Bitcoin Forum

We finally have a real world scenario and multiple threads saying the same thing I was saying. ASIC is different than any other mining technology because it is a much larger leap and there is NO secondary market or primary market beyond BTC mining.

All other mining technologies used thus far had these qualities and therefore created a reasonable market where risk could be reasonably quantified outside of BTC price.

There is NO business model that works for both miners and the hardware vendor when it comes to ASICS if you use only free market principles. EITHER THE MINERS GET BURNED OR THE VENDOR GETS BURNED.

In this case we have maybe the most inconsistent vendor in the BTC community leading the charge...what a fucking disaster. Since no one will be able to truly quantify when they can expect to get their hardware, many people will willfully hand over interest free loans to these clowns in exchange for, hopefully, being one of the first to get a device.

After the first 10 1TH units hit the market, everyone else is screwed unless BFL lowers their price ten fold. Now the early buyers are screwed.

An ASIC development co-operative was/is the only way to avoid this, but if the BFL scheme hits the market in October then there is no hope for that possibility.

Enjoy your $150 coffee warmers because using them for mining will be useless.

Why?

Okay I was wrong. If they release the coffee cup warmers first, then those buyers will be fine. Unfortunately, their 1 TH people will be pissed if they sell enough coffee warmers.

Seeing how the Single came first followed by the Mini-rig, I would assume the small devices come first this time round as well.

So, wait, the argument is that because ASICs are a single-use device they can't be profitable? This argument kind of falls apart when you realize that for 99% of the people buying them, FPGAs are also single-use devices. Sure, you could do other things with them, but the majority of miners don't have the knowledge, skill or any kind of application to throw their FPGAs at anything but mining.

Let's just hope the open ASIC thing gains momentum and everyone can be happy, or at least almost everyone.

Dude...how many threads do you need to start. We get it, you don't like asics. Regardless, ASICs are the future. If they weren't developed now, they would be developed eventually. Even if you managed to get a change away from SHA2, a different ASIC design would fill the same role. Embrace the change.

No, the problem is that price is determined by the market.

What's the market of mining? The ratio price of Bitcoin / difficulty of mining.

What's the market of ASIC? The miners, who follow the price/difficulty of Bitcoin.

So, knowing that, what prevents the ASIC makers (like BFL) to price their product accordingly to the mining market? They'll know exactly at which point they can sell, and at which point they don't. If the ASIC price is too high, miners can't make an interesting ROI, and the difficulty stay stable or maybe goes down. If the price is low, miners makes an interesting ROI, they buy, the difficulty goes up and they lose their ROI. Same thing if the Bitcoin price varies.

FPGA prices are not determined by Bitcoin difficulty. ASIC prices for Bitcoin will vary, depending on the Bitcoin price and Bitcoin difficulty. In a market like that, either the provider make profit, either the miners make profit. The profit is the same for the two groups, so what one gain, the other lose.

+1

ASICs are great!  Seriously.  Examining ASIC alone is just a technology shift.  Considering technological efficiencies brought by ASIC we will benefit.

It's the ASIC market that, where if ASIC pricing is guided by BTC mining difficulty alone, a vicious cycle could (probably will) form where early adopters overpay and late comers get dismal ROI at best.

ASICs bring about the possibility for many more miners and larger capacity of existing miners due to lowering entry requirements.  This can result in emphasizing large, e.g. 60,000 USD+ with BFL pricing, capital requirements to be a serious mining operation with interesting ROI.  All this further pushes difficulty while the ASIC provider has the ability, and compulsion to do so based on difficulty, to lower unit pricing by orders of magnitude.  If the ASIC provider does indeed lower unit cost severely then all of that big miner operation capital was wasted.

I agree.  ASICs are only good for mining profitability if done for the community by the community at minor profit.

 

If anyone has killed the mining market, then it's the people that started building mining rigs specifically for mining.
If everyone used their own PC only, and mined on the CPU+Single GPU then such discussions would never take place.

