Bitcoin Forum

If i run through the various calculator simulations for the upcoming 1 TH/s Server they announced I get some impressive numbers. It seems to me the first few to the table will be in a position to realize sizable profits during the short Window while the world transitions to ASIC's

If I look at BTC Pool for example their average pool speed is about 1178 GH/s which is only slightly above the advertised throughput of one (1) of the Butterfly labs 1U servers. (at least that's what it appear to me. I may have made some wrong calculations/assumptions)

What are your thoughts?

That 'announcement' is a total joke. To be honest I had a neutral opinion on BFL before today, but after reading that I am very concerned (supposing that news article is genuine).

Even if such rigs were soon to be available- who would possibly release them at those prices?? Must be a joke of a company any way you interpret it. Just imagine Intel or AMD releasing such a 'revolutionary' product and pricing it at super low prices like that.. just doesn't make any financial sense whatsoever.

HUGE red flag

They have also posted the information on their website - It certainly seem like their intend is to sell the gear at the prices they quoted. I heard an analogy of them wanting to be like Microsoft and own the market and that could perhaps account for the aggressive price point. Also cheaper technology is constantly emerging that completely rewrites the landscape at times. Perhaps this is that moment for Bitcoin.

Yea cos Microsoft took over the world by releasing the cheapest product so they could 'own the market'.. oh wait..

But hey at least now Apple are the largest company in the world by releasing the leading next gen portables at bargain basement prices so they can 'own the market'.. oh wait..

/sarcasm off

Either:
1) these guys are straight up full of shit, or
2) they can't be trusted to run the company properly if they are posting prices like that on a game changing product, with such a massive demand in the market right now for such devices.

Take your pick.

PS: apologies for the tone of the first 2 lines of this reply, I couldn't resist  ;D

IMO they are just bluffing

It may have a ton of potential, but even at the prices quoted, the newfound hashing power and difficulty will alienate many of the casual miners who make up a good portion of the mining power to date. It simply won't be worth it anymore to mine for 7 days and get a few bitcents at best.

Really? I thought you totally believed in this "press release".

I'm not sure I can agree with your conclusions based solely on the information we have. Amazon sells kindles at a loss in order to capture the ebook market. I don't think any of us can say whether BFL are making a profit on the new gear at this point in the game. Exponential performance gains does not always mean a corresponding increase in prices.

Apple does sell on quality but almost every time they introduce a faster shinier model they slip it in at the same price point. I think the new gear from BFL is the start of a new watermark in price/performance for bitcoin mining.

It may be disappointing for those who have invested in GPU mining but such is the nature of a technology driven market.

My thought though is that the first to be able to take advantage of the near gear will have a quantum advantage in the market for a short period of time. It is in this window I think that one could realize significant profits while the rest of the field and difficulty etc caught up

Its that short window that someone could also do something very malicious.

Yes you are right, but I swear to only use my power for good :)

They will make a lot of money back during that short window, but no where near the cost of the device. I believe, by buying this equipment, we're all just shooting each other in the foot.

Yep.

What would be the alternative. It is akin to one arguing to not buy a new breed of race car because it will outperform any other car on the track and make them obsolete. The field will level over time and people will most likely abandon GPU mining and eventually FPGA mining as they did with CPU mining.

Idiot, Amazon dont make money on selling hardware. They make money on services ....aka selling books thro Kindle.

Appl doesnt make money on your I-products... They make money on App Store.

BFL loves idiots like you.

/thread

What's your point? BFL doesn't have an app store, they only sell hardware.

There is no need to call me names  - I am trying to engage people in a thoughtful discussion.

Perhaps you thought wrong.

Why do you think people will not make their money back. If you are one of the first to the table (timing is crucial here I think) mining at 1TH/s should recoup your $30,000 pretty quick even if the reward is halved to 25 and the difficulty starts to ramp up. Like I said calculations may be wrong but it does seem like their is an opportunity here

Considering they will release more then one at once.  Global hashrate doubles, you'll make half your guess with 1TH/s.  1 week goes by (2016 blocks found) and difficulty increases astronomically.  Goodluck!

Isn't there a limit on how quickly the difficulty can increase? Does anyone know what that limit is?

When I plug the numbers, at Double the Difficulty and Half the reward the gear would still be repaid ($30,000) in 30 days

Yeah, my broadband ISP. 100500 difficulty increase is a serious issue.

