mm^2. That puts them at the same size as Intel's typical chips, but then Intel makes and sells millions of chips and we're talking an ASIC that's basically targeted at one thing: Bitcoin.

And of course, they're not the only ones out there making these claims. I just find it highly suspicious that there are at least four companies all pursuing this same goal, with launch dates all relatively close together. And of course, why bother with a design that apparently uses more power and delivers lower performance if you're going to come to market four months late (e.g. Deepbit Reclaimer vs. BFL Little Single)?

If they ship this year, I'll be happy to eat crow. Heck, if they ship next year and get >50Gh/s at <500W, I'll be surprised. Personally, I'm not going to give $600+ to some place for a pre-order of a completely unproven product.

And that's well within your right.  The people who have pre-ordered obviously don't mind sending money for an unproven product.  So what's your point?  Are you trying to warn people?  If so, why?  Are you just making these posts as a precursor to an "I told you so" post, when the time comes?

I hope he makes one.
Those rare moments of joy are one of the few things left to strive for in the bitcoin forums.  Nothing better than the laughs at the expense of those people who were so greedy that they ignored all warnings.

I'm very proud of telling people exactly what to expect in the pirateat40 bitcoin savings and thrust thread. The unending stream of butthurt... priceless  ;D

I hope he does too, if he's right.  He would deserve to brag about it.

EDIT:  Of course, there's always the possibility that he is affected by SIWOTI Syndrome too.

http://imgs.xkcd.com/comics/duty_calls.png

I basically review computer hardware for a living, and everything being suggested with these ASICs flies in the face of what I see regularly with AMD, NVIDIA, Intel, etc. processors. Now, maybe building something to do SHA256 hashing is just super easy and you can focus on that and nothing else, but I just don't buy it. If people started working to make one of these ASICs last summer and they had a team of a dozen superb engineers, I'd still say 18 months to go from design to tapeout to shipping product would be an incredible feat. So basically, it's a warning to those that are throwing potentially thousands of dollars at these people that it sounds too good to be true, and thus it probably is.

I'm also curious to see if anyone has information that I'm just overlooking. I could be totally wrong on all of this and would love to know exactly why. Is ASIC design perhaps a lot easier than I'm thinking? Or maybe BFL actually has a really large team of engineers, so it's not that far out for them to do an 18 month product cycle? (Though really, with the tanking of BTC price up until January I can't imagine people kept pursuing ASICs during the Sept to Jan time frame.) So someone made a thread and I felt like joining in for discussions... and I basically only look in the Speculation subforum (don't ask me why....)

And thanks, ElectricMucus -- got a good chuckle out of that comment. :-)

The question is not will BFL deliver ASIC in time or at all. I'm almost certain that they are a scam. This is not about development times or fab processes or possible performance or performance per used energy. The whole website looks like a scam. Just take a look for reverse search of this picture http://www.tineye.com/search/2603634f3c1cc35b20fab5492f65b3f63449790a/

The original question is about what will happen to price.

I'd agree with you if it weren't that there are several people on this forums who reported mining with their FPGA Singles. So in order for it to be a scam they have to somehow be in on it.
That wouldn't be the strangest thing to happen, but still it gives them some credibility.
Do you think that these are genuine products or just empty boxes?

On the price: Almost certainly down, this would be a massive blow to the credibility of bitcoin businesses.

Lol, that'd be a LOT of people to be in on the scam, without a single person having reported not receiving their FPGA.  The FPGAs are real.  I bought 10 of them myself (which I have since resold mostly to yochdog, who has been happily mining with them since).

Also, if any of you scam-callers wants to put your money where your mouth is, I'd be happy to counter your bet on betsofbitco.in.  BFL will deliver.  The question (in my mind) is when.

FPGAs are a completely different category -- you basically sacrifice raw performance potential and use off the shelf programmable chip arrays in place of doing a custom ASIC. Note that while FPGAs are more efficient than GPUs, their performance and cost is such that it's not worlds better. 800 Mh/s at 40W compared to 650 Mh/s at 350W means they're about an order of magnitude faster. GPUs on the other hand are about 30X faster than CPUs for hashing, and ASICs have the potential to be 30-50X faster than GPUs (and possibly use less power at the same time). FPGAs are real and people are using them, but FPGA vs. ASIC is like comparing a Visual BASIC prototype (that's missing a bunch of features) to a final C++ program.

As far as pricing goes, if ASICs begin shipping, pricing will tank. People will want to recover the cost of their ASIC hardware, and while not all of them are going to be interested in selling every coin mined, plenty will. Difficulty will shoot up, and if you can actually get 60 Gh/s at 60W you would have a system capable of mining about .7% of all BTC ($300 USD/day at the current rates) while drawing only about $0.20 in power per day. You could sell BTC at $0.01 UDS each and break even, so anything above that is profit (after recovering the cost of the $1300 hardware, of course). Personally, the day people confirm they're running ASICs (and we see the associated spike in block generation with difficulty following), I sell all my coins and wait to buy back in until we stabilize -- probably in the low single digits.

FPGA are real but making code for FPGA is one thing, making ASIC is another. It is more like Visual Basic vs. ASM than Visual Basic vs C++.

The increase in difficulty will concentrate mined coins in fewer hands as GPU part of miners shut down so the question is what they will do with mined coins.

