Bitcoin Forum

This one has been bothering me for a while now. Why did companies like butterfly labs release ASIC miners. Back when they first made them, 5 gh/s was hard to come by and the ASIC did it in just one unit. Here is the thing that makes me confused, they release the units for a small profit and they flood the market with them, making it even harder to mine. Why not keep them for themselves and mine the majority of the bitcoins using the ASIC units. With as much processing power they have, they could of found a bitcoin block everyday. I understand there was competition too, but still, why? :-\ ???

I kinda see your point, but people want to buy miners. If you don't sell them, other people will. If you're already making them for yourself, it's not all that more costly to make more to sell.

I'm sure BFL are mining for themselves as well, of course.

Good question

They are probably and probably have loads of BTC already. Don't know how much money they get but im sure they can quit their normal jobs and focus on just selling miners and earn money that way. Who does'nt want to run an own bussiness?

+ They don't have to worry to much about the BTC price going up and down. (?)

I read somewhere a while back when someone else asked this very same question this response: that during the gold rush in the 1800s in the US, it wasn't the average miner making big bucks in that day and age, but rather the guy selling the pickaxes and other mining supplies.  Perhaps the same holds true here?

I don't know if I buy into that, but it was an interesting response.  Unlike gold mining though, these manufacturers would likely be guaranteed some cash flow, unlike a bunch of rusty old pickaxes gathering dust in a shed (or even these suppliers going out to mine for themselves could be a bust).  I suppose it isn't a 1:1 comparison.

I'm rambling.

Because they sell them for more btc that they can ever mine. You should ask why people are buying them instead...

K7, Thats a very good comparison. When I think of it in that sense, it's a no-brainer :D

I would think that they would sell the hardware they are making to promote their company brand in the event that they are mining using that same hardware. Plus, it offers a lot of security for the company because if Bitcoin ever experiences a massive price drop, they won't suffer from heavy losses from their assets that are then deemed as worthless.

I'm pretty sure they all have a mining farm. Just now they call it hosting. Can you tell which one is your and which one is theirs?  ;)

They sell them because they need to raise typically about $5 million in funds to produce an ASIC.

They will have the pick of the best chips and the earliest run, you will take whatever is handed you.

I always predicted ASICs would kill the Bitcoin network. We've ended up getting rid of one elite with the printing press and replacing it with another. Litecoin waits in Bitcoin's shadow for it's moment to shine as the true peoples currency.   8)

It's a conspiracy, they sell them because they need a small amount of money to 'make more miners for themselves' and make it look like other people stand a chance, but in reality no individual does against these corporations

Read more here: https://bitcointalk.org/index.php?topic=346037.msg3712424#msg3712424

I simply don't think this statement is true.  I started with 6 USB Block Erupters.  They not only paid for themselves, I was able to buy 5 more and a 10 port hub with the profits.  I now have 11 USB Block Erupters running at 100% profit minus electricity costs.  So people are making money on these things, just not as fast as everyone would like I suspect.

But how long ago did you start? And how long did it take you to even out?

the problem is people calculate the profits they would make when they got instantly delivered, and than compare the profit 3 months later to the profit today and they become disappointed. It's better to guess what they would make if the difficulty quadripled and see if they'd still be worth it.

Some aren't, especially not when they get delivered too late (looking at you BFL), but others are.

Seriously? You say that my statement isn't true and you bring as an example the usb block erupters? ROI wise the worst miner in the history of bitcoin?
The only miner that noone ever made roi of?

I started with the Block Erupters in October.  Since I got 2 for free and 4 for $10 each, ROI on those only took a couple weeks, however I reinvested all that in more, again for $10-15 each.  Once I got 8, I had to get a hub, which took another week and a half.  All together, it will be three months next week and I currently still have 0.11 BTC.

So for me dollar wise with electricity an all, two months ROI and a month to get the 0.11 BTC.  My son bought 10 Block Erupters all at once for $15 each and it took him three months to ROI.  Last week we combined our hashing power into a single worker on BTCGuild and we get a payout per day (24-26 hours) at 8.4GH/s, which at this point is all profit minus our electricity costs.