It can increase by up to 4 times every retarget. But note that if the network hashrate massively increases without the difficulty keeping up, retargets will be more rapid than once every 2 weeks, so the difficulty can actually increase quite fast.

I don't think so. I know it's recalculated every 2016 blocks to take 2 weeks, and readjusts the difficulty to compensate if those 2016 blocks took longer then or shorter than 2 weeks time. If done in 12 days, then it's going to jump by ~17%. If it's done in 10 days, then it increases ~40%. If it's done in 16 days, it goes down ~13%. Etc, etc.

Did you account for the difficulty rising twice (possibly 3 or even 4 times) during that period?

When companies order chips like these, they arrive all at once..  If BFL has any common sense, they will flood the market with these things so everyone has a 'chance' at getting the first 1TH/s machine.  Then everyone will complain that their ROI has risen back to 2 years.

My point is exactly that.

As someone pointed out, it does not make any financial sense for such price point.

Its not like they can have trillions chips to ship.

Anyone thinks the low price point is to completely conquer the market is idiot

because they can conquer the market selling at 95% of the competition.

remember those are prices for SPECULATED performance specs.  Look what happened to the single and minirig

If BFL has any common sense, they wouldnt have done what they did so far.

Its a dirty trick and most possibly leads to a scam.

As you said, many ppl will try to have " the first chance"

All your preorders funds are unprotected. Remember that

Yes, up to 4x per change.

There are 2 main way to conquere the market, only one is used but never both:
+ Lowest price point
OR
+ Most technology breakthro in your products line.

So yes, they're bluffing to fool idiots.

1 month gross rates for 1TH/s at $6.38 exchange rate

At present difficulty and 25 reward  - $62850.86 USD
Double the Difficulty 25 reward - $31425.43 USD
Triple the Difficulty 25 reward - $20950.29 USD
Quadruple the Difficulty 25 reward - $15712.71 USD

It still seems to me that even as the difficulty ramps up if you are one of the first to market that you will enjoy a good rate of return until the field equalizes. So your actual return over the first 6 months would probably be a sliding scale of upward difficulty but your initial investment seems like it should be paid off rather quickly

They should have waited to announce this once they had their beta up and running.  If they ever will.

Your estimates are off.  Every 2016 blocks, the difficulty would most likely quadruple.  Which means in the first week, you'd already see your max profits get quartered.  Give it another week (if it even takes that long) and they get quartered again (1/16).  Another week, another quarter (1/64).  The final week, another quarter (1/256).  Not as shiny, is it?

Do the math for an increase in difficulty every 7 days, which doubles.

even by 1/2, a shit storm is brewing!

1/(2^n) ;)

Also, if it quadrupled like that, the difficulty would increase every 3.5 days.  That's scary.

Apparently based on your posts you consider everyone to be an idiot.


In case you were curious:

ad hominem
You attacked your opponent's character or personal traits instead of engaging with their argument.
Ad hominem attacks can take the form of overtly attacking somebody, or more subtly casting doubt on their character or personal attributes. The desired result of an ad hom attack is to undermine one's opponent without actually having to engage with their argument or present a compelling argument of one's own.

+1

Don't forget about market depth when performing your calculations.

You got reading comprehension? I dont believe any of their bluff. And i'm sure i'm not the only one.

You, on the other hand .....

this can't be real.. they are going to kill GPU mining altogether!  at those prices..  3.5 GH/s for $150 is like getting 6990's for $40 and they run on a little solar panel.  This has to be a joke.  They would ruin bitcoin by releasing something like this.

FTFY

Pretty much.  The people said the same thing when it went to GPUs from CPUs.

Man, the difficulty is going to get so high..  I could see it hitting 100 TH/s by mid-2013 if they are releasing 1 TH/s units at those prices.

I'm engaging in a thought discussion  - your reply does not add anything substantive to the discussion. This thread discusses a hypothetical - Namely the possible opportunity associated with potentially game changing hardware. There are many variables and unknowns and I value the insights of people on the board to help consider many of the possible permutations. Calling everyone an idiot, while it may be cathartic for you, is not very constructive to the goal of the discussion and unwelcome. If you have some thoughtful comments to make I encourage you to do so. You are correct though. BFL may not be able to deliver or they might have over estimated the capability or the price point they can offer it at. Those are yet to be determined.

