Bitcoin Forum

I am forming a new company that will engage into large scale Bitcoin mining. We have concluded a deal with subcontractors to produce for us a significant amount of ASIC based mining hardware (up to 2-3 orders of magnitude more power efficient and dense comparing to GPU based Bitcoin Miners). Our target is to build multi Thps (X 000 000 Mhps) bitcoin mining operation and therefore we will have significant bargaining power and will be able to get preferential treatment and pricing from our suppliers. To ensure optimal security we will most likely be housing the mining hardware in one of the most secure datacentres in Europe and eventually even certify all our operations to ISO 27001 standard.

We, however, have no plans to engage into manufacturing and sales of bitcoin mining hardware.

Once we get some paperwork done we will be able to start accepting investments from public directly. This means that soon we will be publishing investment prospectus and enable public to invest either into management company or into mining operations themselves. Until then we can discuss this in details only with high net worth individuals, sophisticated investors and investment professionals after we sign a NDA.

There will be various classes of shares, some of which will be effectively proxies to "perpetual mining contracts" with monthly dividend payable in fiat and potentially a class of shares paying dividend in bitcoins (pending legal and tax advise).

We are in process of re-registering as a PLC. PLC stands for Public Limited Company, this is a legal structure that enables companies to sell shares to public and become listed on stock exchanges. It is our long term goal to eventually get listed on a public exchange and even to become qualify for REIT eventually, if possible. Public companies also by law (England) are required to be fairly transparent, employ a professional "company secretary", provide financial reporting, and must be audited.

It is my strategic vision at some point in the future to enable option trading on Bitcoin Mining Contract simply by virtue of being a listed company and having optionable shares. There is a long road ahead, but we can get there and this is the start.

Meanwhile, I invite interested parties to contact me. email: vladimir@marchenko.co.uk skype: vladimir.marchenko.co.uk.

FAQ:

Q1. Are you designing and building ASIC chip yourself?
A1. We have a long term strategic partnership with a private subcontractor that is building mining hardware for us.
The leverage we have is of a contractual nature and it grants us a number of advantages as compared to what general
public or our competitors may or may not get access to eventually.

this could be bad.
you could force minor(GPU) miners out and take control of the network, if you do not give them a chance to upgrade to better hardware(ASIC).

but except that, GO! GO! GO!, secure the network.

It is a dog eat dog world out there. I don't see why this is an issue. If Vladimir decides to invest hundreds of thousands of dollars into mining equipment, he should be able to reap the full rewards and not have to feel guilty about stepping on some toes.

no he should, if he wants for bitcoin to succeed. this could be what kills bitcoin. it would also not be good for Vladimir, if he crashed bitcoin after pumping alot of money in to it.

would you be worried if NSA build a big cluster of ASICs?

We already have a competing ASIC builder. Combine that with the various FPGA offerings and Butterfly Labs, Vladimir isn't posing a threat. I don't think the OP will get very far with this, anyway.

We are talking about a public company. The board of directors has a very important goal which is maximizing value and long term return on investment for the shareholders.

It does not seem feasible that we will have a monopoly on Bitcoin Mining. However, we do aim to become a major player maybe even the biggest player in this market.

Two things have changed, ASIC's have much higher density and much higher power efficiency. Therefore, unlike GPUs and FPGA's, ASIC mining has significant economies of scale and we are going to use it to our advantage.

We plan to continuously buy ASIC hardware from leading manufacturers over time, long term, and will employ our scale and bargaining power to secure the best possible deal for our shareholders. The keyword here is "public company" we will be accountable to our shareholders and a significant degree of transparency is demanded by law.

So you are not designing this ASIC yourself ?

I don't think there is any REAL ASIC out there anyway ...

You are buying from LargeCoin guys or from where ???

Have you (or your partners/suppliers) designed the chip?

it is not a 51% fear. its a 30% cheap mining power fear, will become a 70% cheap and impossible to have any competition with.
small miners will quit, if its not profitable for them.

i would be more comfortable with you selling mining hardware, and thereby distribute the cheap mining power.

One cannot stop progress. GPU and FPGA's are already doomed. I am sure there will be plenty of ASIC gear on the market given time, with or without us.

Yes, we have. We are in advanced stages of design testing and manufacturing process. Our tech is far superior to all other reported to date Bitcoin mining technologies. This is now simply a question of how much capital we can raise and how quickly we bring it all online.

Read more details on this in upcoming issue #1 of Bitcoin Magazine.

What needs to happen ( I think ) is we switch the algorithm as soon as the guy has paid millions for his ASICs.

I think this needs to be done before he gets them operational, otherwise BTC is doomed and no algo change is possible thereafter without the ASIC miner denying the change.

GPUs will be able to adapt. FPGA should be able to adapt to new algo. The only one that is screwed is the ASIC guy.

If this ASIC mambo jumbo goes forward then I think BTC is as "good" as PayPal or the Bank of England.

The community now has to ask itself this : "Do we really want a company effectively owning Bitcoin ?"

Good luck Vladimir but I don't like where this is going and I bet I am not the only one.

This centralized mining is far away from what Satoshi envisioned ( everybody with a CPU can mine ); GPUs are fine and so are FPGA but ASIC which only a millionaire can develop is too far.

Satoshi, was for pools, and centralized mining. i think he wanted thousand midsized companies in the end, mine the blocks. it will not be profitable for small people, in 100 years. but it should be now, because thats what bitcoin is made of right now, alot of small people.

im only saying it should be done slowly and peacefully, so bitcoin dont fall apart in the progress.
please be careful Vladimir.

I wonder if a large datacenter operation like this will end up being the most economical model for bitcoin mining.  A large data center won't have access to free or subsidized electricity.  The power hungry nature of bitcoin mining will require substantial overhead in terms of power infrastructure, cooling, etc.  It will also require professional administrative staff.  By contrast, a small operation might be able to find free or subsidized electricity and the administration can be a part time (nights and weekends) affair.  Hardware manufacturers will sell increasingly power efficient mining hardware to the general public…will it be enough to keep their power efficiency on par with anything a large data center operation can do?  Nonetheless, I think it's great that someone is attempting to do this.

Ultimately it boils down to how much of an edge they can achieve relative to the general public.  If they are talking about specs similar to LargeCoin then they are already not competitive with medium sized farms in low energy price areas.  If they are talking about specs which are 5x LargeCoin in MH/$ and 2x LargeCoin in MH/W then the overhead of datacenter is immaterial.

So the question really comes down to:
* how much better than other offerings can they get?
* how long can they keep that edge over the general public?

My first thought was "not enough" and "not long enough" but I guess we will see.

Data centers charge premiums for floor space, cooling, electrical rates, data pipelines, redundancy, etc. It is their business to maximize revenues anyway possible.

GPU mining is uneconomical in a data center. ASIC might be able to fit the bill.

GPUs pushing out CPU miners is fine, FPGA pushing out GPU miners is fine, but ASIC is where we're supposed to draw a line?

Steve. Consider also cost of capital and bargaining power. Do you know how much cheaper, for instance,  Coca-Cola can buy hardware from Dell right now comparing to what you would need to pay?

I know right? He is just scared for his bottom line, and his soon-to-become useless GPUs ;)

Hey, the GPU I mined with a year ago and that paid off itself works just fine for gaming. Can’t do that with ASICs. ;D

This type of action unfortunately will hurt bitcoin.  I can not say it will kill it, but it will not be a positive thing.  And it will not be a positive thing for the investors in this company. 

One of the strengths of bitcoin is that the block reward is distributed through the community.  People like me spend or trade almost their entire mining proceeds in the community.  Having more bitcoin (from mining) encourages me to spend more even more in the community.

While the owners of this ASIC company could act the same as I do, I really doubt that will happen.  They will be turning in their bitcoin at the trading houses and depressing the value of bitcoin.  They will not be helping others that accept bitcoin do business, they will just be mining and selling.

Slowly as the price/difficulty ratio gets worse, miners like me will drop out.  We can not switch to FPGA as the difficulty will be so high that it will not be worth it even if electricity as free.

In the end you will have a massive centralization of bitcoin AND less economic activity.  How can this be good?  The price of bitcoin will drop and the INVESTORS of this company will get screwed as well.

Simply put.... we are at least two years too early for ASIC mining.  Bitcoin has not grown enough for this yet.  The investors will not make their money back. 

Exactly what I was referring to. Nothing to do with bottom line ( my rigs are long paid off and with cheap electricity my GPUs will be humming still for quite a while ).

Lots of people can buy a $200 CPU or a $850 GPU and start mining right away or a $600 FPGA but how many people will afford to buy a $500 000 ASIC farm ?

This is centralization and as soon as the ASIC starts running the other miners will be phased out, ending up in him controlling about 70% or more of the network.

He is not selling ASIC to the public but instead he is using investor money to get himself ( and only himself ) an ASIC farm that can totally outcompete everyone else on the network.

Not sharing the ASIC design and passively attacking the network this way, who cares if it is Vladimir or the NSA because the outcome is the same : one company ruling BTC and doing as it pleases without anyone having any impact.

By ASIC I think he means something that costs millions of USD to develop initially but after that this investment will give him devices like 1 ghash/s for 10W for $100 and he can use approximately 12000 of these devices at a cost of 1.2-1.5 million USD to get more than 51% of the network.

LargeCoin is NOT a real ASIC and I have not seen anything that looks like a real ASIC so far just maybe a sASIC. He says it has twice the magnitude of GPU efficiency which sounds bad for everyone else not having access to this device.

Phrases like "I am forming a new company that will engage into large scale mining. We have concluded a deal with subcontractors to produce a significant amount of ASIC based mining hardware (up to 2-3 orders of magnitude more power efficient and dense comparing to GPU based Bitcoin Miners). Our target is to build multi Thps (X 000 000 Mhps) bitcoin mining operation" and "We, however, have no plans to engage into manufacturing and sales of bitcoin mining hardware." tell us his real intentions in regards to this corporation.

So don't invest money with him. I don't plan to invest because of the above reasons. I prefer to own my hardware.

Nobody was talking about Vladimir not reaping the rewards, but about one entity potentially taking control of the network. Any and all vulnerabilities of that entity then become vulnerabilities of the Bitcoin network.

This isn't Vladimir's fault, but I do wonder if BitCoin transaction processing isn't inevitably going to end up centralized and controlled by a small number of companies, just because there are going to be big economies of scale. You'll want the right kind of hardware, which will be cheaper in bulk, the best designs, which you won't want to share, and a presence in places with really cheap energy, which will also be cheaper to buy in bulk.

Added to that when you've got a small number of companies controlling a business, they have an incentive to buy each other up or form a cartel. They'll also be profitable businesses with a lot of assets and contracts with other big businesses, so they'll be very easy for governments to regulate.

You guys are forgetting that this isn't the only game in town. Even if he was to set up and run --lets say-- 2 Thash/s  of ASICs, that isn't a monopoly or even 50%.

While it may be correct that GPU/CPU miners may be forced out of the market, I do not think that so many will be removed that the network rate drops to where he has 51%.

Besides that, do you remember Largecoin? They have been selling like hotcakes, arbitrarily capped at 5 units per customer, to customers that obviously want more than just 5. 5 Largecoins is 100 Ghash/s, and so only 10 users with 5 units each is a whole terahash. Not to mention the multiple orders for FPGA based devices, while admittedly being the worse for power consumption, are much better than GPUs and will remain so for the foreseeable future.

Vladimir said 2-3 orders of magnitude or 100-1000 times more efficient than GPUs.

Indeed. I misunderstood. Corrected.

This really is bad news for BTC and decentralization.

:'(

So if he has a device for $10 that does 10 ghash/s then with with a measly amount of money he owns the network very easily. Initial costs for ASIC are high but afterwards it is very easy and cheap to replicate the design.

They are not capped.

Cool, they mentioned a per-user limit at one point but that must have been lifted.

I even doubt that. They were really going for large scale purchases, at least that is what Ken (ttul) said to me over the phone.

Maybe it was a limit on how many users could buy them half off, not at full price.

There is no mechanism to either enforce or deny algorithm changes, so it really doesn't matter when you do it. Miners may use their political power, but not hashing power, in this case. I myself don't think that this will ever be needed, just wanted to point out the weakness of your argument there.

So how would an algo change happen ?

Start a new chain ?

Vote with hashing power in blocks like now ?

Gavin has the last word ?

Thanks for letting me know, memvola !

Here's a suggestion, both you and Vladimir are in the UK, maybe you should pay him a visit IRL and perhaps learn a few things about being profitable. Bring your wallet too, no point missing a good investment.

"Huge," publicly held mining operations is another example, along with Botnets, of capitalistic "progress," that is exploitative of a system designed to be generally fair and distributed.
Now, I might have a different opinion on this if compensating market forces allowed for a reasonable level of competition with any huge entity.  This is not the case, so I reject the premise of "One cannot stop progress," as a good faith rationalization.  This move is not in good faith for Bitcoin.  A more accurate assessment of these efforts would be that capitalistic profiteering nearing monopoly is hard to stop without limiting principles, regulation, etc.

Why does Bitcoin need enemies when you have supporters like these?  

Like I've said before Bitcoin does not need Botnets and huge mining operations to secure the blockchain.  That's silly.

