Yep, Fab work happens at the smallest level, putting the complexities for the product into a pre-packaged little box with wires (or balls) on it. Think of it like roof trusses, wall panels, or shipping containers that can be either custom fabricated, or acquired in bulk to spec. Take some of these onsite (your house) with some other bits and a soldering iron, and BAM, you get to assemble your own miner. Or in my case cook half your ASIC chips trying...

Going all the way up to a pre-fab mobile-home is what you get once you include the assembly house in this analogy, where the boxes and ducts and such are put together offsite. Then in our case the local dealer who designed the whole darn thing gets to put their custom paint job and fixtures in and ship them out.

Luckily Mini-Rig SC units don't need a "Wide Load" sign, so the scale of shipping can be international without to much extra cost.

Honestly I think they are at least able to put the ASIC's on at the BFL facility and have at least some pre-fab boards with most everything else on them. It's just a hunch, but the way they have been talking about "working hard to convert Jalepeno's into Little SC's" was interesting to me. At least some level of re-work seems to be happening at a minimum.

They had a worker with a filling fall in the smelter a few years ago, and they are still claiming some gold content?

Thanks for the info, that's pretty much what I expected based on the price.

Nice! Good balance of flash and simplicity.

What materials are these made out of?

Isn't the customer required to return the merchandise?

Nope, but I'm not going to let others use my words to call people retards, that is unacceptable. If you think I was angry at this post, please reread it and the one after it. The one that made me angry came later.

I do expect the opportunity for dialog on a forum, and if Des does not want to talk to me or address my many real points, then that is fine. I have tried repeatedly to engage in an honest, non-insulting, considered evaluation of the situation, but all I gets is "you're wrong?"

Puh-Lease.

I don't see a die-size prediction. I'm going with 24mm^2

But isn't it the transformer outside (on a pole, in a box, or underground) that is likely to heat up most from noise? 

Scrybe please.

You might want to quit throwing stones there, Mr. Glass House. I did a lot less than that and you got your back up, why should you get special treatment?

If you don't provide ANY details of what I'm off on, how do you expect me to see your point? Remember, you told me I was screwed, not the other ways around. You have a burden of proof that I do not feel you have even approached. I just tried again to engage intelligently, and you have nothing specific to say? I even made a special effort to directly respond to your OP, with a quote, and provide you updated numbers that are higher than the ones you have published. If anything you should have to re-evaluate your model and tell us how much worse it got, maybe you are just guessing instead of analyzing?

I'm off by 2-3x? No, some of my models will be off by 20-30x in some areas, others will be closer. Until reality catches up with them they are just projections. This one is using the best available information on the forums, but you don't dispute the framework, or the data, or the methods, I'm just wrong? I acknowledge the fact that more than one thing can happen that will have major impact, and you say I am within 2-3x? COOL! Honestly anyone who thinks they can predict difficulty more than 3 months out right now with less than a 2-3x error range are very (over) confident in their model, I doubt my numbers a lot!

You have still ignored the most key point, time If I make 50% of the value of my unit cost back in 1 month, 25% the next, and it takes a year to get up to 100% then the risk is decreasing each month as well that things will go nuts and make the unit suddenly unprofitable. Early adopters have a good chance at this area under the curve, late adopters have little chance at it. Hence there is more profit opportunity with less risk by investing in ASIC now (diversified to prevent scams) than continuing to plan on GPU or FPGA in the long term, or investing in ASIC in January. Once we see the next hardware generation you will have a chance to get back on the train, but I think this is the cheapest a ticket will ever be.

You are not doing your case any favors, if you want to convince me (and most likely others as well) then you have a long way to go to build credibility for this argument.

Just for grins I did the math for the $700k miner above assuming it comes out in a year with double the claimed efficiency of BFL SC Single (and likewise assuming that this will replace 100% of the current theoretical average 1Gh/s miners that were replaced by SC class devices in 2012 (~24,000) increased by 50% due to the profit opportunity of mining (they are worth $200!))