The question that I pose is, if it comes to fruition, what is the opportunity?

I am going to grab some lunch  - discuss amongst yourself till I get back :)

If they really going after full custom ASIC's with a price tag of about 30 million $ they would need to sell only about 1000 of those 1 THps rigs to break even.

If so and if they really will ship it to multiply users in one go this could be the best thing that has ever happened to Bitcoin.

Prepare to start measuring Bitcoin hashing power in Peta Hashes.

When these things come out, I'll have an ISO 27001 certified company ready to host these babies in ex nuclear NATO bunkers, with physical security up to military standards and with DDOS mitigation plans in place. Give me a whistle when you are ready.

I'm in the process of making a spread sheet to depict ROI for this device.  Looking great already!

That can't work : there's not $30M generated quickly enough in the Bitcoin economy to absorb this.

Let's talk numbers :

• given the performance numbers claimed, the current network hashing speed, with only $300k-$400k sold, BFL is wiping the competition (GPUs won't be profitable, FPGAs will need more but they can't represent a big part of the network speed in this scenario).
• after that each new unit sold diminishes the reward per unit (assuming constant $/BTC)
• to have an upper limit to how much units can be sold to miners actually profiting from them, simply compute the total amount of $ to be earned in a year mining. It is (at a $6.5 BTC and 25 BTC/block) 8.5 million dollars.
  If you want to be profitable in less than a year using ASICs (which you should if you worry about BTC volatility and the warranty on your coffee warmer/minirig) you should assume that everyone is doing like you and mining with ASICs. If BFL sells for more than 8 million dollars of ASICs, mathematically you can't be profitable in less than a year (that's not even factoring the electrical/maintenance costs in). I'd guesstimate the limit is at $4M worth of units sold. If BTC value is stable, there's only a marginal market for ASIC after this amount sold.
  

So if BFL sells more than several million dollars of ASICs their customers are screwed, if they sell less than their initial investment they are screwed (and their pre-ordering customers waiting to get their units too). That's not very comfortable for an healthy market.

I've doubts about the economical feasibility of significant volume of ASICs right now : if you need to invest more than $0.5M you probably lose, there's not enough value mined to warrant such an investment because the reward of buying hardware after that amount sold will diminish (as there's no more GPU to replace) so your potential customer will start losing motivation and simply ignore your product when you enter the $1-4M volume sold range were there's simply not any money left to allocate to production costs and miner gains (at least currently). You'd have to take a guess at which amount sold (between $500k and $4M) ASICs will become profitable for BFL and at which amount they stop being profitable to miners.

Assuming BFL ASICs actually work, a few early adopters might probably be profitable (assuming the units don't go to fast out of the factory in the hands of customers) and everyone else is screwed (and it only takes 100 SC mini-rig sold to enter in the profitability vanishing zone).

Another possibility is that they don't plan to flood the market and slowly release ASICs to match the BTC value going up. It's quite a bizarre business model because of the risks involved for BFL but the only one that won't hurt miners badly.

And as always : if you bet on BTC's value going up significantly, just buy BTCs and wait for it to stabilize again to resume mining...

https://docs.google.com/spreadsheet/ccc?key=0Ai2b4IJuKUZhdE5EVFJkUF95TS1BVjdxaEFsSVlQSkE

you can download the sheet and edit it as you please.

gyverlb,

You got me wrong, my friend. My post was not from point of view of a miner. But from point of view of an ASIC manufacturer. All I said is that they need to sell 1000 of 30,000$ rigs 1 Thps each to break even on hypothetical (educated guess) 30,000,000$ costs of full custom chip design and manufacturing. Are you going to argue my arithmetic skills here?

So if you are going to argue with me here you really need to argue the above numbers. I said nothing else except  that 1000 of 1 Thps rigs would bring total hashing power of Bitcoin to PHps range, which is also indisputable. 1000 x 1 Thps = 1 Phps, last time I checked.  Hashing power above Peta Hash is better for Bitcoin than that of 10 Thps and this is indisputable as well.

What you are talking about is an investment case of either investing or not into that hardware. And one thing I know for sure is that I do not know whether it will be profitable or not.

But whoever buys those rigs I will provide them option of having those rigs managed and hosted with both physical and information security done professionally. That's all.