While you buy miners, they buy bitcoins, the bitcoin price raise more fast than the bitcoins you can mine with the miners.

When you send them 25 000 USD for a ASIC, they buy bitcoins, by the time you get your machine, their bitcoins double in price, they make profits. You instead will have to wait much longer to maybe break even.

It's more profitable to sell the machines and buy bitcoins for them than mine for bitcoins.

It's the alure of get rich quick. ASICs are a a shiny new toy that promises to magically pour out money, but they halve in efficiency so often that they barely break even...

i believe they were very important for bitcoin economt still. if they were to do what you think then they would instantly gain monopoly causing users to abandon the coin bringing the price down.

because it would be very difficult to find buyers for all your BTC. This way they get USD immediately.

because as much as we like bitcoin, today dollars are more safe. So they made a lot of dollars by selling bitcoin miners.

I imagine people would be less likely to support bitcoin if they knew 1 company was producing hardware that could potentially dominate the network. Also, selling ASICs does not preclude them from using their own ASICs to mine.

I'm just telling you my experience.  I have seen quite a few people say this crap for each device that is released, generally followed by, "you should just buy BTC instead" garbage.  Your ability to ROI depends on your initial investment.  Since mine was only $40 for 2.016GH/s, I didn't have far to go.

So I had a choice, buy a bottle of Scotch for $40 or buy 4 Block Erupters for $40.  The Scotch would have been fun for a weekend, but the Block Erupters have been fun for 3 months now and I made at least enough to buy a couple more bottles of Scotch. LOL

I bought my first 4 with cash, not BTC and they arrived in 3 business days.  The other five I got with the BTC they mined so that was one for free.  :)  BTW, even the ones I got with BTC arrived 3 business days after I ordered them.  Of course I ordered most of them from a company in my own state.

Shoot if I ran a company that made the chips and the devices, I'd be hard pressed to sell any of them.  I'd probably just setup a farm and maybe sell hosting.  Screw all the headaches dealing with customers, customs, shipping, returns, etc.

I do know why they do it, someone has to hype BTC to increase its value.  Targeting the geeks with new toys is a pretty slick way of doing it.  Its pretty hilarious how much people will pay for this stuff though, for geeks you would thing they would be smarter than that.  They must be spending daddy's money.. LOL

Steps:
1. They need money to produce ASIC this is why preorder.
2. They delay shipment and mine themselves
3. They start sending the units once their facilites cannot use more miners because of electricity capacity usage.

Dont know if all steps done, but it would make sence

Steps two and three are not necessary because they are selling their miners for more bitcoins that they can ever mine.

I don't believe that there is some massive conspiracy here. Apart from the real scammers, I think that most companies have probably underestimated the effort involved in designing an ASIC, and then producing a viable mining rig based around it. This probably leads to some questionable behaviour in some cases.

The pre-order piece makes sense (to the ASIC manufacturers) as the competition have proven that there is a queue of miners prepared to take the risk, and the money funds them (hopefully) through the development stage. If they are delayed, then the flow of pre-order money keeps the lights on until they ship, but some of them just won't make it. If they realise this then they might just keep taking money in the hope that they will recover and become quasi-ponzi schemes, or might have to mine using customer kit to get themselves out the hole.

We blame the ASIC producers, but it is demand from the mining community that fuels this arms race that we are all in.

Demand can't go down because the asic race is a race against time. It 's not like pre ordering a gpu so you can play your favourite game. Having an asic 2 month later might be the difference between positive roi and not.

This also means that it's a race for the ASIC mining rig manufacturers. If they don't take your money now then then they know you will buy from the company that has product on the market the week before them. Hence the pre-order process which provides lock-in for the vendor. Of course that can mean that you've given your hard earned cash to a bedroom dreamer or a total flake. Some of us will get lucky and back the right horse, but most of us probably won't and will end up staring at expensive piece of kit that will never earn it's purchase price.

I know it's an unpopular view, but the mining community (including me) drive the ASIC manufacturers behaviour as we want absolute certainty, and won't accept any delay to a forecast date. The KNC thread is a great example. Despite everything, they delivered products that largely outperform their estimates and yet there are hundreds of posts complaining about being days (not months) late.

