Bitcoin Forum

In light of the continuing Bitcoin price increase relative to difficulty adjustments, I've been thinking about the value of ASIC order placements.  Specifically, I've been thinking about the value of first-day ASIC orders vs. ASIC orders made today.

Here's an interesting question for the community:  How much more valuable is a first-day ASIC order compared with ASIC orders placed today?  Is it equally valuable?  200% as valuable?  500% as valuable?  1000% as valuable?

Keep in mind that, at purported specs, a single jalapeno would produce ~1.97 BTC per day (~$21.77 USD) at current difficulty and price.  Also, keep in mind that the first-day orders are assumed to be shipped before the reward drop and would be mining continuously at lower (adjusting) difficulties for an additional 1-2 months compared with orders placed today.

I'm willing to make a bold statement:  I think a first-day ASIC order is about 7-10 times as valuable as an ASIC order placed today.  

Disclaimer:  Yes, I have a first-day ASIC order, so I'm thinking about this from a biased perspective.  That being said, I will put out an offer for 7 days for someone to buy 1 of my first-day ordered Jalapenos for 100 BTC.  

Exsqueeze me?

never mind, continue your delusions.  :-*

o.O

*sits back, waits to see who buys this thing*

Not even close because the difficulty will adjust upward so fast.  Sure IF you coudl produce 1.97 BTC a day for 2 months then it would be worth a lot but you won't.

We need to make some assumptions but here goes:
a) 100TH of gear will be sold in first 2 months.
b) there are 2016 blocks between retargets.  we will assume half that for the next retarget after the day1 orders arrive.
d) difficulty when product ships will be same as now, reward will be 50 BTC for ~8 weeks then fall to 25 BTC.
e) 30TH will ship on day1,  and then 20 TH per week for the next two weeks, dropping to +10TH per week after that.
f) all existing mining hardware will shutdown but there will be a lag of roughly 2 retargets.
g) a product orders today will ship 8 weeks after a day1 product.

A Jalapeno (JP) would prodce 1.97 BTC the first 24 hours.   However the network hashing power will quadruple (10TH to 40TH).  This means the 1008 blocks to retarget won't take a week it will take ~2 days.

So:
Day 1 - 2.0 BTC
Day 2 - 2.0 BTC  RETARGET (difficulty increases to a factor of 4x)
Day 3 - 0.5 BTC
Day 4 - 0.5 BTC
Day 5 - 0.5 BTC
Day 6 - 0.5 BTC
Day 7 - 0.5 BTC
Week 1 SUM 5*0.5 + 2*2 = 6.5 BTC

Now the next retarget will hit in ~ 10 days not 14 because another 20TH will be added.
So days 8 to 12 earn another 0.5 BTC = 2 BTC.  Since day 0 = 8.5 BTC

Retarget brings dificulty to 6x current.  JP reward drops to 0.3 BTC.  Retarget comes early again in 10 days.
So days 23 to 32 earn 0.3 BTC ea = 3 BTC total.  Since day 0 = 11.5 BTC

Now the next retarget is flat in this scenario.  10TH new mining gear has been shipped but all existing gear has shutdown.
Note: this isn't intended to be accurate but more to illustrate that eventually some new ASICS will just be soaking up existing hashing power.  It will take roughly 14 days to next retarget. Day 42. Another 14 days @ 0.3 BTC ea = 4.2 BTC total.  Since day 0 = 15.7 BTC

Now network hashing rate and difficult is still rising but slower.  10 new TH added to existing 60TH raising difficulty to 7x current.
JP now earns ~0.28 BTC per day.  12 days will next retarget.  Day 54.  Another 12 days @ 0.28 BTC ea = 3.4 BTC.  Since day 0 = 19.1 BTC.

Another 10TH added.  80TH total.  Difficulty 8x current.  JP earns only 0.25 BTC per day.  Dau 66.  Another 12 days @ 0.25 BTC ea = 4 BTC.  Since day 0 = 22.1 BTC

So despite earning 2 BTC in the first day you don't earn 120 BTC in the first two months you earn more like 20 BTC.  Paying 100 BTC for a JP would be a poor deal.  The sub 100 BTC in the first month wouldn't pay it off and if network stabilizes around 100TH one can expect to earn only 0.2 BTC per day.  That would put break even @ 500 days.

Yes, I realize all this.  But, there are some things that you are neglecting.

1)  You completely neglect the block reward drop.  Well, you mention it in your assumptions, but other than that it's neglected.  Assuming first-day ASIC orders do indeed arrive at the end of October, you're looking at a solid month of pre-reward profits.  ASICs ordered today will arrive after the reward drop.  This makes every day of mining pre-reward-drop twice as valuable right off the bat.  

2)  The current network hashrate is NOT 10 T/H, but closer to 15 T/H.  This makes a large difference in your assumptions.  Thus, an increase in hashrate to 45 T/H is not a fourfold increase but rather a threefold increase.  This means that after the first difficulty adjustment (15TH - 45TH), profits would be ~ .66 BTC per day and not .5 BTC.  This has a cumulative effect on the rewards for each subsequent difficulty adjustment.

3)  There will be a lag in shipping times, and thus a lag in network hashrate increases.  Orders made in the USA will arrive before international orders, and this will hold true for each shipment.  As a result, difficulty adjustments will not be fourfold (really threefold) in 2 days as you suggest, but may take as long as a week (if not more) for this adjustment to occur.  If this is the case, your 6.5 BTC estimate in the first week could very well be 14 BTC.

This lag in difficulty adjustment will also hold true for all subsequent shipments -- it will simply take longer for some orders have an effect on the network.  In conjunction with point 2 above, this will also have a cumulative effect on profits.

4)  Let's assume that, as you said, 100 TH is ordered in the first 2 months.  This would mean that after 2 months, the difficulty would be ~7.5 times higher than the current difficulty.  This means that ASICs ordered today would be mining approximately .13 BTC per day when they are received (this is taking into account the reward drop).  Let's assume that I didn't make points 1,2, and 3 above and that your estimate of 20 BTC in the first 2 months is accurate.  That would mean in the first 2 months of mining, ASICS ordered today would earn ~7.8 BTC, and that isn't taking into account subsequent difficulty adjustments.  This already means that the mining time of first-day ASICS is (20/7.8) about 2.56 times as valuable.  

Now, if you take into account points 1,2,and 3 as I stated above, I think that somewhere closer to 40-60 BTC will be mined with a first-day Jalapeno in the first 2 months, making mining time with first-day ASICS about 5.12-7.69 more valuable.

The benefits of item 3 would be diminished waiting for shipping from B to C.


There's definitely a market for selling pre-orders, but not at 100 BTC per JP.

anyone wants to sell their first day (or week) SC please contact me with offers.

^^It's not going to happen dude, the upside is too great for those guys. You would be better off just buying BTC and watch it take off with the difficulty and half rewards.

Buying NASTY shares on the GLBSE is a great way to get exposure to first day BFL SC orders since NASTY does hold the very first 6 SC orders from BFL...

https://glbse.com/asset/view/NASTY