I still wonder if $30 million is too high for full custom, but I guess it would depend on the process node used. For this kind of efficiency, some are assuming very small and expensive nodes like 28nm, but I wonder if it can still be as efficient on a larger and cheaper node such as 65nm. Since nobody has done it before, we really don't have actual numbers to compare with.

That's what my post was about. I simply noted that at current BTC price, it's unrealistic to think of selling much more than 100 of these.

I won't. In fact I was writing my post before reading yours and included it when I saw the $30M. I probably should have only quoted this part of your post, sorry.

fair enough.

BTW, all your numbers are based on one assumption, which is that Bitcoin price will stay at 6.5$ forever. Since this assumption is obviously wrong, there is no need to even look at the rest of your reasoning as it is a logical fallacy already.

Anyway, if you are an investor in Bitcoin, diversify your portfolio, 50% BTC and 50% mining hardware sounds as a good start. Rebalance the portfolio from time to time, maybe add some gold and dividend paying equities and real estate in the mix and you are already doing great. Nothing new here, standard stuff.

Agree with Vlad.  This is one of those opportunities to get out of the mining game and still make a decent amount of money back on your hardware, then invest that money in BTC and watch it grow!!

Obviously assumptions are wrong as, you know, they are... assumptions. However the goal of my post isn't to make a clear cut prediction but give some link between the Bitcoin value and the size of the miner hardware market.
For $30M of BFL hardware sold you'll need a BTC price around $50-100 to absorb it without a miner ripoff. But you will have to read the rest of my post to validate this :)

If you think it will reach this amount when BFL is starting to sell ASICs sure they can sell $30M without their customers losing big, but if it remains in sub $10 territory it will be a bloodfest for sure.

Very interesting discussion. So many possible outcomes. I will be talking to BFL in the coming weeks as I contemplate how to invest my capital. I hope they can deliver on their promises. For every difficulty the right gear at the right time will net profit. The trick is when and what.

That is correct, but if you miss a cycle, you could be out of your largest chunk of change ;)

Interested in how that conversation is going to go:

"Hello Butterfly labs, I have $XXX,XXX to spend on your awesome hardware, but I want to be the first person to receive the hardware, and I want you to hold off sending any other hardware out for 2 weeks"

"Sure thing!  But you have to give the money now as a deposit, and it's non-refundable, and we don't have solid specs yet, and we're not sure when we're shipping.   Thanks for your business!"

-EP

updated the spread sheet*

https://docs.google.com/spreadsheet/ccc?key=0Ai2b4IJuKUZhdE5EVFJkUF95TS1BVjdxaEFsSVlQSkE

I am not under the impression I will be first but if there is an opportunity here it will rest with people who are the trailblazers. Conversely it is also the highest risk position as the first to the table will not have to luxury of others charting unknown waters. Risk is the very essence of a venture investment; if one is right there are big rewards if one is wrong, one pays for their mistake. This is the reason for this discussion and my subsequent discussions with BFL, so I can make an informed investment decision.

One option is to purchase the current gear with the future thought of trading it in as promised. If the new gear never materializes then the current FPGA mini rig will represent some of the best cost vs speed gear available. If the new gear does arrive most likely it will hit at the end of the year or early next year and hopefully by that time one could make back at least a good portion of their investment in the mini rigs before trade-in.

I would definitely argue your numbers. If by "full custom" you mean, standard cell asic (full custom stricto sensu is absolutely pointless), and assuming an affordable process, like 90 or 130nm, you are off by at least an order of magnitude. No way anyone  would plunge $30M in to a bitcoin specific chip anyway, the potential to break even on that simply isnt there.

To all the people doing the math on ROI;  redo your math assuming your minirig sc arrived as late as your fpga single, and see what happens.
 The first ones to get their hands on these might indeed see a good return, but the first ones who will get their hands on these, are...
BFL.

Do you think that BFL will conduct mining operations themselves before releasing this gear (other then testing) Did they do (are they doing this) with their present gear?

I think it would be safe to think that they can get at least two boxes a day out the door in the first week so when they come online.

First week present diff $6 BTC.

฿635.31/day for $3,811.88/day $26,683.13/week

Now in seven days the diff will have doubled so second week you can halve those figures in this you can make your money back, more likely to be the case at least four plus boxes a day shipping under that idea the first 3.5 days present diff $6 BTC.