It doesn't need them, but the only point of Bitcoin is that it is supposed to be able to survive such developments. Otherwise it's a bad idea to begin with.

I would expect he means 100-1000 times more energy efficient, not price efficiency. 200MHash/J-2000MHash/J would be incredible but possible. 150Mhash/$-1500Mhash/$ seems a lot less likely.

no but it could scare GPU miners away, and making him a monopoly.
im all for the ASIC mining, but do it slow, and give people time to adjust.

no need to worry about the future of bitcoin, eventually other companies will
come with ASIC's offers and will be selling them also

Too much faith in free market detected.

I don't think anyone will be able to invest another 1+ million USD when the BitCorp ( copyrighted name Vladimir, you have to pay licensing ;) ) already did so and has their 10 ghash/s for $10 design and owns most of the network.

51% is a monopoly.  You simply exclude blocks by all other miners.

Making a better miner is great.  Trying to monopolize the network isn't so great.

Say this does launch and they get up to 2TH/s (20% of the network).  If profitable there is no reason not to expand so they grow to 25%, 30%, 35% of the network.  At that point it becomes asinine to NOT just expand to 51% and instantly DOUBLE the profits of investors.

Hypothetically say $1M buys you 20% of the network.
$2M then buys you 40% of the network but
$2.6M buys you 51% of the network = 100% of the network.

A private entity having 20%+ of the network is something to be concerned about.  If a company is in striking distance of spending a small amount more to instantly double profits (by excluding all other miners) it is naive to think they won't.

if bitcoin market cap goes up, mining will be a multi billion industry, and 1M invest will be nothing compared

I don't believe that anybody with a stake in bitcoin business will consciously kill it,
by trying to monopolize ... a centralized bitcoin is not bitcoin anymore   ;)

Well after the subsidy cut the network will produce 1.3M BTC per year.  For that to be a billion dollars in revenue would require BTC price to be $761 ea.    So sure BTC mining may "someday" be a billion dollar industry but we are likely a ways from that.

That only gets you so far. You shit all over the network, take everyone's money, and then what? Bitcoin collapses, and you don't actually have that much to show for it, since there is no more money to wring out. That isn't a long-term investment strategy, that is just fucking retarded.

Conciously no but companies are motivated to maximize profits.  If you could spend 10% more on your hashing farm and double your profits would you?  Obviously you would but you can't because your 0.001% to 1% of network doesn't have that option.

If someone got within striking range you would very quickly see the "justifications".  Well doing this makes Bitcoin more efficient, doing this allows us to keep more hashing power in reserve to fight an attack, doing this still keeps Bitcoin decentralized in theory, doing this is no different than MtGox having 90% of BTC:fiat trade, etc.

<tinfoil_hat> Not retarded if this guy works for the banks or for the government. ATM we don't have any guarantee that this is not the case and they are trying to use us as investors to collapse our own system / BTC at a cheaper price for the bankers / taxpayer than would be possible otherwise on their own without BitCorp raising capital for a 51% using ASIC. IMHO this technique would be very viable to kill BTC and stop all transactions and make the system worthless rather than going the economic exchange manipulation route which is quite longer and does not guarantee people losing faith. </tinfoil_hat>

Would Bitcoin collapse?   How many miners use Deepbit despite the danger that creates (hell DB almost had 51% of network at one point).  How many traders use MtGox despite the 90%+ centralization that causes?  Do you think Silk Road users really care if mining is centralized?  Do you think they would even know?  Do "trades" (who honestly are just unregulated gamblers) really care who runs the network?

Your belief that
a) people would know once an entity gets 51%
b) everyone would abandon it once an entity hits 51%
c) the operators would take the risk of a & b and value it higher than DOUBLING profits.

will all happen guaranteed (as in a 0.00000000000000000000000000000% chance of one of the above not happening) is at the very least naive.

Most likely Bitcoin would continue to operate even if an entity achieved a monopoly.  There may be a short term sell off but most of the activity on Bitcoin is speculation and one can speculate just as easy with a single miner than 1000+ miners.  Some would bet againsts, when price gets low enough some would bet for.  In time the network could adapt to a single CURRENT operator.  If the operator failed the network wouldn't fail so it would still remain decentralized at least in theory.

To say it is "fucking retarded" is silly.  It is a risk but investing $1M into Bitcoin is also a risk.


The other potential  is an outside force leveraging the 20%+ network.  Say Vlad go aproached by Chase who said "it looks like you have spent $2M so far and the NPV of your future revenue stream is $3.8M.  We want to buy your company out to monopolize Bitcoin.  Either Bitcoin continues to operate and we own it or it fails and we eliminated a threat.  We will buyout your company for $7.6M (an instant 100% profit to you and your investors), keep you and your staff on (maybe with some nice 300% increase in salary).  Spend another $1M or so and gain 51% = 100% control of the network.  

Maybe Vlad would tell Chase and their $7,600,000 check to pack sand but maybe just maybe he wouldn't.

TL/DR version:
Selling ASIC processors (even at a healthy profit) on open market furthers decentralization, building massive private hashing farms on scale never seen before only furthers centralization.  That can't be refuted.

Bullshit. There's nothing wrong with free market monopolies.

I suspect in the end we will have only a few big mining companies. And the fact that using Bitcoin is voluntary is what will keep them honest. If people have free choice to go to some other currency then these few companies will be forced in their own self interest to continuously stay honest and true to the rules of Bitcoin.

 Only people who have never run a voluntary business would claim otherwise.

You seem to forget that in a market regulated and constrained by market participants "elections" are held every single day by way of keep customers happy.  If you can't do that, you go out of business.

You assume that the coins are hoarded, and not spent on the market. How long can the market sustain the sale of the coins generated from having 50% of the mining power continuously?

51% = 100%.  No company would stop at 50%.  It would be saying "I prefer half the revenue for the same amount of cost".

It only equals 100% when you purposely do bad things with it, such as orphaning blocks by fiddling with your timestamps.

If you were to become 100% by doing bad things with your hash power, why wouldn't the system collapse around itself? How would it stay up?

Bad things for who?  Other miners?  What does some guy buying some weed on SR really care if a miner got excluded from his cut.  Wording like "bad things" has no useful context.  What is "bad things"?  How do these "bad things" affect USERS not MINERS?

I asked the same thing up thread.  You make it seem like an instant collapse to $0.00000000000 per BTC will happen instantly when someone excludes other miners.  Why?  People use deepbit, people use Mt.Gox, people use lots of centralized services.  The belief that Bitcoin would collapse is simply unproven.

Still someone with 51% hashing power could boost their profits in a limited fashion and test the waters by randomly orphaning some % of blocks.  Orpahn 10% of the competing blocks and you are getting 10% more profits for no more work.  You still preserve the illusion of a decentralized network.

Then spend some of that money to affect mindshare.  "see a corporation votes by shares so if Bitcorp Enterpises has 100% of the hashing power it isn't a monopoly because each shareholder can vote.  Mining is still decentralized among thousands of shareholders". 

One could even draw  relatively accurate analogy that a private company with thousands of shareholders and 100% of hashing power is just as decentralized as p2pool having 100% of hashing power.

I don't think you could maintain any such "illusion" for long. Such an event happening would remove any remaining faith in the system, besides all the extra coins dragging the market down to ~nil.

"Bitcoin Mining Contract" = Scam! Only idiots will buy into crap like this.
And this Vladimir is full of s**t. Enough said!

Why does the market price of Bitcoin matter?  If anything a private company could control the flow of coins to reduce volatility increasing the utility to merchants and users.

Because they are selling contracts to people (who would probably be cashing out), not running it themselves as a private enterprise.

watching closely  ;)

If some entity did get control of 51% of the hash and took over the network maybe litecoin could replace bitcoin for a lot of people.  Due to the fact LTC requires more memory so FPGA and ASIC would be a lot more expensive to build then everyone with a CPU running LTC.

FPGA, but not ASIC. Litecoin runs a version of Scrypt with the parameters tweaked so that an ASIC could easily blow all existing miners out of the water. If they would have kept the scrypt using the large amount of memory, it would have been better.

I guess they aren't going to sell shares on the glbse. Aren't they?

You could form an intermediary on GLBSE to gather money to buy shares indirectly.

I think I will get some of my ASIC design buddies together and we will do an ASIC ourselves.  We just want to sell the ASICs to you.  Who wants to do the boards and software?  We will sell them to you for almost nothing but you have to order 10,000 per month (or was it per week - I will get back to you on the volume costs).  We are used to doing multiprocessor SOC ASICs for disk drives so this should be easy enough.  Now where is that open source FPGA design that I can use as the basis of my ASIC design ...

This makes me not feel so good about my recent BFL purchase.   :-\

I hate to say it, but I do agree that a centralization like this could severely damage Bitcoin in a scenario I imagine:
- If enough hashing power is generated by vlad, and the price/BTC stays the same, then most GPU miners will drop out.
- If vlad sells all of his generated BTC to cover costs and investor dividends, then the price will drop further, as more BTC is sold instead of traded for goods or held.
- If the price drops, and ASIC mining increases, then difficulty is going up while price per coin is going down.  More miner dropouts.
- More price drops, as vlad ends up with a higher percentage of mined coins, continues selling them all, and confidence in BTC wanes.
- Eventually, vlad owns 70-80% of hashing power, because the price has dropped so far that only those with ASICs or free electricity are profitable to mine.
- Extreme loss of confidence from everyone, since one person controls the Bitcoin network.  No one wants to risk having money held in BTC, so price drops to $0.25/BTC or less.

I doubt Bitcoins will ever cease to be used, but a death-spiral like this could definitely happen if ASICs aren't released to the general public.  One person/company having ASICs while no one else does would be disastrous.  The barrier to entry is too high for another person/company to risk spending the time and money on developing, but no one else will be able to compete without ASICs.  If no one else can compete, no one else will mine.  If no one else mines, no one else gets coins to spend.  The bitcoin economy would be slowed, and confidence in the project is destroyed.

Vlad, I very much encourage you to make ASICs publicly available.  It is in your own best interest that you do so.

Are you the MM(Mysterious Miner)?

I just noticed that 1_tx_blocks are gone(almost).

TBH this would not surprise me.

It is either ArtForz or the Spanish folks in Grenada or him.

Not good for BTC in any case ...

GBF is going to gather up capital to invest in this venture, I have been in contact with vlad since before this post and he has suggested that all small investors can go through me so they don't have to deal with all the management stuff of having tons of small investors, instead they would have me representing all of those investors in one fund.
//DeaDTerra

i thought an order of magnitude was 10x generally, so that would be 20-30 times more efficient than a gpu wouldn't it?

vlad, what protections do investors have that their funds won't be used to subsidize the R&D, only to have the principles of the company accumulate personal mining hardware on the cheap, after investors have paid for the high entrance barrier to ASIC development?

I meant that if they're only targeting big fiat investors, the operation is going to be obviously bad for bitcoin. The investors are going to be mostly interested in fiat, the interest paid in fiat, and the operation will be mostly a pump and dump of big scale.

If instead they raise capital also through bitcoin economy, and also pay a percentage of dividends directly in BTC, it may be worthwhile for both economies...

Monopolies and oligopolies lead to collusion. If you sell shares in a public corporation you owe your shareholders a return on investment, and these returns are judged by the marketplace on a quarterly basis under the theory of unlimited growth. Of course in the real world, no matter how large it may appear, there are limits to growth. So over time those monopolies or oligopolies particularly those addicted to oil (which after all powers the mining rigs) will pathologically seek out new ways to increase (make those) quarterly profits. Sure that might lead to green energy, but of course it is just as likely to create new ways to extract monopoly rents from bitcoin users and the bitcoin supply chain. At present, unfettered capitalism with out broad based representation (open source/distributed) has spawned monster corporations acting as sociopaths. This is not seen as theory, rather the question is what to do about it. Harnessing the wealth of many for the benefit of a few without any input or oversight by those who are being harnessed.  What is Facebook.

Unless bitcoin users have some sort of participatory powers in decisioning how bitcoins are administered, we will be replicating the current monetary system albeit without inflation.

They are going to accept investments in BTC but they will have to convert into fiat before the purchase of the shares. The operation will payout in Bitcoins but they are looking into the legal aspects of paying out in BTC, as the laws around this are still not clear. When they know more of the legality of paying in BTC, they will announce more info about shares that pay out the dividend in BTC.
//DeaDTerra

Order means power.

So 2 orders of magnitude is 10^2 = 100x.  3 orders of magnitude = 10^3 = 1000x

Switching to another coin would be disastrous pr wise since it would show that Bitcoin was essentially a failure. It would be really volatile, many would lose a lot of money and most people would probably suspect the  next coin will fail eventually as well. Switching the Bitcoin proof-of-work algorithm, would be much more feasible if ASICs ever poses a threat. Such a switch wouldn't even need 51% of the hashing power (but a large majority of user support), since the miners hashing power would be essentially worthless after the switch.

One of the things I always try to be sure I understand before I invest is -- Who is the customer?  In this case it isn't very clear...

It is easy to get tied up in the exciting technological aspects of ASIC and their impressive efficiency but the fact remains that for an enterprise to be an ongoing concern they are either subsidized or have customers that pay for products or services...

