Bitcoin Forum

I just read an email from Avalon posted in the BFL forums stating that they effectively delayed batches 2 and 3 so they could build their own mining farm to print money for themselves. 

https://forums.butterflylabs.com/bfl-forum-miscellaneous/1454-avalon-drops-bomb-second-batch.html

The key text is this:

"On to batch three, we at Avalon did not even wish to sell another batch. If you recall, our original plan was to produce only one batch, sell chips to thwart the centralization of mining, but due to the lackluster performance of our competitors we are here today as the exact centralization we tried to decouple. In addition, this delay is eating into our timeline for this project's future goals and various other projects. To be frank: it was a simple decision of build a mining farm ourselves and mine for a month or so to get the funding for things like the SMT line and next generation development vs. raise the price and sell units trying to get the money earlier to counterbalance the delay we have had. So, we came up with some terms and left the choice to the community."

First of all, I didn't get this email nor did I see it anywhere else.  It's possible that this isn't authentic.  But if it is, WTF?  Yifu Guo's whole mission to democratize Bitcoin is a bunch of garbage.  He's taking customer money to build machines that run directly counter to his customer's objectives.  This is more than a breach of their 'No Bullshit' contract- it's borderline fraud.  And this last sentence about coming up with terms and leaving the choice to the community- Is that meant to imply that Avalon's customers willingly allowed their funds to purchase hardware for Avalon or the hardware they purchased to be used by Avalon to mine?  Is he implying that his customers are ok with this?  From where I'm sitting it looked like the young idealist who did such an awesome and impressive thing sold out and sold out hard.  Using your customers' money to line your own pockets?  How can this possibly be justified?  It's not like he honored his contracts and then built his own mining machines after delivering- that would seem to be reasonable.  But to not deliver, and break his commitment to not mine, and use the chips and hardware his customers paid for?  That is seriously messed up!  Rationalizing by saying they need money for things doesn't quite cut it!

Again, I can't verify the authenticity of this email but it would be great if someone else could.  If this is true, I hope the customers and the community can start asking some serious questions about the integrity of Avalon's leadership.  I would love for this to be cleared up.  I have to say, this was extremely disappointing and I hope that it's not true.

Wouldn't it be funny if all the BFL haters now suddenly started hating Avalon?

 6 week old email and thread........!

Nice source lol

Try reading his post from the opposite perspective.

They did in fact raise the price to god awful levels, came up with no bullshit terms prior to the second batch sale and then said they wouldn't be mining.

That's the optimistic view. Otoh, I still haven't received my batch two, so you could be right.

Not until Josh switches sides.

more like, great bait  :P

All it says is what they (rhetorically) thought of doing. Not what they actually did. I realize reading skills are not something everyone posses.

Read it again, they explain they could have chosen between raising prices and mining themselves. They chose to raise prices to cover the costs. People paid it. They got what they needed for the second SMT line (high speed) machines that build hardware is very expensive).

Again, those who will actually read the message will realize what it says.

Edit: Differentiate this with Inaba a BFL employee who dropped a bombshell that he was taking about half a wafer (now about 1 full wafer since they had to double the chips) to build his own mining farm of Minirigs. He admitted that his 2 Minirigs are just a tiny portion of his full order!

This is certain and absolutely true! This is not to deflect but to contrast what may have been (with Avalon and why they instead raised their prices to crazy levels) vs what BFL did do...despite having so much money and despite promising not to mine on the Bitcoin Main network.

Avalon: We could have raised prices to buy expensive hardware (they did) OR we could have made a mining farm to cover expenses (they didn't go down that route).

BFL: We raised prices [period] and our employee started taking chips to renovate his mining farm. Thousands of chips. (no, I am not kidding, go look on the BFL forums. It is what got me banned from there.)

That's how I read it as well when I first saw it, for once we interpret information the same way  ;)

Are we reading the same article?  I saw no indication that they were building private mining machines.  Unless things have changed drastically, no Avalon employees have their own rigs.  And this post is about 2 newsletters old.  0/10 post.

Well according to Yifu Guo's own words in his Vice Motherboard interview;

You aren’t doing any mining at all?

Nope. Fun fact: none of the Avalon team have their own mining units (outside of test units).



Source: http://motherboard.vice.com/blog/engineering-the-bitcoin-gold-rush-an-interview-with-yifu-guo-creator-of-the-first-asic-based-miner#ixzz2SvGdRqVT

If Avalon was in a cash crunch, I would not begrudge them the ability to fund their work via mining. As long as they are upfront with customers about it.

Specifically:
If Avalon decides to fund development through mining, customers should know this before they choose to buy.
Avalon would need to explain how the deployment of mining hardware affects their customer orders (in both positive and negative ways).

This would also hold for BFL. Let us say BFL ships 300 units and then announce that they are in a cash crunch and can't afford to build and ship the rest. If they proposed to use some of their chips to mine in order to fund the parts purchase for the rest of the orders, that would be acceptable to me personally. It would also be better for some customers (but not all) who otherwise would not receive anything back for their investment. The key is to declare what their conflict of interest is and let the customers decide if they are comfortable with it.

Sounds like a very reasonable way of doing things. But the Avalon Team hasn't needed to do any of that (as of yet).

I am pretty sure these companies are using their own ASICs for mining. You don't just sell a money printing machine for an amount of money that the machine can produce in less than a month. That is completely ilogical.

he forgot to say that all units are test units, and Xiangfu has an avalon, he said himself in IRC, which puts one important software developer out of avalon team. the month is ending we are getting our avalons.

The substance of what you're saying is weakened by your needling that I should learn how to read or if I read it I'd understand.  You should try not to be such a dick when you communicate with people- I am guessing that would work better for you.

I did read it.  I read it very carefully.  To your main point- they did not actually raise prices between batches 2 and 3.  The BTC/USD market did move such that the boxes were way more expensive in $ terms but technically, their prices didn't change.  So if Guo is saying that they had to choose between raising prices or building a farm, since they didn't raise prices, maybe he's actually saying they built a farm.  Technically, he's not lying with his statement if they are mining now but the implication is that they're not- he's consistently said that they don't and won't mine.  But his statement could be interpreted to mean that they actually are.  It's vague, perhaps intentionally, and if it is intentional misdirection it's an act of verbal gymnastics that a politician could be proud of. 

I don't know that they did in fact build a farm and you have no way of knowing that he's speaking rhetorically.  What we do know is that the machines haven't shipped.  They accomplished a Herculean feat of getting chips made and machines assembled to deliver batch 1 on time but somehow they can't get batch 2 done?  Batch 2 should be a walk in the park relative to batch 1.  And what about the 30 Terahashes that have hit the network that people suspect are these machines?  Where did those come from if not Avalon?

I did a rough calculation that estimated they make about 200k USD per day by using batch 2 machines for themselves.  That's a strong pull to the dark side...

Yes, I saw this article.  When I finished it I had a mountain of respect for the kid.  I'm hoping he stuck to his principles...

Maybe this thread should be moved to speculation.