฿635.31/day for $3,811.88/day $13,341.58/for 3.5 days

Now the diff will have gone up by four times so every day after this you get one quarter (฿158.82/day) the return. Not so likely to get your money back now if they manage to get eight boxes a day out the door the same 3.5 days above applies as well but then in another 3.5 days the diff goes up four times again so your return drops by another quarter a day (฿39.7/day) at the end of the first week. To end up at the point where there is not a hope in hell of getting your money back. Nothing in these figures takes into account the doubling or quadrupling of the coins coming onto to the market for this brief time while the system readjusts to the new hashing capacity nor the inevitable extra hashing that will continue to be added as the days/weeks/months go by, as they are not going to want to sell only 50-60 of these 1th/s boxes let alone none of the other offerings they have listed. As well they have end of October listed for availability if they slip a month then we are into the reward halving territory then the best case payback I list here turns into not a hope in hell of one.

They burn in their minirigs, which to be fair, is what youd expect anyway. You know, testing. But its not done on testnet.
Now their current hardware doesnt have a significant impact on the network, but these asics will change that. Whether or not they will mine for profit; who knows? But they sure wont tell you if they do. Nor will they tell you who gets those rigs first.

https://docs.google.com/spreadsheet/ccc?key=0Ai2b4IJuKUZhdE5EVFJkUF95TS1BVjdxaEFsSVlQSkE

check out my calculator :D

Quite eloquently put.  Good luck sir!  I wish you the best of all possible outcomes.

-EP

nice spreadsheet :) they should sell these at auction, one at a time, and take the profits and just hold onto them as a reserve so their company gets more money in their pocket and people have a chance at getting each unit, and instead of giving someone a unit that will make them their investment back in a few days and then raping the network forever, this way they bid for it and might end up paying $150,000 instead of $40,000 to get it.  

In any event my wife promised not to kill me if I end up being wrong :)

awesome idea.  people will pay the premium to have it early.  Like releasing 2-3 a week or something.  eventually the price will trickle down to that break even point, and BFL will make more money than they planned on.  Why sell 5 for 30k when you can sell 1 for 150k while it's in high demand?

It is simple mate : the one who puts the most money at the earliest moment gets to be the first.

Think gigavps or Inaba or other fanboys.

Who hands over the most money right now wins the game !

Now, what would you consider your break even point if you have to give BFL money at the beginning of July, and you receive your SC Minirig in December? Would you still consider that 30 days to recoup your investment?

How long between the first payments for Singles and the first Singles in the wild?
How long between the first preorders for Rigboxes and the first Minirigs in the wild?

I can't believe people are falling for this... remember the ''1.05GH/s and 19.6W for $500''?

Either this is a long prepared scam or again incorrect simulation results (or they bribed their way through government-owned wafer factory in some developing country).

An ASIC performing at the speed of 1300 HD5970s (about $600k) for $30k? Who is going to fall for that? With a price of, say, $150k for 1TH/s ASIC they would appear at least more credible and still remain competitive. This doesn't make sense. If by chance they would release it with currently advertised specs and price this would mean end to GPU mining as has happened with CPU mining over a year ago.

The reason I said earlier that this would doom bitcoin is because right now, the "mining process" is done by the individual users in a "decentralized" fashion, and your average Joe can get a video card and start earning bitcoins, and then decide wether to sell them or stash them, if along comes an ASIC that is thousands of times more powerful, it makes GPU mining obsolete and all the average Joes out there are going to flip their cards on eBay (and the market will flood with GPUs, lowering their value) and people will get out of the mining game, and in a lot of cases, get out of bitcoin altogether.  The thousands of users right now who are mining bitcoin on their computers are likely to purchase things off each other with those coins, and if you took away their income overnight, then a large percentage of them will walk away feeling cheated as some monster miner is mining all the coins.

Satoshi would not want it to come to this.

Forgive me if this logic doesn't make sense.  Personally, if I could no longer mine coins anymore, I would sell all my hardware (as it is now useless) and then probably not invest in bitcoin anymore, unless those 3.5GH/s for $150 units are in large enough supply for me to get some, but in that case everyone will have them...

$3M for the design may even be higher than needed. The ASIC wouldn't be nearly as complex as a CPU or a DSP for example, so comparing the R&D cost to CPU/DSP design isn't really meaningful.

Is someone aware of R&D cost examples for simple ASIC designs ? Crypto-accelerators could be in the same ballpark although a bit more complex I guess.