When people started mining for profit only, it set a chain reaction = how to mine more while consuming less ?

This led to FPGA slowly killing off GPU and now ASIC slowly killing off everything else.

Denying the evidence while hoping people follow angelic virtues is not going to change human nature.

It's only a new problem, where we need to find new solutions, that's all.

I would venture a 'guess' and say that GPUs still make up atleast 70+% of the current 11.x TH Network, so nothing has been 'killed off' as of yet.

FPGA market penetration has not been that great, considering the delivery times for most.

Also, ASIC will not SLOWLY kill off everything else - it will kill it off decisively and quickly....LOL

+1 been saying this all along; FPGA for mining is only good if you can later sell it for a reasonable price after having paid it off.
NOBODY will buy FPGA from you for other purposes most likely because it does not have RAM or good I/O pins.
With introduction of ASIC all FPGA really become useless because nobody wants it ( for mining or otherwise ).
At least GPU you can sell on eBay for gaming or something. 

OP is just butthurt ( I have to say this : like TONS of other GPU miners with cheap electricity on the forumz ) that his GPU farm is worthless.

Either surrender to BFL or get out of the game !

Nobody can stop change / ASIC ...

Long term GPU will be killed off . In australia power is now at 0.20  kw/h and will rise

bitcoin have to be above $4.80 just to break even with power  -- I have sold all my GPU's
however I agree about 70% of the network power is from GPU's
FPGA's only shipping in small numbers because they are expensive and only a handfull of small suppliers
I think if BitForce SC Mini Rig comes out is will complely change bitcoin mining
Ie GPU and FPGA will no longer generate enought bitcoins to make any money for miners

Brunic nailed it, this is the first time that the price of the mining equipment is tied to bitcoin price/difficulty.

THIS is the problem. ASIC is great for bitcoin if done right, otherwise we play this dangerous game stated above and let's not kid ourselves, the companies selling will win and the miners will lose. This will reduce overall interest and stall the network hashrate which is bad for everyone.

My farm is gone, so I don't give a shet about myself unlike the rest of you. My concern is bitcoin because I believe in its potential to create freedom from the banking cartels.

I make plenty of money running my company, I didn't get into mining thinking I would make a killing, I just like screwing around with hardware so I built a farm.

I made some money which is a bonus.

My point in all of this was simply to get people to stop and think, this is not the same old cpu-gpu-fpga argument.

I'd prefer to see a thread without trolling made up of those in the community who actually have an expert knowledge of all of these technologies, plus some solid economic thinkers. A sort of bitcoin mining think tank that the rest of us could follow and make appropriate decisions from SOLID info.

Love to see people finally questioning the right people and asking the right questions


Old cablepair does'nt seem so crazy anymore does he :P

As discussed before, there IS a solution: Give early adopters a royalty slice of later sales, justifying the comparatively high initial cost. This allows a midpoint to be reached between the miners and BFL. BFL maximizes profits by releasing exponential hash increases slowly rather than all at once, and also maximizes miner's profits. The key thing is to give realistic public plans about how chips will be released and then stick to them so that people know what they're getting into.

-bgc

Their plan is already SET and was done so a long time ago. It was essentially to get as much of your money as possible, hold it for as long as possible, then FORCE you to send them even MORE money in the end, regardless of how pissed off you are at them.

They are geniuses...

Yeah, but it doesn't come from me. We have some quality people around here, and one of them explained well the situation.

I'm simply playing the parrot here.  ;)

BFL are the APPLE of bitcoin mining.

I dont know who the steve jobs is yet.

I like playing dangerous games with money...  ;)

In all honesty, bitcoin is in dangerous stage if BFL's ASIC is true.

1. They can deliver the performance: Everyone will shoot themselves in the foot. Bitcoin network is no longer being decentralized when big players come in (cough....BFL's VC )

2. They cant deliver the products, and it turns into the WORST scam ever in Bitcoin history.


Choose one or we should propose a change in algorithm.