10,000w*2GH/w=>20TH/s * 36,000 miners=>720 Petahash = a difficulty a bit over 1 Billion.

average miner takes home 3BTC a month with this monster everywhere, BTC is going to have to be >$500 before it even pays for itself, but we could see some big gear happen if that block reward start becoming worth thousands of dollars or more. Honestly once BTC gets past $100 I'm going to start getting nervous that we will see REAL ASIC Wars when multinationals and governments start playing. (of course if this happens we can all get drinks in Monte Carlo if we have more than a few bitcents to rub together.

Yep, I think I mentioned that. The mining equipment is going to have to become cheaper, more powerful, or both. I fully expect a Single to pay back 2-3x (maybe up to 7x if things go nuts, or I lose that particular shirt) in the next 12 months but that is 80-90% of the BTC that it is ever likely to mine. It's trash (for BTC at least) in less than 2 years almost guaranteed.

The exception to this would be a skyroketing price that takes the block reward from $250 (assuming the price keeps falling to hit $10 today) to $5000 ($200/BTC) over 12 months. This would mean that a bASIC could be earning about $96 in January in (@$8.82/BTC) , but $220 in December (@$200/BTC), even though the profitibility in BTC has gone down by 90%. Assuming that this major price swing didn't impact difficulty even further.

I doubt such a thing will happen, but even if it does the exact scenario above will not play out since a LOT more mining gear will be able to be sold every for every block generated. Instead we will see shorter ROI cycles and more frequent gear purchases required to keep up with all the other folks who are getting "rich." I have been thinking about putting together an ASIC shipment model based on the value of bitcoin which would allow me to get more accurate, but until then I'll just have to say that I deduce that we would see difficulty spike up to something like 600-800M and 12 month ROI on a $700,000 miner the size of a refrigerator that consumes 10KW (well maybe with $1000 BTC)

I think that the easiest formula I have seen to capture this is a "Spend half my income on upgrades" model. After block halving this means that each month each miner will have a portion of a bit over BTC100,800 so if we add in the 50% rule we get ~BTC50k spent on mining equipment. At $10 this is $100k/month, at $200 this is $2M/month, at $1000 it's likely $5M/month,assuming more than 4 years to get there.) It's easy to do this with constant increases and an easy forecast just by adding mining capacity with a 2-6 week delay for ordering/shipping. Unfortunately the reality is to be useful it will require a basic P/L forecast analysis for every time period to see if it is a buy or hold period for hardware, hmmm.

Until ASIC at least comes out and we see the first difficulty change or 2 I'm going to stand pat, and continue to calculate on BTC based ROI. Any fiat based bonuses I get due to exchange rate are awesome, but I'm not counting on them.

That one could be a winner, as long as nobody steals your space heater. It's even a USB controlled variable unit, pretty fancy!

I also just realized that unless is is BFL it will be so confusing looking a thing that nobody will steal it. Tom I love your stuff, but it does not look expensive to the layman, BFL is all shiny and black and ... where did it go?

I think my favorite one for a cube situation would be to hollow out the crappiest looking computer case I could find, and put it under my desk with a Kensington lock.

Now the answer is put it in my office, lock the door and leave.



RHIP, like my new "space heaters"?
I have a small RAID array of "space heaters" so I only will get 20% colder in the event of a failure.
(^-- this pair of statements are intended as a joke and not an actual forecast of the mining power that may or may not be deployed at Scrybe's office or any other location on or off the planet Earth.
Past performance is not an indicator of future performance, do not invest more than you can afford)

I'm assuming that the folks who claim that BTC is not tied to mining are correct and BTC will mostly follow it's own price path based on the value of goods and services that are traded with it. The only real control over the exchange rate that mining plays directly is pressure based on how fast or slow the collective miners sell their BTC, but that population often sells at market rate which exerts no real force. Block halving may cause this second factor to get more important, but I doubt it.

In my most common model for BTC price model I'm assuming that BTC will get higher than $16 around halving day, crash down to $6-8 sometime in the new year, and climb back to $25 by midyear (and with a lot of drama) making it to $50 before the next year is out. This is based on an overall model that has the overall BTC market cap at $20Bn by the end of 2016. A more pessimistic model I use only has a max of $200 in the same time frame, but what fun is that!?