How much does R&D cost (ballpark), and could the people who want this option pool together and pay for R&D and manufacture of ASICs with bitcoins?

you prompted me to search online, and the accepted definition seems to say an order of magnitude is 10 times the original, 2 orders of magnitude 100 times the original and 3 orders of magnitude 1000 times (as you said).

i guess it was the first order of magnitude i had stuck in my head, although each oom is simply another increase by 10x, i just wasn't compounding the increases by factor of 10.

so 100 to 1000 times more efficient is the actual range quoted by the OP.  seems an awfully large range of performance estimate if they are so far along in the design.

who are the customers ?  maybe the millions of people that may embrace using bitcoin daily in the future ?

If Vladimir (or anyone invested in Bitcoin) reaches 51% he is unlikely to make the 51% 100% by rejecting all other blocks because that would invalidate the entire currency and the customers (users) will switch to some other crypto currency.

I for one do not fear a monopoly.

Btw monopoly is a natural by product of using a free-market structure. Nothing lasts forever though and so too monopolies will die.

"This too shall pass" - King form Persian Fable

It really pisses me off when people explain something not mentioning the whole picture. What we have in the entire world today is not a free market and it is not capitalism. What we have is GOVERNMENT (FORCE, COMPULSION, VIOLENCE, AUTHORITY) that enables companies to behave in ways the free market would have never allowed them to also called CORPORATISM.

I don't know how many more times do I have to repeat myself: BITCOIN IS VOLUNTARY, no one is forced, there is no violence, there is no authority and there is no compulsion.

NO ONE, not one entity in the world of Bitcoin can do something the rest of the participants wont like and get away without feeling the consequences. The behavior you describe would immediately be known to every participant and everyone could act in their self interest accordingly which would mean huge consequences for any business with such an intent.

Goddamn ignorance wants to make my head explode.

BIG TIME LULZ!

@Gusti - And what are they paying the company?  How does that help "pay the light bill"?

I get what you are saying but don't clearly see the longer-term business plan -- again seeing this will be a publicly traded company.

We corner the market on ASIC and have first mover advantage, mine lots of blocks, then what...

Thinking out loud.
what happens if existing miners decide to "fork" and switch to a different algorithm, like scrypt, but building on the existing blockchain?
Most existing miners have everything to lose from competition like the OP, but switching to a different algorithm would likely render those ASICs useless.

All we need is 51%. Whos with me? :)

For a fork 51% has no relevence.

You could fork the blockchain right this second with 0.00001% is you want.

Actually a 51% fork is a worst case scenario and likely means the death of Bitcoin.  Coins will exist and be spendable on both sides of the fork.  People will have wallets, and tx on both sides so merchants may accept BTC1 and some accept BTC2.  Some mining on BTC1, some mining on BTC2.

In a fork you want one side to have overwhelming support of the ecosystem (i.e. installed clients, developers, nodes, exchanges, merchants, etc).  If the original fork has 90%+ support then the new fork dies off.  If the new fork has 90%+ support the old fork will die off.  Having a roughly 50/50 split is going to create massive chaos.

That brings up another ASIC problem.  Entrenchment.  If we find a weakness in SHA2 or in the bitcoin protocol itself and need to upgrade it, the ASIC miners may not be able to do the upgrade.  Even FPGA miners can switch up protocols pretty flexibly (unless it is specifically designed to keep them out), but ASIC miners can not switch as easily.  A bitcoin ASIC that was MOST flexible would probably be just an SHA2 engine.  At least flexible it would have even more of the protocol built into the ASIC and be harder to change.  So going to another hashing formula would be out of the question for most ASIC designs.

So a needed protocol change ur upgrade would be veto'd by the ASIC miners.  

True.  It is also much more about the majority of users and businesses, not the majority of miners.  If the next version of bitcoin set a change date of Jan 1, 2013 (well not really a date, but a block #) past which all blocks would be mined with a different protocol, it would matter more which fork the users and businesses recognized.

After such a fork, people are going to be on the side where the exchanges, businesses and developers are, even if the hash rate was 1/3 of the other side. 

The Spaniards have some competition.

Your not alone.

they (we) are paying small fees (by now), and higher fees for every transaction made, once the block rewards go lower.
the business plan is to participate and collect a portion of that fees.

+1

To anyone complaining, if what Vladimir is doing is so lucrative, you'll have no trouble starting your own ASIC farm and taking a share of the market. If it's not, then what have you got to worry about.

You assume that Vladimir will be the only guy who ever mines on a massive scale. This isn't the banking sector, where GOVERNMENT FORCE prevents competition.

Free market cartels are unsustainable, because there is a great incentive for any participant to break from the cartel and undercut their competitors.

Damn state apologists make me sick!

It's not that easy.

If there is only one ASIC mining person/company, they will push out the competition, confidence/price in BTC will drop, and it will not be profitable for a second ASIC company to join in even if they had the funds to develop one.

Also, no bank will lend $1M+ to a startup company investing in technology to do with something as risky/variable as BTC.  So yes, most of us here WOULD have trouble starting our own ASIC farm, for lack of funds.

this whole "the sky is falling" scenario is completely nonsense, multiple asics companies and end user devices will flourish.
currently, 1M investment is only 2% of bitcoin market cap, I bet it will be 0.01% in the near future.
 

Looking into it.

This thread is slightly disturbing but I'm not too worried about it. First of all there is only a problem if one entity has over 50%. I would be comfortable if the majority of mining was done by major mining companies, but I would not use Bitcoin ever again if there was a sustained 51%+ presence in the network. It doesn't matter one iota if this entity is presumably "friendly" or not, it takes all credibility away from Bitcoin and what it's supposed to be.

So in conclusion, anyone who thinks they can get over 50% and that would actually benefit them, are entirely out of their minds. People would not be happy about it, not at all. Bitcoin would lose all core support instantly. Not only is mainstream bye bye, it's people like me bye bye. That is exactly the reason why I believe that no one is actually going for that and I'm fairly optimistic. I have no problem with someone starting a 2 thash operation but I would have an issue with someone starting a 15 thash operation (at this point in time).

It's no accident that Deepbit hashing power has never been over 50% sustainably, there are always enough people who care about this issue. A sustained 51%+ would be an absolute catastrophy for Bitcoin, mark my words. I honestly can't believe there would be anyone instead of a couple of complete lunatics or potheads using Bitcoin in that scenario.

It just gives you a small glimpse into just how tough a market regulated and constrained by it's participants is. Hint: Much much tougher than any government regulations could ever be.

That's why it's also so laughable and at the same time so frustrating for me to see all this fear based on a logic that simply doesn't apply to this experiment.

Switching pools because you "care" is easy (not too mention profitable when moving from deepbit). Keeping x GH GPUs running just because you care, even though its costing you money, that is quite something else.

DnT has a good point about the 51% too. If 20% is doable, 100% is almost a given, more so because a sudden 20% increase in hashrate and therefore difficulty, will drive out a comparable number of existing miners, increasing your share automatically.

How would you know?  Pretty trivial for a major entity to relay a portion of its hashing power to appear <50%.

His point is absolute lunacy. It's true that from a linear point of view it is completely doable for a mining operation to attempt near 100% share but anything over 50% would be idiotic. Even if he can somehow hide it, there is a risk of people finding out somehow. That day Bitcoin price would crash to pennies (I'm not kidding about this, I would short with my entire bankroll and so would anyone with any sense). That risk would have to be fairly minimal for him to risk such a massive investment on the possibility of total failure.

Good job missing his point entirely  ::)
Read it again.

I feel you missed my point. Read that again.

Increasing mining investment is only directly profitable until 50%, after that it gets much more complex and can't be calculated by direct profitability. A sustained 50%+ presence is catastrophic for Bitcoin and anyone involved in it, because it would drive confidence down massively. Bitcoin is a new technology, an experimental technology that is not very trusted as it is, an entity with absolute power over the network would be unacceptable.

This is why I think that any speculation on the profitability of gaining over 50% is invalid if the conclusion is that it is profitable. I can guarantee that it is not. Unless you can somehow hide your hashing power so effectively that no one can now.

I'm not much of a fan of this idea at all, however I have my doubts it'll ever get off the ground so I'm not going to worry about it just yet.

Seems to me that a decent solution to any class of 51%-ish problems (including evilvladmirinc or evilnsagov) would be to have any interested group publish white or black lists.  If a majority of users choose find a particular list credible for some reason, chains with the offending blocks would be rejected by the majority and the blocks would be valueless (no matter what hardware they were generated on.)  Under such a scenario, anyone who had the interest could support then network to their hearts content but if they pissed off the natives, they, and their investment, gets voted off the island.

I've mentioned before that having such a solution developed, tested, and in place would be in my opinion a prudent defensive tool and one who's very existence would almost guarantee that it would never need to be used.  The complexity (although rather modest compared to the 'supernode cluster architecture' needed for Bitcoin scaling) and increased latency would be a nuisance, but I doubt that it would be much more than that.

The problem is... how do you recognize "evil" blocks? What properties do they have that make them unique from other blocks?

Right.  You can not.  The only thing close is things like the 1 trans blocks from MM.  You can not 'vote' or try to blacklist as that is very easy to get around as long as there is money at stake.  The only thing you can do (which is actually quite do-able) is change the hashing algorithm. 

If such a system was in place, a list maintainer (or some other entity) could issue something to build into the block as an identifier of origin.  That's just the first idea which came to mind and there are probably other ways to do it (if network analysis by the list maintainers were not sufficient for the task.)

The initial post just rings of the following to me:

"We have a great idea of making money"

"We dont have money to do this on our own"

"We need investors to pay for our mining hardware"

"We will own the hardware that was paid for by investors"

"We effectively get everything for free, paid by investors and end up paying a portion of profits generated back to investors"


I have it extremely odd anyhow that vladimir last dissapeared from this forum vowing never to return and only remain at his own forum then suddenly come here posting about the GOD machine he will produce based on aSIC tech.

Vlad? Didnt your own forum fall for this and now you try pull funds out of the unexpected on the forum you left in disgust?

list maintainer= central point of failure/control/attack

Let me say again, ASIC is inevitable.  That is not the problem.  The problem is that it is too soon.  

Right now it is doomed to failure for the INVESTORS.  The price of bitcoin is just too low and the ASIC miner (in the hands of one entity) will undermine confidence in bitcoin and make the price even lower.  The investors will not get their money back and bitcoin will be damaged.  ASIC mining will make sense when the market cap of bitcoin is greater and it would be harder for one ASIC miner to control 50%.

The odds of a single entity going to a reasonable share of mining without surpassing it are quite low.  At 20% the network will exist just as it does today, but once you pass 40% confidence will start to erode and you will be acting as a 'tax' on bitcoin by driving so many of time mined coins to be exchanged for fiat.  

I do admit the request for capital funding is somewhat fishy.

Or maybe we are being overly paranoid.
http://i1260.photobucket.com/albums/ii580/omni1990/da9dca10.jpg

Couldn't agree more with this post.

Wrong-ish.  The lists are simple and freely available for anyone to create.  If they are credible and seen as such by a majority of users, they survive.  The moment they are suspect, they die.

The lists are also not integral for the function of Bitcoin.  If through some sort of coordinated attack on the loose network of list maintainers they needed to be disregarded for a time it would not impair the ability of the Bitcoin network to function.  It could create a mess to clean up, but without such a 'weapon', Bitcoin would probably suffer a terminal blow to it's survival under this magnitude of attack.  Or would if/when Bitcoin grows to scale.

I think most of the investors learn of bitcoin through miners. If the miners go away so will a lot of the investors.

I wish Vladimir the best; however, I think his passion/greed is getting the better of him (happens to me all the time).
This doesn't appear to be thought through entirely. Could be wrong so I hope Vladimir would be willing to respond.

Right now, the Bitcoin economy is valued at 42 million U.S. Dollars, but this does not mean there is 42 million dollars to be extracted by mining extremely cheap bitcoins and selling them on the market. There's only a few million dollars that are day traded keeping the market liquid (I really don't know the amount, but it sure isn't 42 million; it's much less). So, if you are expecting profits that are near or in excess that amount, you'll crash the market and your business will suffer.

A Bitcoin business that is bad for Bitcoin is bad for business!

I've read multiple comments that have mentioned the time and economic conditions still are not right for ASICs. Now that I've put more thought into it, they may be right. The amount of money/R&D required is near or higher than the amount of cash keeping the market liquid. If someone pursued ASICs at this point with plans to recoup their investments ASAP they may just crash the market and hurt themselves at the same time.

Please Please do not stop pursuing ASICs; just realize that the risk may be much greater than you think and please reconsider a different business model.....you know... Like selling hardware to the rest of us. I'm sure over the long run you'd recoup your costs and Bitcoin would be much better because of it.

Either way, I wouldn't change any plans to increase mining capacity (if anyone had any) over this thread. I really don't think there's anything to fear here, but I do realize that a few millions dollars foolishly invested with unrealistic expectations could kill a business and cause a recession/depression in the bitcoin market.

You still missed it. He is saying when you have 51%  then you have 100% control over the network. Thats where the 100% comes from. If you can achieve, say 20-25% in a short period of time, you will drive out enough other miners that you probably end up well over 30% by the next difficulty change. From there to 51% (ie 100% control) isnt much of a leap. If you can do one, you can almost certainly do the other and it makes perfect sense if its about profits. The second "25%" are not more expensive than the first, but much, much more lucrative.