LOL

How do you know? Are you channeling him now?

Why you think that full custom design is absolutely pointless?

We have already experienced that the Bitcoin hashing requires far out of ordinary chip design:

1) unusually high toggle rate
2) problems with supplying enough power
3) problems with dissipating enough heat
4) simultaneous switching noise problem with internal signal immunity violations

On the other hand Bitcoin hashing is highly regular. Once those problems are solved for single round most of the full design will consist of the copies of said single round.
With this respect the full custom design should be worthwhile. Moreover, once well designed Bitcoin hasher could become a standard benchmark case for comparison of ASIC processes. It also has a nice nearly-self-testing property: there are no unreachable internal states and almost 100% of faults show in the output for no additional effort.

Maybe you were thinking about some financials?  The overall design is highly repetitive which greatly reduces the total cost.

I just think he would have wanted "the people" to have the coins, not the millionaires who can afford these special mining machines.  So what if the Federal Reserve bought a bunch?  If they are only $40k for a 1 TH/s unit, what is stopping them from dropping $10 million on 250 of these units and having 250 TH/s?  And what's stopping them from doing that over and over again until they control the supply of bitcoins?  Now, that would increase the value of the bitcoins that are already out in the wild, but we have to be aware of the fact that it allows the upper 1% TOO much control.

I'm not a millionaire, and I can afford a Jalapeno device for $150. I'm sure lots of others can too.

Yeah good point, I guess it depends on the volume they are able to make those...  If we can get them in stacks, I guess the whole world is going to mine with Jalapeno's this winter..  So much for heating my house this winter with my rigs!  The difficulty/trading price/network hashrate is going to go bonkers for awhile but I suppose it will correct itself...

looks like I picked a "fun time" to jump into bitcoins. The next 6-12 months will be highly interesting

You missed the fun time last summer :P

The thing is, the only customer for these Jalapeno's are miners. And the miners don't have any alternative at the current moment.

BFL can, at any moment, take the difficulty index, calculate what's the ROI on their product, and adjust the prices depending of the ROI. If the ROI is shitty, they can lower their prices, so the ROI gets better. Seeing that, miners will buy new ASIC, shoot the difficulty up again, and make the ROI worse. So BFL can again adjust their prices, miners buy again with the better ROI, and the difficulty goes up again.

And if miners quit after a while? Nothing prevents BFL to prices their ASIC a little higher. Miners will calculate their ROI, they'll see an opportunity, and when everybody buys, the difficulty goes up, and the ROI goes down.

The price of GPU or FPGA was not determined by the difficulty of Bitcoin. AMD is going to sell its card 400$, whatever the difficulty is. Same thing for Xilinx or other FPGA manufacturers. Those ASIC have no value outside Bitcoin mining and since the mining market is completely public (with the difficulty index), they know exactly how to price their products for buyers.

Well they could do that but not with the th/s boxes shipping that is just too massive an increase potential if any amount of them ship now one way it can work thinking about it some more is if they ship the smaller capacity ones first they can literally ship thousands of the 3.5 gh/s machines and not have that bad an increase of the diff or hundreds of the 40gh/s boxes keeping with this idea. Now whether they plan to do that is a guess as if past history is any indication you would have better luck finding out who really killed JFK than getting any real info out of BFL.

Good thing nobody has considered the drop in price of Bitcoins that will happen almost immediately after the ASICs arrive... Remember that this economy is based solely on the supply demand aspect, and bringing so many coins in at once is going to plummet prices. It's like what would happen to let's say the US dollar if the government sent every household $5,000... The price massively deflates as the supply increases.

Supply is 50BTC/10minutes now, and 25BTC/10minutes sometime around December, regardless of hashrate.

He might mean that miners have to sell their coins. If they pay BFL with BTC then BFL has to sell coins to get some cold hard cash.

Yes indeed. That and the fact that this whole thread has been about how more coins will be produced in a short amount of time than ever before. The difficulty will rise with the bashing power, yes, but that doesn't change the fact that there will be a time in there where BTC flood into the market. Keep in mind that the difficulty is rising to keep up with the hashing power. Not the other way around.

Imagine you had access to this miracle product. Why would you sell it?

Because BFL knows there is not enough money to be made in mining.

The depth / market is simply not enough / ready.

Imagine dumping $3 million USD now to recoup ASIC costs = price will surely tank to like below $1 SURELY.