Honestly I'm in BTC for the long term, so the BTC rate really only impacts my re-buy schedule and eventual portfolio value. Of course it impacts everyone's investment rate in mining equipment so it is an important factor and I recommend putting at least 1-2 crashes of price into your model to ensure that your strategy can keep up with them. It's a strategy so it requires tactical adjustment based on reality, but knowing what actions you are likely to need/want to take when the forecast looks certain ways will arm you to recognize them more easily. (FYI, there is an intellectual trap where you can get caught up in your models and miss reality though, so it is important to keep updating and refactoring your models to help avoid the trap.

An old (and successful) investor friend once told me that models are great, as long as you know that they are all flawed in some way. When you start believing that you have everything accounted for you are about to lose your shirt.

That's a good restatement SgtSpike, thanks.

There is a big difference between most of those scams and this scenario. Pirate offered nice returns by investing in a ponzi and operating a pass-through, it was a scam from the start. 3 of 5 ASIC projects to sell to customers have been selling gear already, so they have given us some indication of their morals. I'd score the current situation like this:

Morality: 4 of 10
Caught: 4 of 10
Revenue: 9 of 10 >10:1 difference in risk/reward

Aggregate that together and you still have a better than even chance that they will not cheat. and I think the morality and caught scores should be higher given the level of scrutiny. If we did the same thing with Pirate (when trusted) it might be 9, 1, 1, resulting in a 66% chance he was going to rip folks off. Either way we will see as it plays out. Remember what I said about lawsuits next year...

A couple technical assumptions to get started:

• Tom has closed pre-orders for BTCFPGA bASIC round 1, he has about 900 orders, <100 of which are 27Gh/s units. Please update his total to 45,900 GH/s.
• I think your BFL number is also low, I've been using 165TH/s for their total preorder backlog (note: not the same as the first shipment
• Avalon has completed 2 rounds of 300 units each at 66GH/s, so that total is ~20TH/s twice for 40TH/s total.
• Additionally as you state there will be a rush of folks that are relieved that ASIC is real (it's real already, but some folks need more) who buy additional equipment, but it will not all happen at once.
• BFL should ship in November, maybe slip into December. bASIC may ship in late November, more likely early December. Throughout December BFL has claimed they will catch up to their current pre-order backlog.
• Avalon comes out in January, along with a second batch of bASIC and more BFL from October, November pre-orders. More of the same moving forward, but it will be directly impacted by feedback in the price of BTC and the hardware ROI.
• This feedback exerts a constant tension that tries to pull the price per GH of mining equipment down to a 12-18 month ROI, and may eventually succeed if bitcoin does not increase.
• Mining Hardware will continue to evolve with at least a moore's law expansion rate, but will exceed this growth rate until mining hardware reaches current process nodes and then stabilizes it's rate of growth.
• This will eventually result in at least one hardware generation per year, but at 1.5x faster per year, not 100x like ASIC vs GPU.
• Bitcoin has demonstrated growth far in excess of mining impact and mining does not have a direct impact on BTC price (halving might be different, but difficulty generally is invisible to SR folks)
• If the price of BTC shoots up, then the profit opportunity will also shoot up, and we will start seeing mining rigs that are the size of refrigerators and need a datacenter to run, but are still profitable.

So given this environment we are going to have a progression something like this:
November:
Difficulty starts at 3.7M, block duration ~ 10 min
BFL Ships first batch of ~50Th
3-4 minute block average from block 209664 to 211680
A very few lucky bastards get 50% of the last 336 50BTC blocks with ASIC (I hope to be one!)
December:
12/2 block 211681 has difficulty ~12M, duration of 5.5 minutes
BFL second batch, bASIC first batch
12/10 block 213696 difficulty increases to ~20M duration of ~8 minutes
BFL Final initial preorder Batch, bASIC same
12/21/12 (yep, I LOVE that my calc is predicting  difficulty change that day!) block 215712 has difficulty ~25M and duration of ~9.4 minutes
January:
Slow first part with a gap in BFL and bASIC shipments as things get ready for a second wave of preorder clearing. Avalon ships first batch
1/3/13 block 217729 has difficulty ~26M and duration of ~9.2 minutes
Second Avalon Batch, BFL and bASIC start shipping in sustainable quantities (but not sustained rate) instead of batch processing.
Month ends at ~32M difficulty
February: ~48M
March: 60M
April: 75M
May: ~95M
June: ~120M

I know that this is all speculation (based on the ASIC shipments I think are going to happen, tempered with price/power costs, time cost of fiat, lots of factors included) but I included it more for the point I'm about to make, rather than the numbers themselves. Let's see how this plays out. I'll base the scenarios on a bASIC because it's a less confusing shipping policy, and it is at an assumed disadvantage of second shipping.