Probably because a miner has an approximate set USD price. While BTC doesnt.  By selling them it removes a lot of the speculative risk involved in mining alone.  And others have said it costs a lot of money to create an asic from scratch and selling them again removes a lot of the risk compared to mining yourself.  You know people will buy the asic, you dont know how BTC will move.

Wow, is this a recorded message or something?

There is a simply solution here, just don't buy them at those prices.  If people continue to buy chips and miners at rates that will never ROI then there is no incentive for the companies selling the hardware to lower their price.  In fact, the prices will only continue to increase until people stop buying.  When they stop buying, prices will go down.

Yeah I don't blame the ASIC producers, after all they wouldn't even have designed them in the first place if people weren't willing to fund the project.  Anytime you mix greed with ignorance, you end up with a mess.

Yep.

Back during the 1849 California Gold Rush, few prospectors struck it rich. Most of the people who made money back then were those who sold shovels.

With the huge demand for ASIC hardware, their profit margin is probably insane, and its guaranteed profit regardless of whatever bitcoin's value changes to.  Plus, if they don't sell it, I'm sure some rival startup would.

I agree.  I have little sympathy for those that invest in vaporware and cry later when they get ripped off.  Not only do they loose their hard earned cash, they open the door for more crooks to turn around and do the same thing, especially when the guy that got ripped off turns around and invests more money in the next pipe dream.  It's like strapping a sign to your chest that says "I'm rich and stupid, take my money please!".  In that case, most crooks would be happy to help you out.

I think that's a little harsh as none of us know who will produce vapourware next. I trust KNC after they delivered more than I'd ordered in an acceptable timeframe, but I'm not prepared to gamble over $12,500 that they can ship a Neptune to me by the beginning of March. If the Genesis block is correct, if it arrived at the start of April then it would be too late - I would be better just holding my coins. If the Genesis block is wildly over then my Jupiter will still be profitable. I guess I've bought my last mining rig!

Yes this is a recorded message because the concept of difficulty is not so easy for newcomers and they fall victims of companies selling the asics at outrageous prices. If you have another opinion about asics i 'll be glad to hear it.

Oh and noone cares how much a random like you bought some usb miners. We are talking about what usually happens.

You can only say this for fact in hindsight. at 1000/btc it's hard to imagine it doubling by March.

I don't like long term predictions for bitcoin but do you believe that anyone was thinking that bitcoin will go from 200$ to 1200$ in one month? Absolutely noone. Even the more bullish among the bulls couldn't have thought of such a rise.

If it's that difficult to conceive, maybe they shouldn't be investing in the first place.  Like any investment, you should do your homework before giving away your money to strangers.  Didn't everyone's mom tell them that?  My point is, you don't have to pay those prices and you don't have to fall victim to the scams, but you do have to do a little research.


Maybe you don't, but maybe if people see there are deals to be had, maybe they won't be so hasty to jump on those outrageous prices.  I would think that in a community of techies, people would be smarter than this.

Everything you say is correct except that you don't mention how asic companies price their miners. The only real race between the companies is which one is going to sell first the most overpriced one.

All of you who say one should buy coins instead of mining rigs...

Do you understand what you are saying?

I mean, do you really get it, what you're implying?

Even saying it's a conspiracy of corporations...

Mining IS Bitcoin. The reason Bitcoin operates, exists, is that there is processing capacity allocated to it.

If mining becomes a monopoly, Bitcoin becomes compromised, and thus worthless.

If mining stops, Bitcoin becomes unusable, and thus worthless.

If you do not think it's a good idea to mine, then you should be SELLING your coins asap, because you're saying the roof is coming down, and soon.

True. But then there is a day like today where BTC drops 30%! Glad I physically couldn't get my money in early this week. Hopefully by next week my LTC miners should be here if people don't stop buying the damn video cards :)

Bitcoin dropped 50% or even more actually but what can you do when you have officials like the bank of china saying that bitcoin should not be used as a currency. (Whatever that means anyway)

https://bitcointalk.org/index.php?topic=178336.msg3872676#msg3872676

Mining is ok, just the ASICs mining equipment is too expensive.

the same thing happened like why ppl make rice machine while they can produce their rice