1) Why does a large company minnig for bitcoins automatically mean they won't be spending their bitcoin in the community?  I hope to invest in this company (if I'm a big enough fish for Vladimir to listen to) and spend plenty of bitcoin on products (if companies actually accept them)

2) Mergers & Acquisitions happen all the time.  Some businesses consolidate while others rip each other appart.  It's a cycle.  Maybe right now, mining companies are consolodating, but without regulation, there's no reason why they can't.  Welcome to the free market.

3) I'm sure when people started GPU mining, they "waited for all the CPU miners to buy GPUs before turning them on.... NOT"

4) Who cares if people cash out 100% of their mined coins?  The average volume on Mtgox is over 50k a day as of late.  So this means there's enough market activity for all 7,200 BTC generated each day to be dumped into the market daily and the market will gobble them up...

5) If BTC become worth $0.25, I'll be buying plenty of them.  That would be frickin amazing. 

6) Define a small investor.  What's the cut off amount for investing directly with Vlad $1,000 or $10,000 or $100,000?

I think you need to get your head straight, smoke less pot or something. That point is clear, has been from the start, but it is false. It still doesn't matter even if it's easy or seemingly profitable to acquire 100% control of mining, it would all go away once he has a monopoly. I wouldn't pay a cent for one bitcoin after that and I'm confident that I wouldn't be the only one.

Ixcoin & I0coin have been hit by double spends & 51% attacks and they still exist.  I'm sure Bitcoin would come back.  At least it'd be worth $250 to get a thousand of them just in case.

And chances are they would still be worth "something" which may be pennies, but they are still pennies.

I've already invested 7 days 13 hours of my life into these forums, so why not throw some of my money at bitcoin if it gets beaten down.

Same reason I just invested in a coal mining company.  Coal's not going way anytime soon, but the market price of the coal mining companies are really low right now.

I agree with you kjlimo.  Just used you as an example.  The idea that if some entity gained 51% (and thus 100%) of mining profits isn't the death of Bitcoin.  Now don't get me wrong I think that is a horrible blow to Satoshi vision but for daily users not much changes.  The idea that BTC value becomes $0.00 is just silly.

The network remains secure, tx are still possible, the protocol is still decentralized.  Sure as a miner it is a death blow but in time if Bitcoin grows the increased profit potential ensures that competitors will once gain decentralize the network.  Life would go on.

I don't see that as a problem.  Higher value for my bitcoins which I will be spending and saving alike!

Good luck my friend.

"Do not fir Vladimir."

Free research. Post your ideas here.

this is great news
people jumping gun too early, this is a huge undertaking and could take few years to execute. and this is just a beginning, a glimpse into the future developments around Bitcoin.

6-9 months in the funding is ready to go.

Why announce before you can even invest?  Or are even an entity that could be invested in?  Who is funding the initial research and dev?

If the first batch of ASICs comes back flawed, will there be enough capital to continue development?  What if it takes more tries than that?

Personal opinion:

Vague announcements like this only create uncertainty for everyone involved.  Is that how you really want to start a relationship with investors?  It either means that development has only just started (ie it will be a long time before any product) or it's a scam in some way.

It's supposed to discourage the competitors and push them out of the market, but it certainly hasn't done so to Vladamir's project. ;D

lol!

tell me when glbse shares are available

+100

People nowadays is so used to government interventionism in every aspect of his life that is unable to just even understand how tough is free market competition for the sellers and how good can be for regular users.

For starters, just think on the massive risk these early investors will take with this project.
If it will fail, they will lose their money (not yours, like with government failures), if they'll succeed then a lot of other people will try to do better than them, investing their money (not yours).

And Bitcoin will thrive.

following

Anyone who thinks vladimir's idea is a bad one must realize that of he doesn't do it, someone will. In fact, if no one try's hard to build powerful rigs, that is equivalent to bitcoin not being valuable (otherwise people would do hard things like design ASIC chips and assemble mining farms and companies to earn valuable bitcoins).

I think it is a good thing for bitcoin that people are treating them as valuable enough to work hard to mine them in a professional manner. Everyone should try to do what Vladimir is doing, instead of saying no one should work that hard to earn bitcoins (and hence implying that bitcoins aren't valuable enough to work really hard for).

I think this means bitcoin is moving from hobby to capitalism.

Some things dont quite add up. In one post you say you


(Also note the plural, manufacturers).

In another you say:


Which is it? If you are buying the chip, then so can anyone else, and I fail to see what your big competitive advantage would be.

If you designed the chip, or had it designed and you own the design, then you wouldnt have any suppliers to chose from or bargain with (its not like you are going to have any leverage over TSMC to fab it, you are going to have to beg to get a few dozen wafers!)  and the financial picture would look dramatically different.

In the latter case, its also completely unclear where you are. If you are doing design testing, I assume you havent taped out yet, and you are going to need a few million dollar to get that first mask set done and to get your first silicon several months from here - silicon which may or may not work.

Not saying that couldnt be worth investing in, but its a million times more risky than buying chips off the shelve, and Id be careful making bold claims about performance and efficiency if you havent even taped out yet.

P4man, great reading comprehension skills. Kudos to you!

 The first quote refers to long term plans. The second one refers to immediate plans (the first batch). Also to clarify, "We" refers to us and our subcontractors.

  However, your analysis of our (and our subcontractors) manufacturing options is not entirely accurate. At this stage I am not at liberty to disclose all the details publicly, unfortunately, and therefore I have to be fairly vague.

  What you have described does indicate pretty accurately the difficulties our would be competitors most likely will have to deal with, I must add.

  We still will have to take some risks associated with final stages of design/manufacturing ASIC chips and building mining rigs based on those. We are not buying core components off the shelves yet (obviously).

 Generally, greater risks bring greater rewards.

 ???
That makes no sense at all. So you plan to first develop your own chip in the "short term", for the first batch, while the long term plan is to buy off the shelve chips?  Did you mix up first and second quote?

If you mixed them up, Im going to assume the short term plan is to buy Largecoin chips (or more likely, appliances),  and the plans to develop your own chip are just that, plans. In the short run, I also wonder what kind of bargaining power you think you will have over Largecoin, assuming they are legit, since they will most likely have a monopoly on bitcoin asics for quite some time. Not too mention the fact you just declared you want to compete with them.

Anyway, not sure how much information you are willing to give potential investors, but no offense, with what you posted here so far, Id have to think long and  hard about investing all of one bitcoin in your businessplan.

No I have not mixed the quotes. First we use custom chips, then eventually when other manufacturers join the fry we continue as a bitcoin mining company buying the best possible hardware from the best possible supplier.

The company I am talking about itself is focusing not on ASIC manufacturing (we have subcontractors for that) but on mining and on being public company and being listed on public exchanges eventually and attracting to bitcoin financial resources that would not touch it due to lack of legal ways to do so on "large" scale.

Thank you for suggestion of thinking more about the business plan. I'll consider this. But you should understand that I am tied by NDA's and can say only so much. I am being vague not from lack of business plan, but because I can say only so much.

I, however, can disclose that Largecoin is not our subcontractor or supplier and we have no plans of buying anything from them. Not until they can produce significantly better product, at least.


I am not talking here with potential investors. Just informing the public about our plans. At this time any serious talks with qualified potential investors are done in private and under NDA's.

Well, in that case you are not getting my 1 BTC.

Seriously, developing an ASIC costs at least hundreds of thousands of dollars, producing a mask set is in the millions. But once you have that (and ignoring all the rest), producing the actual chips only costs you like a few dozen dollar each, if that.

If your plan is to invest millions in your own chip, only to toss that away soon after and buy chips from other companies who obviously price their chips to recoup their invested millions, well, then, someone needs to go back to the drawing board.

If you are saying someone else is developing that ASIC, then you will have close to zero leverage over them, and calling them subcontractor is deceiving; its a supplier. Either you pay for and own the design and mask set, or you dont. Which is it?

P4man, thank you for your questions. I will try to make things as clear as I possibly can. However, I may not be able to
answer any specific follow up questions or make any further public statements just yet.

We have a long term strategic partnership with a private subcontractor that is building mining hardware for us.
The leverage we have is of a contractual nature and it grants us a number of advantages as compared to what general
public or our competitors may or may not get access to eventually.

This is the foundation of our competitive advantage. Additionally, we expect to be the first to the market with
this technology, we also expect to provide a natural and low risk bitcoin investment route within traditional legal frameworks
for those who are now outside of bitcoin economy.

I understand you may not be able to give all details, but the fundamentals of your business plan still arent clear to me.

Am I right saying the IP, chip design (and mask set, assuming there is one yet?) belong to a third party supplier ?

See, the difference between owning the IP (and bearing the associated development costs and risks), regardless if the work is done in house or by a contractor, versus buying a product from a supplier who owns the IP and mask, and took the brunt of the risk, is rather crucial. One is a high risk/high potential multi million dollar venture, the other is not, or at least not necessarily.

+1

Having read the entire thread I don 't understand what its purpose is other than some kind of scam. It doesn't look or sound professional to me and I think it's only to spread fear and confusion. I highly doubt many people will trust any money with this "public" company. If I had the ability to pull something like this off the hell would I do to announce it in some forum. I'd also not look for real investors here apart from suckers to screw over.

If MM is still around (see solominer thread) and screwing with the network I'm all for changing the protocol in order to protect Bitcoin. If >51% are held by a single entity even if Bitcoin would still be able to operate technically the experiment is over. Most people will abandon it and abandon promoting it before it is has become anywhere near mainstream. If this development is inevitable, as some here say, bitcoins doom may be inevitable. Bitcoin will need a wide userbase to support it for quite some time. Even speculators would quickly look for a new game (after having shorted BTC to death).

Seriously people. This is shit. "Tainted coins", MM's empty blocks, now this ASIC monopoly threat, do you honestly expect people will invest more into a project that gets riskier day by day???

To Vlad, good luck. If you succeed, you will make a lot of people lose a lot of money. It's not your fault though. It's the way economics work.

Here's a quote from the late 19th century:

"It is always sound business to take any obtainable net gain, at any cost and at any risk to the rest of the community."
Thorstein Veblen

I know. They, however, will not be able to claim that they have not received a fair and advance warning.

Why so much anti-BTC slant in your posts, canicula ???

The current system is perfect; there is nothing to be improved on. ::)

I don't see why the hate ...

This is the fun part about what Vladamir is doing. If he succeeds, he corners the market and miners are out of their money and Bitcoin rises because scarcity is concentrated to his company only. If he fails, miners don't have crap to worry about.

With the sheer amount of money you need Vladamir, pray tell what is the answer to this question:
Why should I invest in you when I can just buy Bitcoin and reap the benefits myself when you've got the market on future coin cornered?

Anyone that doesn't see that it'll be far easier to just buy coin and get immediate benefits than have to deal with the overhead of Vladamir's operation and setup time is being foolish or just ignorant of market forces.

Then again, we could invest half in BTC and half in Vlad and probably make do, but I imagine the price will rise faster than Vlad can set up his operation.

Also, keep in mind he's very short on details. No megahash/joule estimates, no indication aside from "contact me if you want to spend money". He's still trying to confirm that there is investment interest.

Vladimir is going to have to provide some good answers to start finding the kind of funds he needs. And I'm sure there others looking at this and wondering why they can't do the same.

Vlad's project in my discussion will be called P51 (project 51%)

If bitcoin hovers around $5 (before project P51 is powered up) there are four outcomes:

1) P51 achieves 51%, destroys confidence in bitcoin and the price of bitcoin drops to the point where P51 investors lose money, bitcoin is dead

2) P51 takes money and fails to complete for any number of reasons, P51 investors lose money

3) P51 dances at 40% share, keeps confidence in bitcoin but investors lose money because 40% of mining revenue is not enough to make investors profit, P51 investors lose money but not all of it, bitcoin survives

4) P51 gets going and achieves growing share, community striving to keep bitcoin decentralized switches protocol so P51 ASIC is dead in the water, P51 investors lose money

If BTC rises to the point where 40% is enough to make P51 investors a profit or if P51 costs are low enough,IT IS A SUCCESS so long as P51 does not actually turn into 51%.  Investors could have purchased BTC now instead and reaped similar profits with less risk.  

After thinking more about this, I think he is trolling us all.

ASIC project in Bitcoin is not viable for at least 2 years.

I cannot see anybody that will be stupid enough to invest into this fallacy ...

7-9 months. Maybe sooner.

vlad, could you please address two questions i had earlier in the thread?

if you are in advanced stages of testing, why is the performance estimate so large (100 to 1000 times more efficient than a gpu is the actual range quoted)?

and more importantly:

what protections do investors have that their funds won't be used to subsidize the R&D, only to have the principles of the company accumulate personal mining hardware on the cheap, after investors have paid for the high entrance barrier to ASIC development?

also, when will official investment material become available for mailing out?

Very witty, indeed!

You know what I think you are doing is not making an announcement but making a threat. ( http://de.wikipedia.org/wiki/Fear,_Uncertainty_and_Doubt  (http://de.wikipedia.org/wiki/Fear,_Uncertainty_and_Doubt)) It is precisely defined by "an individual or firm making use of FUD to invite unfavorable opinions and speculation about a competitor's product; to increase the general estimation of switching costs among current customers; or to maintain leverage over a current business partner who could potentially become a rival."