Selling miners instead of mining passes that risk to the miners.

Miners are betting on price increase and diff staying same. BFL does not need to bet on anything as they are providing the tools to mine !

Well if you not a millionaire, then I guess he isn't talk about you.   The issue of centralization can become a problem if all the incentive (ie: profit) to mine is taken from the many and put into the deepest pockets.   It comes down to what people feel the most important aspects of the Bitcoin Project are?    I would thinking decentralization and the use of cryptography are near the top of my list.  So if we are doing things that counteract these items, then we are potentially undermining the currency or at least creating more vulnerabilities because it will have more central points of attack.   This is why I believe if BFL is coming to market this strong, they should develop a policy that addresses there feelings on this and stick to it.  I have no problem supporting them and purchasing their products, we just need to understand that "we are all in this together" so we need to play nice to a point.  If not, then we will cut each others throats and implode from within.  If you don't believe me or don't care.  Then do nothing and support anything you like.  I hope other like-minded people will support at least a productive dialog about this issue.   What I think we need to do, is get Gavin and other senior developers involved so they can weigh in on the long-term affects and if this can be a problem, that would help me a lot to hear it from someone who knows more than me about Bitcoin and issues like these.

Thoughts?
Dalkore

If miners start selling a lot of btc -- the price bitcoins will drop from $6.41  to maybe a $1 ???

I am also looking at buying the current 25 GH/s rig from BFL

You may want to caluclate the numbers using this link
http://bitcoinx.com/profit/index.php (http://bitcoinx.com/profit/index.php)


change the BTC/block to 25 (default is 50 -- by the time they deliver I think that where it will be)

I takes 1 year and 165 to get back your $15000 (0.20 c /kwh in australia) 
hopefully by then they will have shipped the asic bitForce SC Mini Rig

I've already got my money set aside for my first 1 TH SC Mini-Rig and can't wait to be able to place orders.

You don't have clue one when the hash rate increases so does the supply of BTC, if the blocks are being solved every six minutes then you have 500BTC an hour being produced rather than the normal targeted 300BTC. The reverse is also true when you have a diff drop you have less than the 300 per hour being produced.

Hey, finally someone gets the idea here...

And this means all things being even, difficulty would increase or drop by whatever percentage beyond the intended 300 BTC per hour (6 blocks).   You have to keep this in mind when we try and build this conceptual model of "what the world is going to be like with ASIC (like going from 286's to Pentium II).     I have spent so many hours playing out different scenarios in my head.

Well the scenario is this in massive diff increase of 4x in the ~3.5 days it takes to happen you have 28,800 coins a day being produced for that time period if that massive increase is actually an 8x times in disguise as the diff cannot rise that much, then 57,600 coins a day in the first 1.75 and 14,400 in the remaining time until next diff change is being produced as that second 4x is in actuality a 2x new diff so 7 days for that.

What's stopping the FR from utilizing supercomputers for the task?  Or from building their own ASIC?  Or from buying 100,000 video cards?

Nothing.

The best thing we can do is exactly what is happening - get as many ASICs into the hands of everyone who is a proponent of Bitcoin to defend against everyone who isn't.  To say that publicly available ASICs are against the core idea of Bitcoin is to say that you want Bitcoin to be attacked by people with lots of money.

Quit talking about the number of days for it to go up.. if the amount of hash goes up by an 8 fold and blocks are being found 8x as fast, diff will rise at a rate of 4x per 2016 blocks until it is caught up.  So if normal diff is 14 days, then 8x is just under 2 days.  Not 7.  You lack certain understandings of the fundamentals and its affecting any sort of estimation or predictions you make.

Folks need to remember that diff re-targets are every 2016 blocks. 100,800 BTC per re-target interval, regardless of how long it takes to complete that interval. (Until reward drop, then it will halve of course)

I bet they sell a lot of more small units which jack up the difficulty before the first 1THz comes online. But I don't know how much the difficulty will change.

And you lack reading comprehension I say plainly that 8x is 1.75 days and 4x is 3.5.

Edit: And the second 4x is as I have said 2x new diff so it is 7 days.

You talk to us about reading comprehension, and you can't even be bothered to make your own sentences readable with the use of a smattering of punctuation? Sure.