Initial pre-order first ship results (the irregularities are an artifact of my block-based spreadsheet, so my months don;t 100% line up. It's a (fairly) smooth decline if you look at it per block):
Spent 98BTC in September
December: 47BTC
January: 33BTC
February: 15BTC
March: 16.6BTC
4 month ROI 114%

Mid-Janaury delivery of bASIC:
Spent 98BTC in November (assuming flat here)
January: 20BTC
February: 15BTC
March: 16.6BTC
April: 8.15BTC
...
January 2014: ~100% ROI without power costs
August 2014: 100% ROI with power costs

Finally I come to my key point. You cannot simply estimate a final environment and calculate for it, you have to look at how items enter and leave the equation over time and take the area under the curve as profit. This IS calculus to do properly, but most of us approximate it with series of algebraic formulas. You simply cannot capture the whole thing in one equation, so the time-series analysis approach is important. It is also important to incorporate uncertainty in your models, I have models that range from 500TH/s to 2.8PH/s at the end of 2013, as time goes on I throw some away, create new ones to match new data, and incorporate more feedback where appropriate. The one I used here is a "pretty bad case" model after the initial ASIC Zerg Rush, if your scenario plays out with an overbuy of ASIC then the market will correct itself at least to self sufficency, I seriously doubt that anyone who gets an ASIC in Nov/Dec is going to lose money on the deal.

Your Thesis Statement that those with pre-orders are screwed is exactly, 100% backwards. Those that have preorders are almost guaranteed a profit, those that have not are taking a bigger risk, and it might be prudent to wait on the next price-drop or tech-bump to place another set of orders.

Of course if we add back in a reasonable set of swings for BTC value (up to 4 doubling/halvings per year was used recently, It jives well) then the mining rate will be fluctuating in response to that as well. If appreciation of the BTC exceeds the Jan/Feb ship rates there will be plenty of profit for everyone.

Please do not apply an aggressive tone to my messages, I tend to type like a thesarus by long habit and I also do tend to have strong opinions, like many on this board. I would much rather have a spirited argument followed by a beer (or alternate SR product as appropriate) and resolve an issue than have it fester and cause grief in the long run. This was not intended as a personal attack in any way. I truly am confused with this morbid fascination some seem to have with ASIC manufacturers cheating their customers.

I came into this thread because it said I was screwed. I encountered on page 8 a statement by mpradeep that had previously been debunked, and I tried to put it back to bed. I refuted every reasonable argument for it, as well as several unreasonable ones. I have done so with details where appropriate to allow others to learn something about this complex, crazy world of ours at the same time.

I thought I was refuting the notion that mining for profit of any reasonable size would be undetectable? It more likely than not if someone was trying to do this it would be a huge spike much larger that $100k worth. And you parroted the "but we can't tell" line so you got caught up in the thread too, if you wish to refute it, my hypothesis is that if any ASIC manufacturer "blows up" the difficulty, the information will leak out and/or rampant speculation will lead to a reaction against someone, a case of Business Russian Roulette at best. Your arguments come down to "not knowing == 50% chance", when I'm trying to point out  that it is reality much more like a 0.5-2% chance. You are the one who has accused me of not even considering the possibility when I obviously have given it both a lot of thought and typing. I'm not sure what you thought was a personal attack, but I certainly didn't mean to malign your intelligence or honor, only question your current point in the current context.

Apologies if I have offended, but if you think I've missed your core point, please wait until I address the OP, then we can talk more.