So, what are the actual reasons for your "announcement"?

Unfortunately, unlike you, I am not qualified to provide investment advice and I do not provide investment advice to the public. Therefore I am not in position to respond.

Vladimir - Are you and your associates willing to mine at above 51%?  Do you plan on maximizing profit or would you take measures to ensure confidence in the integrity of the network?

Why? Isn't the difficulty (and hence the network share) calculated from the valid block rate only?

As long as you play by their fricking rules then, your 49% of blocks are still valid, like is receiving money from the mob or the fed.

a principle of the company making an official announcement, doesn't have any fiduciary responsibility to answer questions from potential investors?

and if you are ready to send funds at this point, knowing nothing about the company,  its articles of incorporation, the business model, the technology behind the company, what your investment will get you, etc. then i think you should reevaluate who is the idiot.

I have no reason to believe that we will ever be able to reach anywhere close to 50%. Even if we reach such capability (which is highly unlikely) it would be very unwise move for more than one reason.

Just check old ArtForz's posts on the matter (right about the time when he killed CPU miners, FPGA miners - take notice). It was discussed at length back then.

1. It makes no sense to have more than 50% and keep rising hashing capacity while being honest. Your machines will be simply driving difficulty up and competing with each other. Easier and cheaper to shut some down.

2. It makes no sense to have more than 50% and be dishonest as well for a variety of reasons, including ethical, public relations, investor relations, legal, long term profit.

You people give not enough credit to Bitcoin's design. It is much deeper than many get it.

My goal it so build a Bitcoin mining company that will be sustainable long term and that will continue ongoing investment into new technologies and new mining capacity, get listed, get optionable. I just cannot wait a moment when I can sell naked puts and roll them perpetually (if allowed by law, damn insider trading thing).

It will be not so much a technological company but a financial one, more specifically an asset management company. There are plenty of examples in non-bitcoin world of companies that are being managed by a handful of professionals but have billions under management. Just check out biz models of companies like AYR and most REIT's and specifically O (my favourite, if I can I want to emulate their biz model, specifically stable monthly dividend and lack of leverage).

I respectfully suggest that many people here got it all wrong. This is not about killing Bitcoin and getting into 51% territory. Ask yourself why the hell would we want to become #1 target of guys with badges and guns? It is all about becoming the Bitcoin REIT and eventually being traded alongside of my darling O (Realty Income Corp. NYSE). My best estimate is that we will climb to 25-30% for a short period of time if we are lucky, just as I have done with GPU's at one point. History tends to repeat itself. I bet on it.

The FUD is being generated in this thread not by me, but perhaps by those who overextended themselves (we know who you are, lol) by buying FPGA's and now they are trying to pass their own fear to you. (do refer to my signature for legal disclaimer).

GPUs are already produced in pretty much top of the line fabs.  These custom ASICs will certainly not beat them in feature size or clock speed.  So, where is the waste that will be cut to achieve 100x or 1000x improvements?  Surely the PCIe interface and cache don't account for 99% to 99.9% of the real estate of the GPUs we use now.  Is there enough cruft in the ALUs that can be cut?

That was exactly the point of my question and again, afaik (and please educate me if that's wrong) orphans are not included into the block rate calculations, so the remaining 49% of valid and verified blocks produced will not all orphans. Of course I agree there will be a lot of orphans and mining efficiency of regular miners will suffer in the process.
If they all were orphans, a 51% miner had effectively 100%.

Sorry Vladimir, this was slightly off-topic, considering your latest reply.

That was the same question I asked 3/4 ago when I considered mining.  Seemed to me that the money was better spent just hoarding BTC.  If Bitcoin takes off big-time, the hoard would be bigger than even a huge miner could generate.  If it did not then my mining gear would be an albatross, and probably obsoleted fairly quickly in either situation.

There was also a factor of wanting to support Bitcoin on philosophical grounds.  I considered that soaking up liquidity by hoarding during the high inflation period was as good a way to do that, and since there was no eminent threat of a 51% attack by adversaries, there was already enough hashing power to protect the Bitcoin network.

Thanks for the well thought out response and clarifications.  It is good to hear that your heart (and greed) is in the right place.

Would you be interested in codifying a provision into your bylaws which prevents you from rejecting valid blocks from other miners?  It would be easier for me to invest dollars if you made it an uphill battle for any future management to start monopolizing block production.  

Incorrect.  A 51% miner may choose to monopolize the blockchain, but they do not have to.   What you are speaking of as a certainty is only a possibility.

And if the 51% miner chooses to monopolize bitcoin, many people that came here for the freedom of currency will not accept the monopolist as their new fed printing money and look for something else.

Hmm. And I thought that I am just being smart, greedy and rational. If that also makes me noble, that is a plus. Tell it to Her Majesty. Sir Vladimir hmm sounds nice.  8)

Cunicula, don't take this the wrong way, but could you please shut the fuck up, or maybe even go die in a fire or something like that?  Not every thread on these forums exists for you to go trolling in.

lulz.

Put another way.  No disrespect, but STFU.

Ahhh, thanks for that.

@Vladimir
To quote myself:

IOW, what exactly do you need the money for? To buy third party equipment, or to develop silicon. This is not a minor difference to put it mildly.

Okay, well I guess you are right. Since Vlad is just setting up a large non-monopolistic mining organization, this isn't really the place for me to go trolling. I'll delete my posts and take my posting to other threads.

RaggedMonk, this is technically possible. However, all it would change is increase required shareholder vote from 50% to 75%. While I usually prefer to run with default articles, your proposal has a merit. Feel free to make specific suggestions on the wording. I will pay attention.

I do read this thread and see all the questions. However, I may chose to not answers some of the questions. It is nothing personal it just means that I either cannot answer them or do not want to (just yet).

Please notice how orangey his ignore link is and while you're at it, give it a click yourself. I promise you'll have a much better experience on this forum ;)

A 51% miner could have 100% of the generated blocks and 100% of block rewards.  So yes a 51% miner effectively has 100%.  Every block produced by the 49% would be orphaned out (eventually).

Either they are orphaned or not. What does the eventually mean?

i means a miner COULD do it, but COULD choose not to too.

Ophan isn't instantaneous.  

The chain with the most hashing power will ALWAYS eventually the longest and orphan out any other competing chains.  Eventually is a given but how low is subject to variance.

Say one entity (A) has 51% hashing power.  Everyone else is (B) and has a combined 49%.

block #1000 is current block
B builds a block #1001  (we will call it 1001B)

If A builds the next block (1002A) it never risks being orphaned as long as it builds on the longest chain.
If B builds the next block (1002B) and A decides to abandon the block it is working on and build on top of 1002B then the chain continues
If B builds the next block (1002B) but A decides to continue its chain and publish 1002A then eventually 1002B will be abandoned.

Maybe team "B" even gets lucky and builds 1003B, 1004B, 1005B.  Sweet got 5 blocks despite A having 51%.  The victory is short lived because the math is unavoidable.  A has 51% of hashing power.  The 1% is like house edge in a casino.  Over a long enough chain of blocks A will build the longer chain and when that happens 1001B, 1002B, 1003B, 1004B & 10005B will all be orphaned.   It is inevitable and unavoidable.  It is the same dynamic in play with a 51% attack.

51% hashing power = 51% to 100% hashing power.  The miner with 51% can choose how many blocks to oprhan and how much profit they want to make.

It would mean the corporation is choosing lower profits over higher ones.  If the company is publicly traded and Bitcoin became large enough to the point that 51% vs 100% is tens of millions or even billions a year it is inevitable that the company will increase their profits by getting more revenue for the exact same amount of work.

The US govt COULD build a massive hashing farm with 51% of Bitcoin network and then use it to protect not hurt Bitcoin also.
Paypal COULD decide to cut their fees 90% next year.
The FED COULD decide to no longer inflate the US dollar.

Yeah lots of things COULD happen.

No rational miner will ever reject all other blocks when he has 51% because this will lower the value of the BTC he is mining. Irrational miners however ...

What about reject 10% of the blocks to make a bonus 10%.  Give the market time to accept that and realize that monopoly or not the only way the mining company profits is it Bitcoin continues.  A year or two later start orphaning 15% to 20% of competing blocks randomly to boost profits to shareholders.  

Convince other miners to simply buy shares.  "See it is still Democratic shareholders control the network".  Then ramp up the orphan rate to 25%, 30%. Eventually making 1.5 BTC for every 1 BTC earned "fairly".  Who would't take 50% higher profits if they could.  In time market will accept the dominance of one entity and they can move to orphaning all other blocks.  

At that point one has maximized revenue and can boost profits further by turning off some hashing power.  If others try to mine just turn it back on so you are >51% again and orphan all their work.    One could cut operating costs significantly by having say 20TH/s but only using 2TH/s continually to protect the network (and profits).  The other 18TH/s is simply the "threat" to convince any attacker an attack is not economical.

No rational user will stop using bitcoin because of the identity of the person processing their txns. Therefore, there is no rational reason to believe that a monopoly would negatively affect price. In fact, the rational argument points in the opposite direction.

Monopolized Control -> Stronger incentives for monopolist to develop uses for bitcoin -> More new uses developed -> Higher price

Your argument goes

Monopolized Control ??? Less Useful -> Lower Price

I'm not understanding the ??? part. Seems illogical. Could you explain without introducing irrational behavior?

So if B builds following blocks on chain A, it will create a valid block, meaning if B plays by the rules of A, it can still successfully mine blocks. Or not?

Only if A changes the rules without including B, like in a 51% attack, then B would start producing orphans. But that comes back to the statement, that A could monopolize Bitcoin with 51% but doesn't need to.

So D&T, are you assuming in your explanation, that A will eventually change the rules in his favor?

@cunicula: Bitcoins security is largely based on the decentralization of control. Using a centralized approach one would have to trust a single entity to, for instance not double spend. Replacing the distributed  securing authority with a single centralized one just turns Bitcoin into another Fiat currency. Even inflation could be introduced at the mercy of the central authority! This significantly reduces the value of the currency.

@DeathAndTaxes: Sure that could very well happen. The drop-off in value would simply be smeared out over many years. The loss in intrinsic value of the currency would be the same, so market prices will follow soner or later (markets can be irrational for potentially long periods).

To be clear: I am not saying the system would have zero value. it would be useful similar to how the Candian Mintchip has value. There will simply be more value for a miner with >51% to accepts valid blocks of others and in turn he will stop holding 51% of the market in the future when suffient competitors enter the market.

Once again what "rules"?  Of course A will do what is in their favor.  By definition corporations are REQUIRED to maximize profits for shareholders.  In the US an officer (CEO, etc) of a corporation can be personally sued for failing to maximize shareholder value.  If a company can get x% incremental value without any increase  in production cost it is naive to think they won't take that "option".  Even if Vlad was a Bitcoin knight in shining armor a public company will be held accountable to the market, brokers, and fund managers.  They will want to see the "option" taken and if that means replacing Bitcoin friendly CEO with one who puts shareholder's interests first


Ask yourself this question?  How/why are banks "evil"?  Why do they load consumers down with heavy fees, borrow money for next to nothing, and charge high interest?  Shareholders demand it and they are in a position to get away with it.

so you cant even tell if your company seeks capital to buy third party systems or to develop your own IP and chips ?
Why then, post anything at all?

I say go for it, Vlad!

Man, all this nonsense about monopolization again!! My goodness - I'll chalk it down to public education but I swear it's amazing how many people confuse the evils of coercive state-based monopolization with the non-issue of market-based centralization.

Markets move toward efficiency. If Vlad's venture is successful (profitable), then that's where the market's going. If we need to enforce inefficiency to protect bitcoin from "scary centralization" then the experiment already failed.

Every rational market actor should be trying to figure out how to mine more than anyone else. Nothing wrong with that, and I hope Vlad is wildly successful in his capitalistic endeavors. I see no reason to think Bitcoin will be weakened by its systems advancing forward. And if indeed Bitcoin is weakened merely by advancement, then we ought to discover this sooner rather than later, and Vlad is doing everyone a public service.

Kick ass Vlad, just don't use up all the world's electricity cause I still need coffee in the morning.

Announcing a paramount monopoly in mining would be a good trick to drive many people to sell off their coins in panic. Result: Cheap coins to buy before people found out it isn't really a present danger and the price will slowly rise again.

If I held a substantial amount of hashing power of the network I'd also make sure people won't notice it. MM could be mining at 10 different pools hiding his 20% of the share until he could go for a 51% attack. After the next difficulty change we will know more.

BUT it looks like the 51% attack may be Bitcoin's sore point after all. It won't be Vlad's or anyone's fault. It will simply be the major flaw everyone has been looking for and was glad they didn't find. The system really seemed bullet proof so far. Perhaps the time will come sooner than later that "shit hits the fan" as some here in the forum may call the end of the game.

Let's hope I am wrong or the developers decide to change the algorithm so Asics have no chance at this (too early) stage of Bitcoin.

Then again, isn't it mismanagement to go the 51% route and push away everyone who currently supports Bitcoin?