But my point is that BFL ASIC will be vaporware. They have nothing right now just a Solidworks rendering and a generic picture of silicon waffer.

I'll assume your reply regarding FPGA's is more directed at Electric than myself.

It'll be interesting to see what happens to price when ASICs ship.  A great deal of miners currently keep their minted coins (probably 90% or greater).  I'll probably be aiming to sell half and keep half, so right there, your argument is partially justified.  Then again, if the price drops significantly, I'll just hold all my mined coins until it rebounds.  My ASICs are already paid for by FPGA mining, so I am not worried about getting any USD out of it quickly.

I'm not really sure if hits to the credibility of Bitcoin influence the price of BTC as much as you'd think. Seems to keep on plugging with good or bad news.

"Would ASIC's not showing up cause miners to sell their hoards" is almost a more direct question.

In answer to that question: no. ASICs not showing up would mean that you won't see a bunch of miners selling a lot of BTC to recover initial hardware cost.

Put another way: if ASICs really begin shipping and cost $1200-$1300 for a setup that can mine at 60Gh/s, I'll take out a loan and buy one, and in the first month I should be able to recover the cost of the hardware by selling coins (assuming 10,000 people don't do the same thing, naturally -- gotta keep an eye on difficulty). Actually, if ASICs come out, difficulty and network hash rate could get really crazy -- like, we could see difficulty increase by a factor of 50X over the course of a couple months or less.

Current total hash rate for BTC is around 21900Gh/s, so I guess my earlier estimate was off: with 60Gh/s you'd mine on average 0.3% of all BTC; first person to get an ASIC and start mining could in theory earn $4000 in a single month! But if 1000 people get these ASICs, then difficulty will quadruple and you'll only get 0.07% of all BTC. Taking the latter, you then acquire 2.52BTC/day, or 75.6BTC/month, with an electricity cost of under $10 most likely. Sell half of your BTC and as long as price is in the double digits you break even after less than two months.

So what you are saying is the FPGA product were brought out in order to get credibility for the scam?
Mind you when BFL first started they claimed their FPGA line contained "custom hardware" as well. Some amoung my self used the same reasoning that the thing is a scam.
What it actually turned out to be was something differnt, with vastly worse specs than the initial promised product.

So that is what I am betting on (not literary). The best explanation would be some FPGA conversion chips in those devices. Like Altera Hardcopy or something.
It fits the time margin and what they demonstrated to be capable of, and given the attiude of their customers they will get away with it if they lets say deliver half of the promised performance/second (30 GH/s instead of 60) and one tenth of the promised performance/watt (100MH/Jule instead of 1GH/Jule).

I'd be more than happy to take you up on a bet about that too.

Ya'all can't even speculate about this, can you?

Amazing.

"In answer to that question: no. ASICs not showing up would mean that you won't see a bunch of miners selling a lot of BTC to recover initial hardware cost."

That's the closest so far to actually being on-topic, then degenerated into speculation about how quickly ASIC's will pay for themselves. That's not the topic.

I also think no, but I'm assuming that miners WILL try to recover hardware cost but will be patient enough to not tank the value.

Again, like in the other thread, I'm broke and don't wanna give BFL additional publicity. Additional even BFL supporters tend to give them an additional margin for error, which I don't consider fair. It should be something like 10% (In our case 909.09 MH/Jule to 1100MH/Jule)

I'm morally torn between being nice because I want the friends who I have met while mining to not get ripped off.. and wanting to be right about seeing too many red flags and not participating with ASIC pre-orders.

When I upgraded my 1 GPU dedicated miner 2 a 3 GPU miner 7 months ago, I didn't (pre)order FPGA for the same reasons.

When GPU mining ends, I may have to step away from the bit coin hobby.. And thats OK. I'll leave well fed as sales of Bitcoin has paid for my lunch for a year and some handful of months now. I will be able to sell my GPUs online even if there is a glut of GPUs online. It's estimated that bit coin mining is 1% of AMDs business and I have 3 very high end AMD cards. so I've got nothing to lose really, those cards come with a 3 year warranty and if ASIC does hit the scene, there will be more than 2 years left on that warranty... plus the boxes, and all accompanying hardware software.

Speculating without reasoning behind the speculation isn't particularly useful, so that's why I provided more than just a simple "up" or "down" answer. If you want a different phrasing without getting into technical discussions of the hardware and such:

Possibility 1) No ASICs -> no change in status quo -> [speculation] -> price continues on current path (low double digits)
Possibility 2) ASICs -> change in status quo -> [speculation] -> increase in difficulty of mining -> GPU miners mostly stop -> race to bottom to drive out smaller operations -> price goes down.

But obviously there are a lot of other factors that can have a much bigger impact on the pricing of BTC than ASICs.

So then the most reasonable prediction is that price will remain the same. Because I'm almost certain that the ASIC will not come out, at least in near future and from them.

And how about miners who lost money on prepaid orders? Can they cause some action?

I remind that this is no thread about will the BFL deliver what is promised. This tread is speculation what will happen when the ASIC preorders are not fulfilled.

The price wont be affected by ASIC. The price is only determined by what someone is willing to pay for it.

And also it is determined how many coins for what price are put to sale. If many people sell coins for cheap, the price falls. If the expectation is not fulfilled and people lose money to BFL scam, this will affect the price and quantity of coins put to sale.