Additional stuff that might be interesting:
For reference, have you guys ever attended a business ethics course or workshop?
(http://highered.mcgraw-hill.com/sites/dl/free/0073524565/324445/jon24565_ch05.pdf is a good basic primer for those of you following along at home who have not done so (experts who lol'ed, I did say basic))
So far I've been focused on the Practical Rule for ethical business behavior. "Because they would not want the public to find out, it is unethical." The same result happens if you view this business decision on the part of the ASIC manufacturer from the viewpoint of the Utilitarian, Moral Right, and Justice Rules as well.

Original post from Page 8 by mpradeep (emphasis added):

There is also a difference between a bait and switch scam, and a real legitimate business.

You are just saying "no, no, no, no" I'm adding more and more evidence to my side of the scale. Make an argument other than whining and I'll give it some real weight, but right now I see nothing you have said that is even slightly convincing.

Deeplink, I respect your opinion, as well as yours Desolator, you both can continue to believe that these guys are scams and can never get caught, but at this point the chances of that are less than that of Mitt Romney getting elected and declaring this the Peoples Republic of America.

There are thousands of eyes watching them, and employees working for them, if there is a breach in this policy, even the suspicion of violating their direct statements to us, and you know the size of fecal hurricane that will hit them. It will not require proof, only suspicion, I've been on this board long enough to see that!

This is business. If you piss off your customers, they fire you. Generally they get a lawyer and sue you if there is real money involved. If you think some of the guys buying multiple mini-rigs will hesitate to take BFL to court if they violate this, then you are nuts. I bet they get sued anyway even if they ship on time.

Go back to my previous post. If BFL mines enough to be worth the effort, it will skew the difficulty by at least 5-10% Anything less and they will make more money selling a dozen more singles. We have examined this issue and long ago passed the "they would be nuts to try, they know that, and they have stated they won't" point.

WTF do you want? Videographic proof of the birth of Jesus Christ? What is your standard of proof, or are you going to continue whining about this forever, no matter how much ASIC is manufactured?

If this is indicative of your risk assessment methodology, I recommend investing in a rock to hide under.

FYI, using work resources for personal gain is generally frowned upon, profiting directly from your employers electricity bill will most likely be a resume generating event if you are caught.

Ask permission for something vague and keep your head down, then you can get away with it.

No, there is something about it that prevents merged mining. It was a feature NOT to allow MM IIRC.

FFS: They are all using TestNet In A Box!

Here's BFL's announcement:
https://forums.butterflylabs.com/showthread.php/52-ASIC-Pre-Shipment-Testing-Policy

Here is info about Testnet in a box:
https://bitcointalk.org/index.php?topic=4483.0


WTF? We HAVE looked at it, I'm ignoring anything. We looked, we asked them, we got the answers, and we moved the heck on.

get another freaking topic already.

You have to be joking... If they mine enough to matter, someone will notice. Both the risk of getting caught and the consequences of doing so are more significant than you seem to realize.

Fine, let's game this out:
They are making millions of dollars worth of mining equipment, so to match risking that they would need a hefty profit, at least in the $100k range. So they get a couple MiniRig-SC units assembled, and decide to run them for a couple weeks to make an extra $173k (based on current info, no hardware cost) and then ship them out for an additional $30k each for a total of $233k from 2 rigs. The problem is that the 2 minirigs just generated 3TH/s for 2 weeks, impacting the difficulty by 10%. This means that the (say) 20 minirigs that ship out are only making 90% of what they should have if you had not stolen from your customers. Unless you think that Josh can keep his mouth shut forever, eventually someone would leak, or the 4x size of EMC would show and folks would cry foul. Every customer then joins a class action lawsuit and sues you into oblivion, or you get to live the live of a fugitive with $170k.

If you make the reward bigger, the detectability goes up, and if you lower it to a couple singles it's an inconsequential amount of money. In any case it is not worth the prison time. Why risk millions (and a long term opportunity) for thousands (and a lack of long term options?)

You keep asking for reasons why not and I keep giving them. Maybe you should refocus on the why would they part of the equation more.

When dealing with a guy running a financial trading house from his basement, the risk of vanishing deposits is high, when you have a known brick and mortar business the risk is a lot lower and you generally have more ways to get relief or detect problems.