I, for one, would leave Bitcoins altogether if someone was trying to forceably control the Bitcoin network with > 51% of the hashing power.  And I know I'm not the only one...

Thanks Vlad for your recent detailed post.  I am glad to hear you are not interested in gaining a majority of the hashing rate, as you (rightfully so, in my opinion) indicated that it would kill interest in Bitcoins altogether.  If you sustain 20-30% of the overall hashing power of the network, it still leaves room for competitors to come in, and Bitcoin mining will remain distributed, as it should be, while maintaining the confidence of Bitcoin users that no single person or entity will have majority control over the network.

I wish you the best of luck with this project!

First everyone complains that Deepbit is going to take over the network.  Then diversification with the likes of P2Pool seem to have eliminated that possibility.

Then Mystery Miner is supposed to be able to take over the network by ppl wildly extrapolating his growth.  Then along comes Vladimir who will probably eliminate that possibility.

Then, the fact that Vladimir has done that, HE now becomes the next threat.  

And on and on and on....

LOL. The circle of life. Go ask Simba if you do not believe me.

It is better for Bitcoin to learn how to deal with a +50% Vladimir miner now than walking without any experience into a hostile government mining operation later. Maybe new technical solutions will be invented which prevent new nodes to contribute that much mining power, maybe Vladimir won't be able to achieve + 50%. Maybe Vladi will save the network some day with all his ASICs.

If Bitcoin wants to succeed it needs to come out stronger of this situation. So I'm looking positively forward to ASIC mining.

don't you think that if Vladimir is preparing his ASIC assault that Artforz, BitcoinExpress, etc. are fast on his coat tails if not ahead of him in planning their own operations?  Vladimir does not operate in a vacuum.

the fact that Vladimir is moving forward on this makes me want to buy more Bitcoin.  His operation will work to ensure the safety of them.

+1

I have no problem with this either. I wish Vladimir good luck. It's good for Bitcoin that mining businesses become more prominent, their incentives go hand in hand with keeping Bitcoin secure and reliable. In fact this is likely to significantly increase Bitcoin security.

My only problem was with some of you that claim it's profitable to attempt 51% control and thus 100% control. People who still think that should go take a brainscan and check if they actually have any braincells.

Vladimir explained it very well in his own post, there are a multitude of reasons why it makes absolutely no sense to attempt taking control of the network. Profits from doing that can't be calculated in a linear fashion (more hash, more blocks, more money) because it would significantly erode trust in Bitcoin and thus likely crash Bitcoin's price. Vlad also had a good point about the fact that increasing his hash power becomes questionable at some point because he's increasing the difficulty of mining (and the bigger his percentage of the network is, the more significant the effect from that is to his entire operation).

The only thing we really have to worry about are hostile ASIC-farms which would in theory be built by either a government, the banks or other companies that provide competing payment systems. Friendly mining businesses are actually a very good way to fight this and make it so much more difficult and expensive to try to attack Bitcoin. So in conclusion this adds confidence in Bitcoin overall.

this is technically impossible, if you think about what an asic really is.

it's a specific chip designed to do the work required of a specific application.

if that application can only run on cpus then this specific chip will just be designed to mimic millions of cpus.

p.s. good job vlad... i'm excited to see you bring these online.

This is somewhat offtopic, but this proves my point indirectly. I hope mods will forgive me this little sin.


Selling only for BTC.

Have large amount of used hardware in excellent condition for sale, most boxed "almost as new" with all the original kit.

5870's XFX-587X-ZN (lots of those)
various 5970's (many)
various 6990's (many)
various 1200W PSU's (best in class)
proper mining motherboard/cpu/memory bundles (work with many GPU;s)
low cost custom compact open air mining cases (up to 8 GPU's) of my own design and made by yours truly
pcie extenders (hundreds), fans, etc..

if you can pick it up in UK have heavy 4U mining cases ready to go with GPU's and everything in it already, just add your USB stick.

skype: vladimir.marchenko.co.uk (text/audio/video)

Do not expect me to be very responsive on the forum and PM's.
Use skype, tell me what you want and how much you are prepared to pay.
Bitcoin payment upfront, this is not negotiable, will ship worldwide, will ship within 2 biz days.
Large orders will be given preference.

Someone come and take all the stuff I have left off my hands retail or wholesale. I have some offers already, but I want a better price.

Now time for some serious trolling...

From Vladimir's signature
Which one is this thread? Joke or Sarcasm?

Serious troll is serious.

Teh internet is srs bsns.

Oh sh**...  :-\

For anyone equating ASICs with 51% mining, I wouldn't worry too much. ASICs become financially viable if you plan to sell them in consumer products in high volume (millions), or for dedicated tasks at high cost where a higher power and larger FPGA just won't cut it (say, a pacemaker).

If vlad's plan is the first, this will lead to a high volume product that's good at mining. Much less chance of anyone getting 51% in a market like this with cheap commoditised hardware available, whether he sells them, allows his subcontractor to sell them after a lockout, or his subcontractor owns the design (in which case he needs a pretty good reason for the investor to invest in him rather than the sub), and also the sub will sell the design to as many people as possible = more miners

If it's the second, you can still achieve his hash rate with gpus or fpgas. You'll just need to buy more hardware and spend more on electricity and cooling than he will. But nowhere near the amount he spent on designing the chip ($2-$5m depending on complexity and whether you cock it up or not). He's got a lot of money to make back. So perhaps he'll rent out his new ASIC hashing power from a central location. But then you're back to more distinct miners in the market = less chance of anyone hitting 51%.

Oh, and for the record, GPUs are ASICs themselves... (the GPU guys had to design the first GPU, right?). Just not ones that are particularly dedicated towards SHA hashing. Oh, and the GPU designers will have tried the design out first on an FPGA. Crystal ?

He already said he's not selling them.

If he achieves his goal of 20-30% of the network's hashing power, and does it quickly, that'd be around $9,000/day of BTC.  $270,000/month.  $3.2M/year.

Obviously, there's the block reward decrease to account for, but even if his payback doesn't come for 2 years, it's still an amazingly profitable venture.

As far as I understood it there is a risk for Asic owners. Asics are highly specialized chips and therefore not very adaptable. Much less adaptable to different ways of computing hashes than GPUs or FPGAs. Besides, it was already discussed in the forum that if quantum computing becomes ever a reality the protocol might need to be changed in order to protect bitcoin's security. I don't see why that couldn't happen if a single entity gains more than 50% for an extended amount of time (who or whatever). Though I'm against changing the core protocols of Bitcoin for every problem that occurs Bitcoin as we see it today is not carved in stone and there are many actors with an interest for it to survive. I don't think people will just say oh fuck it, nevermind, didn't work. Let's move on.

If tho protocol is changed to screw people who invested in specialized hardware, Bitcoin is dead. Quantum computing is not likely to be a threat either. Each hash corresponds to an infinite number of possible inputs. You would have to structure your question for the quantum computer very carefully to get a valid response.

I don't think this move is bad for Bitcoin. If taking over a large portion of the network with ASICs is profitable (even with the up-front costs), it means mining has stagnated and it is time to move on. If Vladimir is doing this, I would not be surprised if 3 and 4 letter agencies/banks are considering the same thing. They won't be announcing their plans for Bitcoin 6-12 months ahead of time. With lead times the way they are, this may turn out to be foresight on Vladimir's part.

Are we to believe this this can't be programed to screw with Bitcoin?
JP Morgan supercomputer offers risk analysis in near real-time (http://www.computerworlduk.com/news/it-business/3290494/jp-morgan-supercomputer-offers-risk-analysis-in-near-real-time/)
What is that computer doing for the other 23 hours, 56 minutes of the day?

As a reply to some monopoly whatever concerns.

Vlad has no chance at having a future monopoly on efficient sha256 hardware.

Some 3 letters agencies... more likely.

That's the point. I'm imagining a cheap PCIe x1 mining card since I first heard about Bitcoin in 2010. The chip would be practically free if sold millions. Put one in a $20 USB coffee cup warmer and it will pay for itself in a year. It's fancy too. :)

(And, and, I want an LCD displaying the current block count on the cup warmer. The new universal time clock.)


Look, even if the dev team decided that it would make sense to change the hashing algorithm now, it would take years for them to switch, and it would still be a soft landing. This would be a different matter though, if you really believe that SHA256 can be cracked. It's a very tough assertion though.


I suggest you re-read those discussions. Even if quantum computing becomes a reality (which it won't at least until your ASICs get old), the last thing that would be replaced are the hashing functions, which are pretty much immune.

Ok, but as a reason for this leading to more miners, Vlad is entrepreneurial, has created a unique position at this point, and there's a long term and elastic source of reward money. why would he stop there ?

Let's say you invested in inventing a new spade that you could use to dig up $100 of precious metals. There's plenty of precious metals around, but no-one else's spade is any good. Do you make more money by :
A) making a spade and digging
B) selling spades for $99 each ?

Because he knows that if he acquires too much of the hashing power, people will lose trust in Bitcoins and the price will drop, reducing profitability.  It's not as simple as just extrapolating the profits all the way out to 100%.

ans: B

You guys are all arguing as if you know what he is doing. I for one, dont. So can someone enlighten me?

Is he (co?)developing his own chip and systems, if so, have they even taped out yet? If not, what makes you so sure they will secure the funds needed to get this to working silicon? We are likely talking about >$1M here, depending on process node, possibly substantially more.

Or does he know of a third party ASIC chip we dont know about yet? If so, what makes you think he will not be just one fish among many when their product hits the market?

Or he is going to buy LargeCoins appliances?

Or something else?

That's not quite how it is. Directors are required to act in the interests of shareholders, but those interests are not necessarily the maximization of profits.

Here's a specific example. In Google's IPO they stated that Google would do lots of "cool stuff" that would not necessarily make money. Therefore, Google's Board is free to do that without fear of a shareholder lawsuit. Google also stated that the share price may go down, "even over the long term", so Google's Board has no legal pressure to keep the share price high. They also stated in the IPO that they would not focus on quarterly earnings, so again there is no legal pressure.

If you don't want to read the lengthy prospectus from Google's 2004 IPO, you can get a taste of what's in it by reading Google's IPO letter from their S-1 IPO Registration Statement:
http://investor.google.com/corporate/2004/ipo-founders-letter.html (http://investor.google.com/corporate/2004/ipo-founders-letter.html)

Which is it: Management Company, or Mining? Public or not?




So wait, it's not feasible that you'll have a monopoly, but you might be the biggest player on the network and you intend to have at least 1 digit of TH/s of power?



You're intending for what now?  700MH/s for 250W (5970) is 2.8MH/W * 10^3 = 2.8 TH/W?





So you have "concluded" a long-term contract with a manufacturer, yet you intend to purchase from various other suppliers over the long-term?  What about the supposed long-term contract you've already drawn up?  How much do you plan to buy? I thought you weren't aiming for a Monopoly.




Why?  What is the monthly colocation fee for "the vault"?






Wait, so you are or you are not going to allow your IP to be sold to the public?  I say *your* IP because you specifically said subcontractor.  But you've dodged any definitive answer on this.





Are the masks done or not?  If they are, why do you need capital.  If they aren't, why are you spreading fallacies regarding your current project progress?  Or are you trying to cover your ass in case your first run fails?



Not trying to be an ass, just trying to patch up some of your inconsistencies and holes so I can make sense of this.

Also, feel free to use this template and your responses for your FAQ post at the beginning of the thread.

dropt, thank you for your effort.

Most things that you consider as inconsistencies I do not consider as such. Other quotes are taken out of context and I will not respond on those. Some facts are not disclosed intentionally, some statements are made intentionally vague.

One thing that you have completely missed is that whatever I say in this thread or elsewhere publicly is not an investment prospectus. I am not addressing or informing any shareholders or investors here. I am not inviting anyone to buy any shares (those shares are not even issued yet). This is not an annual return or pre IPO documents either.

Just informing public about our intentions, no more, no less. Treat it accordingly.

Yes, sell sell sell!!!

You should change the phrase under your pic from "building a huge ASIC mining farm for investors" to "intending to build a huge ASIC mining farm for investors"

FUD spreading much, hein?

So if he builds 3TH/s (30% of current network) and through higher difficulty and lower block rewards difficulty falls to say 6TH/s he is going to idle some % of his multi-million hashing farm to keep himself below the 30% cap?  Really?

Given how variable network hashing power is (min of 3GH/s, max of 15GH/s, avg of 8GH/s just in last year) do you really think a <30% of total network cap is realistic?

The stupidest part is that once designed the per unit cost of an ASIC is negligible.  So he pays the massive upfront cost, takes all the risk and then intentionally limits the # of chips he produces ensuring he has a high cost per chip, lower profit and more risk?  Combine all that higher cost and risk with the need to idle some % of farm based on what other people (he has no control over) do with their hashing power?

Some people will believe anything.  IF one wanted to maximize the # of units, the amount of hashing power, and profits they would simply produce 10TH/s of chips and sell them on the open market at a 300%+ markup.  The network would be more secure, more efficient and no player would have more than a couple % of network hashing power.

The only limits Vlad would be facing would be market demand.  So the question is why isn't he doing that?  To take more risk for less profits?