I don't see how them delivering their product = end of decentralization. This is an argument that has gone roundyround, and I think it's a flawed one.

Because BFL is the ONLY supplier of such technology. The technology that can change ROI of each customer.

Note: i dont say miners are the players. If this ASIC product comes to life, every miners will be basically buying bonds from BFL.

It's a consolidation of power / leverage over the miner base.  BFL relies solely on the miner base + mining difficulty/exchange rate to be profitable.  

You could compare the mining community to the insurance business.  BFL profits from front end, point-in-time healthy difficulty/exchange rate conditions while the mining community takes on the tail end risk of possible future downturns in mining profitability.  Mining community losses will only be realized if/when two items are discovered.  How much over ASIC production cost have miners paid (estimates are 10x+) and just how poorly difficulty/exchange rate affects ROI.

One could think of it another way.  Hedging.  Mining is the market.  The source of revenue.  BFL is indirectly consuming mining subsidy and depending on how high over production costs the ASICs are it would be effectively hedging against downturns in the direct source of revenue.

BFL has no other current avenue for revenue.  It really isn't a safe thing.  And I think this because I don't believe a single vendor can be trusted with 90%+ of market share.

Competition, especially from the mining community (less possibility of cartel like collusion or price fixing), would allow for greater leverage on the part of the mining community for enforcement of fair play.

Because the mining community is taking on tail risk the community needs to collectively cover it's tail ;)  One method of doing so is to scrutinize the profit margins of the vendor poised to hold the vast majority of market share.





 

Asic will destroy bitcoin.  Watch.

It will no longer be something that the regular Joe can participate in.

Thanks BFL.

Yeah, thinking about selling my singles.

I'm not ready to pull the trigger on the trade-in / pre order.  And if I wait a couple of weeks my ROI might be totally gone.  *shrugs*

Because... why?  Does the regular Joe not have $150 to spend?

No, but it would be from the possible negligible amount of income made from a Jalapeno if ASICs thoroughly saturate the network.

What is so concerning is how low the prices are for the ASICs.

Having a 'jalapeno' be an insignificant amount of hashing power would be the best possible thing for the bitcoin network. Ideally, even the SC rig will be viewed as comparatively insignificant in 2 years.

-bgc

I get the sense that all you folks who are claiming asics will hurt decentralization don't really understand how the crypto works. I think you're just hurt that your current hashing power will be insignificant. Centralization and ASICs are orthogonal, and right now the network is VULNERABLE to the threat of someone making an ASIC and NOT sharing. BFL making an ASIC as early as possible and distributing it to as many people as possible (think jalapeno) is precisely how to make the network more secure. I wish all the 'ASICs are bad' ignorance would stop top-posting to its own echo chamber. Ideally we'd have more than one ASIC manufacturer, and I believe that will come in time. 'til then, I for one am glad BFL is making it less easy for a nation-state ( or even mid-size corporation at current hash levels ) to screw with the history of transactions.

-bgc

Idiot, whos behind BFL? Whos their VC?

I didnt say miners falling out of mining game is decentralization....

Its the player behind BFL who can change the network hashrate distribution. Thats the centralization problem.

 

Looks like you forgot that "Bitcoin" and "mining" is not the same thing. You don't have to mine if you are just using bitcoins as a payment system.

Yes, decentralization is cool and BFL's competitors will take care of this.

I think if bitcoin as a merchant gateway is successfull ie lots of people use bitcoin - lots of transactions -- it may lead to bitcoin prices increasing -(lot of miners are not selling bitcoins because of low prices and this may cause a shortage of bitcoins and lead to higher prices)- then asic mining because of low electricty usage will be a good source of income for miners -- bear in mine in december bitcoin income will halve (50 to 25) . anyway if you are a miner the best is for you start using bitcoin and get your friends involved -- hoping if a lot of non miners start buying bitcoins and use them for purchase .