You're right. I misread, my apologies.

interesting times, indeed. it seems ot me there are valid arguments in at least three different directions from all this... some good for bitcoin over all, some bad, some with a rough patch that ultimately leaves everything roughly where it is now...

too many variables and not enough solid information. any action taken now could be the wrong one, it seems ot me.

I'm not sure about the BFL claims. However, this just seems like the natural progression of this experiment we call Bitcoin. As the network and technology improve/expand you will have whole companies setup to designing/manufacturing/maintaining Bitcoin related hardware/services. Already starting to see companies receive additional funding. CPU's and GPU's made a great starting point for the network because they are readily available off-the-shelf components and fairly cheap as well. As the idea was tested and it started to grow people started looking at optimizing the efficiency of mining. Then came along FPGA's and now BFL has introduced the next step. A custom processor/hardware platform solely designed for Bitcoin mining. This would allow it to achieve maximum efficiency and processing power because it is a specialized device ie. you don't have to make design compromises to suit another application like you do with CPU's, GPU's and a lesser extent FPGA's.  

This doesn't mean I don't hold some reservations about BFL's claims. The prices seems low for such great hardware (on paper) but as some other forum members pointed out they could be trying to  corner the market. It's not uncommon (PS2, PS3, Xbox, etc). They could also charge for firmware/software upgrades to further improve the mining efficiency of the units along with technical support for their hardware. I remember working for a company that sold hardware at cost but charged an obscene amount for the software (lots of mathematics/algorithms for optimal efficiency). Anytime a new market emerges it's best to get in early and big or risk being pushed to the way side.

Edit: So after a bit of reading in the FPGA section this thread sums up what I'm talking about and more. Good fundemental ASIC talk about pros/cons of ASIC mining and how it will effect the Bitcoin now and the future. Title is misleading.

ASIC = The end of decentralized mining
https://bitcointalk.org/index.php?topic=87303.0 (https://bitcointalk.org/index.php?topic=87303.0)

Every disruptive technology (even within another disruptive eco-sphere like bitcoin) is usually declared as "the end of < insert previous tech >, dooming the < insert current status quo >". Assuming for one moment that BFL's claims are true, all we're witnessing here is the steady march of progress.

Radio/records were going to doom live performances.

Video recorders were going to be the end of TV/Movies.

FPGA is going to be the end of bitcoin.

See the pattern? Technology adoption evolves in ways that we can't easily predict, to the benefit of everyone.

Lets say everyone rushes and buys, produces a metric crap-ton of coins, prices oscillate wildly - hell, even get down to the $2 level -- this won't end bitcoin. I'd say that a lot of people would come out of the woodwork to grab some more. (yet *another* chance for all the disenfranchised 'I only heard about bitcoin a few months ago' people.) No? It happened late last November 2011. This isn't the end, in fact, as some have noted - it will turn the already powerful hashing network into an even more formidable force.

I understand the concerns of %51+ hash-attack, etc., but we've been at those crossroads before, and we haven't seen abuse. I don't personally have the funds to pursue this technology, but I have no problem with the increase of collective hashing power, as I see it strengthening the network overall.

Sex Robots will be the end of Marriage/Valentines Day....

Someone needs to do a ASIC killed the GPU Star remake of Video Killed the Radio Star.

That would be an epic music video. Anyone have an reddit clout? I'm sure someone on there would do it. +1

NOOOO Bitlane! You've never watched propaganda video. Civilization as we know it would end!


Sorry for being off topic had to though :D


Futurama: I Dated A Robot!
http://www.milkandcookies.com/link/48647/detail/ (http://www.milkandcookies.com/link/48647/detail/)

hmm if BFL have this tech, why are they selling to the public when greater profits could be made by mining themselves?
at least first then sell later..?

Because mining is volatile and unsure.

Some ASIC developers, like Vlad, ARE going that route though.

Oh maybe it's a good thing we will get tools to compete with him!

Makes me want to buy one of these (http://www.cafepress.com/butterflylabs.559178310) in the meantime while I wait for these beasts.  I wonder if I buy ten of those can I trade it in for a Jalapeno for the upgrade plan they are offering?  Hmm.. maybe I need to get these (http://www.cafepress.com/butterflylabs.559178309) instead since they are technically "coffee warmers" like the Jalapeno. 

Don't forget to countdown the year till they come out....

http://www.cafepress.com/butterflylabs.559178306 (http://www.cafepress.com/butterflylabs.559178306)