To answer your first question, yes, he absolutely WOULD idle some % of his hashing farm to keep himself below the 30% cap (or 40%, or whatever % below 50% he chooses).  The reason being, all faith in Bitcoin would be lost if a single person owned and controlled more than 50% of the hashing power of the network, causing a price crash.

1800 BTC/day @ $5/BTC is a heck of a lot more valuable than 7200 BTC/day @ $0.05/BTC.

I agree that it could be more profitable to sell ASIC miners, as it wouldn't reduce confidence in the network/cause a price drop, and he could continue selling them until the market is completely saturated, but that choice is certainly his.  If he wants to be the only one with ASIC miners to increase his own BTC take, then I can kind of see that as well.  Also, there's something to be said for being able to generate mostly passive income.

SgtSpike here is correct. You'll notice that in my criticisms of what Vlad is doing I'm not criticizing on the 51% attack route, because even Tycho, and before him ArtForz, understood the risk of being at 51%. It's actually *not* in a Bitcoiner's best interest to hit that point, because the value of Bitcoin as a currency itself drops considerably when a threat is actually present.

When ArtForz first brought his GPU operation online, he offered free transactions and downplayed the essential dominance he had once the difficulty reset to something less in his favor. It did, however, upset a number of CPU miners who had invested quite heavily into their own operations. Artforz could have brought enough GPUs online to have achieved 51%, but appears to have chose not to in order to preserve his best interest of keeping the value of his already mined coin high enough to continue to compete in the future. Over the next three months, as more GPU miners cut into his profits, the price of BTC rose.

When Tycho -- with his mining pool "Deepbit" -- cornered the Russian and Eastern markets of GPU miners, it upset a lot of the smaller pools that had relied on friends and family all mining to get a set amount of Bitcoin per day. He actually became such a present threat that someone actively started using their botnet to try to punish him and the other larger pools for not letting them mine on their networks. In other words, BTCGuild, Deepbit, and slush's mining pools *could* have achieved 51% with the help of the botnet, but chose not to in order to preserve their actual best interests, which was to keep Bitcoin prices viable. Over the next three months, more and more pools began operating in more languages in order to cut into Deepbit's advantage, and some pools outright allowed pool hopping that I'm sure at least one botnet operator took advantage of. The price of BTC rose.

We've been without a major innovation since. Now I understand FPGAs and the more Bitcoin-targed BFL Singles are innovation, but unlike CPUs and FPGAs they don't have any dual-use purpose which means they are less and less viable outside of Bitcoin, itself. This has cause major trepidation on the part of some of the more serious Bitcoiners, who want to have a reason to throw a few thousand USD into something they would call an "investment" with an easily-measurable liquidation fee once they are out-of-market viability. This is especially true for European and US coast miners, who would operate FPGAs at a higher cost-per-watt than those in the US Midwest, or other remote country with a significantly cheaper electricity cost.

All in all, I think the biggest problem with Vladamir's operation (presently) is that he didn't bring enough technical details on the mining equipment itself, and instead jumped into how easily he'd be willing to spend funding trying to secure it in the most secure data center he could find. That's something that someone with a good sense of security would do, but without technical details, specifically what kinds of Megahash/joule, we'd be investing in something that is more of an idea than certain to be a reality. That said, if someone does come up with a major innovation that gives just one person an advantage, the price of coin with significant rise, just as it has in the past due to Bitcoin scarcity.

These are all valid points about Bitcoin evolving and how it'd be actually good for the price. But if it's just a matter of good will/ rationality if somone takes over 50% of the hashing power I'm no longer convinced Bitcoin's design was such a great idea. You say it could have happened before when the switch from CPUs to GPUs happened. But we were lucky. So are you saying future or past, the system is only as secure as the benevolence of some of its users?

ASIC's are really the last major advancement that can be made.  As long as we survive the transition to ASICs, there's no reason that we'll have to rely on a single person/company to keep things legit.

Went through 11 pages.

Not a single clue on:
*the investment required
*time frame
*prospects on mining capacity
*view on development of Bitcoin prices the next few years
*prospects on ROI for investors, their position etc
*etc

I appreciate that it's not a prospectus, but you aren't giving any clues whatsoever. I wish you good luck with your enterprise.

lack of clues explanation: http://www.legislation.gov.uk/uksi/2005/1529/contents/made

Will there be an opportunity for small time investors to get in on this?

We are talking with legal bods about this. This is our goal to allow "small time investors" in. At this stage it is not possible. We are in talks with a number of "funds" some of which are considering using GLBSE. We will do what we can to allow small investors to participate, but it is neither simple nor quick process.

Thanks for taking the time to respond Vladimir.  I appreciate it.  I understand your comments about context, I did my best to try and maintain some linearity in your statements.  I respect your inabilities and dis-interest in out right answering a lot of questions that people are having.

However, this thread *is* soliciting investors, you have it listed right on the first post.  I can only assume with confidence there are people who are watching this who are, or have ties to professional investors and IMO this thread is doing nothing but harming your potential with them (the ones present here, in this thread).  So it is my understanding that despite your non-intention of addressing investors, by posting this thread you are.

If you're serious about all of this, I would consider having your lawyer peruse this thread and make sure you haven't done anything you really shouldn't have such as indicating to the investors you're soliciting to that you have a long-term production contract which you've publicly announced (albeit indirectly) that you intend to renege on.  If this is a fallacy in its entirety, then I suppose it doesn't matter.

But I digress, if you're successful in your ventures please tread lightly.  I have the feeling this has the propensity to end quite tragically for those involved.

One point that I have not seen mentioned is the fact that bitcoin failing would destroy his company. He has no incentive to harm this economy. The better it does, the more he makes. So I am assuming that he will be spending money to further bitcoin in the world. He might plan on doing this through advertising or other methods, but either way I look it this will bring more people to bitcoin.

Yes, this is why I responded so enthusiastically to the project initially. I am just disappointed that Vlad doesn't have anything more ambitious than 10-30% of mining power planned.

You say he has no incentive to harm his business. This is obviously wrong if one can believe his words. He claimed he'd become one of the biggest if not the biggest player in the game again and clearly said he didn't want to sell his future SuperAsic to the competition, but which he wants "public" investors to pay for. This makes me think he didn't think it through at all before opening this thread. If you think about it, the idea is pretty failsafe for him if it works out, but only if those investors are willing to take the risk though. This alone is bold, but what I find appalling is he makes an attempt to intimidate people in telling them if they aren't investing with him, they'll be out of the game. Oh hold it, I'm sure it was meant as a joke. ;-)

Isn't the correct play for vlad to take his ASIC farm up to 25-35% of total mining power (ie, just under the range where the community really starts to freak out), and then start selling ASIC hardware at huge markup to everyone else? He can tightly control the supply of his high-margin sold-to-the-public ASICs while bringing on a like quantity of his cheap production-cost ASICs in his own farm to maintain that 20-30%. I think if we assume that vlad is a rational actor, this will be the play (assuming the mining efficiency of his ASICs really is a few orders of magnitude better than current tech).

If Vlad and Co produce an ASIC, I would not expect them to have a monopoly for long, and I would anticipate that the follow-up fabs (assuming he is even first to market) could well be more optimized.

From: http://marginalrevolution.com/marginalrevolution/2010/01/estimating-soviet-production-speed-for-a-nuclear-weapon.html
==============
In the mid 1940s he and his colleagues were commenting on how quickly the Russians would get the bomb – most of his colleagues put it to 20-30 years. He however amazed them with his estimate 5 years. His reasoning was they they would be much more effective and focused in their research , since they knew it *can* be done. This is the key thing in research be it purely for science or military.

In two years the Soviets had the bomb and it’s all history after this.
==============

yet it were the Americans who blew that bomb...

Something for you to think about, Vlad...

This matter of existence of technical solution and specific details will be discussed privately and covered by NDA's where required.

How auditors would account for BTC? I suppose exactly the same as they would account for potatoes. Imagine a company which pays dividend in potatoes that it grows. These are open questions how BTC's will be accounted for, whether there will be dividends payable in Bitcoins or not, and it is for accountants to figure out.


"Accepting fiat and extracting fiat" for me sounds as neutral. I am discussing with advisers our options of having both fiat and Bitcoin dividends. This is not a trivial matter considering dividend taxation and VAT. It was also suggested that it would be bad idea to commit to a fixed dividend schedule as this would put the company and shareholders at disadvantage and it would be difficult to react to changing market conditions. We do not know yet how exactly the company will be structured, there are no investment prospectus prepared yet. It is complicated. We are working on it.


REIT is a pipe dream for now. Not going to happen before the company is listed on main market of LSE, and this in turn would not make any sense unless the company is wildly successful and Bitcoin's market cap is measured in billions. Even if it would be accepted that racks of ASIC mining gear is a new sort of "real estate".

However, it is rather rare than companies that are less than 3 years old are listed on public exchanges. Considering how quickly Bitcoin is developing, the future is uncertain. Should it happen that in 3 years time Bitcoin will be in mass adoption stage already, the best time to start thinking about being the first Bitcoin company that goes public is now.


I do not think that this is a fund. This is a company that operates Bitcoin mining hardware on large scale. There is no requirement for minimum turnover for a PLC in UK, to the best of my knowledge. You perhaps mean a listed PLC when you refer to turnover requirements. If so, then we talk about different things.


No, I do not mix private and public, plc and ltd, (they are both limited) , I founded quite a few of ltd's and do know the difference. However, plv vs ltd matter is being discussed behind the closed doors and there are good arguments for both routes.

EDIT:

Catfish, I have one question for you.

Do you think that Bitcoin mining will be confined to the "garage" stage forever?

Why all the closed door stuff? Isn't it about time that someone --ANYONE-- were a little more open about things like this? When I hear things like FPGA and ASIC, things that spring to mind are insanities such as multi-thousand dollar costs for nothing more than a bit of software that can make the things work, engineering fees that far exceed the cost of the time and materials expended, and on and on and on. It is a pathetic shame that the industry has such a strangle hold on the hardware development that every detail must be kept under wraps.

A prime, shining example of a useful open hardware design is that of OpenSPARC T1/T2 - relatively modern processors with a completely open architecture (http://www.opensparc.net/). Take also for example the kernels used for video card mining - open source. Many minds can find optimizations that may never have been considered before, and everyone benefits. Even if you refuse to share your IP, there is no reason to be secretive about the other plans, since there isn't a whole lot anyone can do without both the IP and the investment money.

1.  It can cost several million dollars to develop a new ASIC.
2.  If you want an open-source ASIC, you have to find a group of engineers willing to work for free.
3.  If a company or investment group spends millions of dollars on a new ASIC, they would be fools to give it away for free.
4.  What else do you need to know?

Sure, it'd be great if someone developed a free and open-source ASIC for Bitcoin mining.  But it's probably not going to happen.  Why?  Because the software and personnel needed to do the job aren't free.

And if you need a reason for companies to not release too much detailed information early on in a project, just look at Matthew announcing the Bitcoin Magazine.  He had plans, those plans didn't come to fruition as quickly as he had anticipated, and his reputation is suffering because of it.  Obviously, vlad doesn't have all the details of his plan worked out, and doesn't want to share any information about it to avoid raising people's expectations.

It can also be a competitive advantage to keep corporate strategies a secret.  The more you know about a competitor, the better you can compete against them.  The counter to that is making sure your competitors know as little about you as possible.

Making an ASIC to mine Bitcoin is not really very innovative. Everyone (with the money) can do that.

It's like buying a $1 million machine to dig a whole in the ground and spending another $1 million to start digging for a while (operating cost, manpower, electricity/fuel, etc).
 
If you are lucky you'll find some gold or diamonds. If you're out of luck, somebody gets there first or people move on to something else than gold or diamonds.

That's why everyone wants other people to send them their millions. Including Vlad (using investors) and LargeCoin (by virtue of getting escrow and secured financing). BFL in principle does the same, but a bit different. They want their customers to send them the money up front to build FPGA mining hardware. They are not willing to take the risk and use their own money for it (or they simply don't have money).

Vlad goes a bit further than the other "ASIC developers", he wants to keep it for himself and move to an expensive penthouse.

that's why i like vlad

What is there so much to like about greed and the desire to confine all the rest of the "garage" miners to get out of the game ???

what's not to like about such an ambitious nature?

It's my understanding that there's no minimum turnover unless the PLC seeks listing on a stock exchange. However, to form a PLC there must be a minimum of £50,000 allotted shares.

I suppose a bitcoin asic would be relatively simple to design, and so you might find some hobbyists (or pro's with free time) willing to collaborate on a design; but the one thing that REALLY costs money when making an ASIC, is the mask set, and there is no way around that. Depending on process, you are looking at at least $500.000 to a high multiple of that. Opensource or not wont make that go away. And I imagine someone risking that kind of money on a bitcoin specific chip to not want to inform potential competitors too early.

That said, I think ppl are getting a bit too excited over Vlad's announcement just yet. Ill get excited when I see a demo of working hardware. All I see so far is plans to start a 'HUGE' company doing who knows what using who knows what. If he is planning to build his own chips as he suggested, and particularly if he is new to that field as he seems to be, he might be in for a few very unpleasant surprises.

This.  I had a friend who works at a company doing ASIC design and he offer me space on one of their test wafers as they sometimes have a few free spots.  But then you still need to test and package, etc.  That was the best deal I could get and it was still very expensive and I would only get a few test chips out of the deal anyway.  I did talk to my boss about just doing it through the company I work for and they did look at it but then balked when we got to and could not answer the questions:  What is our projected volume?  How are we going to make back our NRE?  How long will it take to get back our NRE?  How many total customers can we project?  What is the price of BTC going to be in one year?  How many miners are there today?  How many will there be in one year?  two years? Etc. etc.

Basically it is impossible to make any kind of buisniess case for investing this kind of money.

BUT, if you guys can really come up with the money we would be glad to do it for you!  PM me.  Worldwide ASIC design company with offices in China, access to fabs, we can do the verification work, etc.

I know damn well the cost of a mask set and packaging, and the engineers still need their salary. But I was asking why must there be a "competitive advantage"? I'll bet that even if the thing were crowdfunded, that the one making it would still demand secrecy, just because that is the way it has always been done.

When I put on my investor's hat, I start running scared because of the potential cost and devastation to the entire economy to be running this operation. When I put on my miner's hat, I see a concentration of power that could have been spread to keep the network secure, instead all working under the thumb of one group of investors, some of whom may not have the positive motivations that I am sure Vladimir has. And when I put on my end-user's hat, I see the rich getting richer and the poor getting poorer, just like the failed world of today.

Maybe as a peon myself, I don't understand what it's like to be rich, and why the rich must continue to become more rich. Perhaps if I had a larger discretionary income, I wouldn't be preaching about this, and would be demanding NSA-level secrecy about my organization, my investors, my product, and my vision of the future. But I'd like to think not, and I'd hope that others would feel the same way.

Why must there be a competitive advantage?  Well, so that a company can remain competitive!  If they don't remain competitive, they may not be able to make back their initial investment.

It'd be like spending $1B on a new medication, then handing out the formula to anyone who wants it.  If a company did that, they just wasted $1B, and will never be able to make that money back from sales of the medication, as they'll have to compete with everyone else for sales.

Cornering 100% of the market is highly improbable because to do so you would have to drive everyone else out.  Even cornering 70% of the market is very difficult.

The only way a monopoly can survive and make monopolistic (above-average) profits is to have barriers to entry in the market.  In this case the barrier to entry is the development cost for an ASIC. 

What is unknown is whether the bitcoin economy can support the development of one, two, three, or more ASICs.  One possibility is that if there is one ASIC effort it will be profitable, but if there are two ASIC developments then they will both lose money.  In this case, an investor/developer would have to decide the probability that they would face competitors, how many competitors they might have, and whether the risk was worth it.

So Vladamir is advertising an effort to develop an ASIC to reduce the probability of competition and thus increase his probability of profit.

Where it could get interesting for miners is that if ASIC developers lose money on their overall project they are likely to still over run the mining industry as their marginal cost of production will be very low.

I expect the emerging of a large ASIC industry (if it happens) will lower the value of bitcoin by reducing the number of miners and thus the number of participants and the size of the bitcoin economy. 

That's the one concern I have with this as well.  A lot of the people currently interested in Bitcoins are interested because they are mining them "for free".  Take away that "free" income, and those people are just going to disappear.

51%-ing the network to capture 100% of profit is a barrier to entry that would produce monopolistic profits. You don't need ASICs, 5970s will do. Txn fees would also be increased under the 51% monopoly. The monopolist is a price-maker and has the luxury of choosing appropriate fees for the user base.

And the customer gets to choose the currency in a free market. With fiat currency that isn't always as straightforward, but with a community based open currency the user can choose to evade the tyranny of the monopolist by exercising their right to choose a competitive currency. Right now there's no viable alternative to bitcoin, but if there's an opportunity and demand for it (like if the terms of the monopolist become unacceptable) there will be another crypo-currency. The new currency would be able to build on existing bitcoin infrastructure; if a merchant already accepts bitcoin, it's easy to add yet another crypto-currency and capture a greater market share.

So I'd think one has to be careful to assess these risks when building a monopoly.

...rightfully so. "Bitcoin, the revolutionary online currency for the people by the people one big mining corporation". It could happen but if it does without people using FPGAs profitably, bitcoin identification will plummet. User identification is a big factor, and one that Bitcoin can't afford to lose IMHO. People will take their money somewhere else, investments won't pay out without enough users. Again, rightfully so.

I'm curious about how to acquire these ASICS and how much power they use,the MHash/s (or GHash/s) they produce,how easy they are to setup and how much are they?

I think that I may have to acquire an ASIC to make mining profitable.I was interested in the BitForce type miners though as they look reasonably priced to me (as a man from the UK as USD=less cost in GBP and I'm looking at the 80W power model for 0.8GHash/s)

Since my GPU only gives me 400MHash/s (stable OC for 24/7 operation),that'll put me out of the mining game unless I can get access to ASICs (cheaper than FPGA maybe)

Whats the difference between an FPGA and an ASIC in general as well as mining ability?

Thanks.

Are you bulanula?

If the other currency also uses proof-of-work, like bitcoin. It would be a dead letter. Monopolist could control both simultaneously with negligible additional cost.

Sure he is.

Did you not know that everybody on this forum is me ???

In fact, it is just you ( terrytibbs ) and my 10 000 sockpuppet accounts on here ! It is the Matrix !

Not everybody that puts spaces in their lines is me ... :D

100% is very unlikely if he doesn't use the >50% to invalidate everybody else's blocks. 70% is probably fairly easy, though. If he adds the same as the current amount of hashing power the difficulty will double, and that will make a lot of mining operations unprofitable. Lots of miners will stop mining, and then his market share will increase to 60 or 70% without him needing to add more hardware.

This will probably also lead to fear about the future of Bitcoin. The price will fall, and then it will become unprofitable for even more miners, and his market share will be even larger. On short, I think anything more than 15-20% will put the future of Bitcoin in great danger.

and then difficulty will drop again, and lots of miners will start mining, and then...

No, they wouldn't. We've already seen such a drop, and the difficulty is still well below what it was about 7 months ago. It will fall sharply and then level out before it starts going up again very slowly (unless it kills bitcoin completely).

Watch out, the sky is falling!

Wow, some economic reasoning. I likey!

... and that will be the day a new alternative cryptocurrency will be born, so they can participate again.

If you have a warehouse full of toys, but no one to play with them, do you have any toys at all? ;)

point is, you said 'difficulty will double' causing lots of miners to drop out, but failed to mention this would cause difficulty to drop again.

The beauty of bitcoin is that if such an operation causes panic amongst the majority of hashing participants then acceptance of change namely in the hashing algorithm will be wide spread thus a new version of bitcoin would become mainstream... as most everyone has no access to asic tech then I'd suspect thats exactly what would happen.... interest as asic cannot really be re-tasked to another job that makes for a massive risk to investors.... I'd not want to bet a lot of money that massively relies on guessing the outcome of human nature :-)

don't forget that to gain x% of the network hashing power, you can't look at the current hashrate, and do a straight percentage.

for example, to gain 50% of the network hash power, someone would have to have a hashrate equal to the current entire network.

He is describing an equilibrium effect which significantly decreases the amount of hashing power needed to carry out an attack. For example,  if there are 10 TH currently, you won't need to add another 10 TH to carry out a 51% attack. 7 TH could be enough if increasing difficulty to 14 TH level causes 3 TH of miners (30% of the starting amount) to drop out. That is what he is saying.

The actual numbers are hard to estimate, however it is certain that you won't need to create a full new 10 TH to 51% an existing 10 TH network. True attack costs are less than people naively assume.

This isn't right either. The answer is somewhere in between. Take an extreme case...

If 50% of the network is on the borderline of dropping out (at the threshold of profitability), then you can look at the current hashing power and do a straight percentage. i.e. if there are 10 TH of miners to start out with and at least 5 TH of miners cannot tolerate any difficulty increase without dropping out, then you will only need 5 TH to 51% the network.

In reality, it is not reasonable to assume that 50% of the network is just at the threshold of quitting. It is also not reasonable to assume that difficulty can double without leading to any exit from incumbent miners. To 51% a 10 TH network, you need to add an amount of hashing power somewhere between 5 and 10 TH.

It's the kind of thing I expect people to realize without mentioning it explicitly, and it doesn't change my point.

This is what makes a private ASIC farm extremely risky. Building ASICs to sell to the public on the other hand is far more profitable and much less risky.

i'm speaking on the straight math, no assumptions, no predictions.  nobody knows the full impact if this company ever launches.  nobody knows what gpu miners might do (like selling their gpu's and buying fpg's) or if a retail asic option would become available, so safest not to make any assumptions.

as to people generally realizing that you have to double current hashrate to gain 50% of the hashing power, numerous and repeated postings on these forums speak otherwise.  you most often find it in a statement like, "well if he got 1.2TH hashing, he'd have 10% of the network.".

I would like to thank everyone who responded in this thread and elsewhere, be it compliments, suggestions, criticism (constructive or otherwise).

At the moment I am having a series of meetings with investors, accountants, lawyers and other "professionals" trying to figure out subtle details of "the plan". As soon as there is some better clarity on our exact plans it will be announced. Until then I will be mostly quiet.

Thank You all, again. Your feedback both positive and negative is very much appreciated.

yeah i get that but guess what happens as soon as they drop out? you failed to mention it too.

True attack costs are gigantic, because they directly attack a golden goose! ;D

Why would anyone with 10TH (or 9TH, or 8TH, or ...) do anything besides mining (thus, collecting huge profits) is beyond me. Wait, I have 10TH, gonna collapse Bitcoin now! Much better investment! ;D

What? Of course you are making assumptions. Unrealistic ones.

which assumptions am i making?

You are assuming that the number of other people mining will remain constant as difficulty rises. If you believe people who say that a 51% attack attempt will decrease price, you are also assuming that the number of other people mining will remain constant as price falls.

no, the exact opposite.  i'm saying that nobody can predict what will happen, and making predictions with arbitrary percentage drop in hashrate is a terrible idea.

Perhaps I misunderstood. I thought you were singling out people who assumed that investing 2 TH when the network is currently 10 TH would yield 20% of the hashing power. Special criticism for this group did not seem consistent with your opposition to any type of assumption.

I don't agree with you that people should avoid making any type of prediction. I think a reasonable prediction is that investing 2 TH when the network is currently 10 TH would yield somewhere between 16.7% and 20% of hashing power.

Anyways, it isn't worthwhile to discuss future events with someone whose only position is that no one knows what the future holds.

Open question for Vladimir. Why aren't you planning to sell the ASIC gear to your competition?

The sunk cost of making an ASIC is huge. The marginal cost is small. Why not recover some of  your sunk cost by selling some ASICs at say 4 times marginal cost? Every sale would provide profit sufficient to pay for 2 ASICs for your personal stash (thus providing a net addition to your mining power) and in addition pocket 1 ASIC worth of profit. The more you sell, the more you profit, the more you dominate, the stronger the network.

What's up? It doesn't make sense. Is there a potential for any ASICs you sell to get reverse engineered and thus you don't want to release them? Are you trying to bluff that you have a larger technological advantage than you actually do and thus can't sell ASICs without revealing your secret? Are you a bad businessman? Which one is it.

i disagree with you that its a reasonable prediction that we will see ANY drop off in hashing power.  as i said, there are just too many variables.  how does your prediction take into account potentials like a nice increase in bitcoin value (which historically shows a correlating increase in network hashrate)?  in say butterfly labs shipping singles and mini-rigs in quantity?  in potential new companies sprouting up delivering economical mining machines?  or the numerous other potential events that are realistic?

your forecast is about as valid as a professional weatherman trying to predict the weather on a single day 6 months out.  just too many variables, and the further out you try to forecast, the less valid your predictions.

maybe we see a drop off, maybe we see relative stability, maybe we see a network power increase.  why you think you have special insight and skills of prognosis professional forecasters repeatedly show not to be in possession of, is either overconfident or delusional.

50BTC*20days=1000BTC, you would start mining October 10 to have approx. 1000BTC by Nov 1st.
That would be a large lead time, but 82GH/s per card.

doesn't correspond to your 200 days statement. Or maybe it's 5btc/day that would be approx 8.2GH/s currently per card then?
200days/30=6.6months. So you have an ASIC BTC miner board to sell now that does 8.2GH/s?

Which is it?

Nice April's Fool Vladimir!

I think this is true.

Nobody will be stupid enough to invest $1 million into something like BTC mining. Not at this uncertain stage with the reward halving, anyway.

Come on, let's be realistic !

I've invested far more than $1.

There is a bitcoin with an entity controlling more than 51%. Its called "mintchip" :D

There is a bitcoin with proof-of-stake. It's called "mintchip"  :D

lol.

Hey Vlad, have fun taking over the world muahahahaha first bitcoin billionaire indeed ;)

This is the open alternative to Vladimir's approach :
https://bitcointalk.org/index.php?topic=76351.0

Let me fix that for you: Building ASICs to sell to the public on the other hand is far more profitable for the scam leader and much less risky only to him, because risk is dumped on fools, who buy into this bullshit "business".

You are calling this scam "A public company"?! Really? http://en.wikipedia.org/wiki/Public_company

Curious, if there are any new publicly-releasable information regarding the original post...

its been a few months...