Why would you sell a mining rig to anybody?

[yvv]

Suppose, you have equipment to produce ASICs. Why would you want to sell those ASICs to anybody instead of mining bitcoins and other coins yourself? Is mining such an unprofitable thing?
 

[martynw2000]

I know if I had a warehouse with 500 ASICs sitting on the shelf, I'd be extremely tempted to plug them all in for a couple of months, and just tell my customers they weren't ready yet. Could quite easily double or triple profits that way, and by the time you actually sell them the difficulty will be sky high.

[Dabs]

Plug it for a week. Then start selling them one by one. You would want to spread the mining capability instead of consolidating it all in one spot for some drone to target and blow up. That's the idealists view.

[dg2010]

Because it costs a lots to develop these things and those people selling them needed money to be able to develop. Hence the pre-order or ASICminer selling shares for dividend payouts.

There will be people in the shadows developing ASIC miners without telling anyone who have access to sums of money to enable them to do so.

[uneone]

I think, or at least like to think, that not everyone in the world is unusually greedy. Now don't get me wrong everyone is tempted and driven by money, except maybe some buddhist monks, but if I had four ASIC's and was mining (assuming 240Gh/s) enough bitcoins to equate to $70k USD/month I think i would  be amenable in spreading the wealth to a worth person.

Above is why am an idealist and I am sure people are generally greedier than I assume. Especially with strangers.

But that said it makes zero business sense to sell an ASIC you are currently running, but it might make a modicum of ethical sense. The individual is the one who must decide.

[2x0ninja]

If hashing power centralized (like if BFL plugged in all their preorders) people would get weary of the 51% attack and the exchange rate would drop. Right now it seems like there's a lot of uninformed people jumping on the bitcoin bandwagon so I doubt that would actually happen at this point in time. AVALON said their plan was to mine with what they turned into batch 3, but ended up selling them because of other companies lack of delivery. If they had done that they'd have have a significant amount of the network's power. Basically for these companies to succeed they need to sell units to distribute the hashing power or everyone will bail on bitcoin leaving them with a bunch of expensive paperweights. They need to think longterm profits. I think they'll all probably keep their own mining farms, but they need to make sure the rest of the network has a reasonable amount as well.

[crazyates]

I think it's a lot to do with economics, and not technology. You not only have to predict the future in terms of difficulty and returns, but also economic balance, and price estimations.

The price has been massively rising. If this is due to a lot of people buying BTC with the intent to sell later for a profit, then as soon as the price starts going down, people are going to sell. Everyone's going to sell. This is called a bubble, and it's popping. Think the crash of 2011.

Now if the price is just naturally going up, and it's sustainable at 200USD/BTC, then that's great! The prices will level out, and ppl will continue to mine/buy/sell at that rate.

The decision to keep an ASIC pre-order or sell it is (to me) determined by your estimation of the previous factor. If you think the price is going to crash down to $10 sometime in the next 4-6 months, then selling an early BFL pre-order now for $10,000 would seem more profitable. If you think the price is going to keep going up to $500/BTC (which isn't impossible at the current rate of growth), then it's more profitable to keep the miner, and cash out later.

[crypTrade]

Suppose, you have equipment to produce ASICs. Why would you want to sell those ASICs to anybody instead of mining bitcoins and other coins yourself? Is mining such an unprofitable thing?

Why buy a big mac at McDonald's? Why not just make yourslef a burger and keep all the profits?

[hardpick]

if bitcoins are at $15 then sell mining rigs
if bitcoins are at $190  - - I would rent a warehouse and mine --  - spread out the hash power on all pools so not to get to 51% ---
when till difficulty became to high - stop and put rigs in the bin

[johnyj]

If that machine mined not bitcoin but US dollar, no one will sell them for sure. There is always exchange risk involved with bitcoin and it has not reached mainstream acceptance yet. They need to protect their investment if bitcoin experiment somewhat failed

[Gator-hex]

Why do you think nobody is shipping any ASICs, they're all delayed, even Avalon until 15th April 

[speeder]

I sold mine (that is a batch 3, so it was not with me yet) because I needed to pay a debt urgently. (I am the bitcoin broker to a ex-coworker, and he showed up wanting his coins back... and I had left his coins in a brazillian exchange that got hacked)

[yvv]

Suppose, you have equipment to produce ASICs. Why would you want to sell those ASICs to anybody instead of mining bitcoins and other coins yourself? Is mining such an unprofitable thing?

Why buy a big mac at McDonald's? Why not just make yourslef a burger and keep all the profits?

If you want to kill yourself, yes you should make burgers and eat them all every day.

[crypTrade]

http://www.max-logic.com/wp-content/uploads/2011/03/weird-fat-man-eating-burger-300x265.jpg

Damn that burger looks delicious!

[hardpick]

I sold mine (that is a batch 3, so it was not with me yet) because I needed to pay a debt urgently. (I am the bitcoin broker to a ex-coworker, and he showed up wanting his coins back... and I had left his coins in a brazillian exchange that got hacked)

sorry to hear about your bad luck

how does this help ?--- you won't get paid for your mining rig till you deliever to whoever brought it
so your funds are still tied up till may

[mrb]

Suppose, you have equipment to produce ASICs. Why would you want to sell those ASICs to anybody instead of mining bitcoins and other coins yourself?

Because this:

You don't understand the whole context of the Avalon project. It is very simple:

Avalon was started by 2 young engineers who had almost no money (*), and no or little experience designing ASICs. They had no choice but to sell pre-orders at a low price (due to the overall risk and uncertainty of the project) to acquire the initial capital required to develop a 110nm chip and the machines ($200-300k or so). Once they successfully manufactured the first batch of Avalons, they honored the pre-orders because they are ethical persons. If they had say at this point "f*ck you, customers, we will mine with your hardware and not ship it to you", this would have enraged the community, destroyed their reputation (so no batch #2 and no batch #3 sales revenues for them), and it would have possibly disrupted confidence in Bitcoin due to 2 guys controlling the majority of the hashing power, possibly destroying the exchange rate and their potential mining profits.

That's why. If you knew the 2 guys, you would see they care deeply about the future of Bitcoin and about ethics.

(*) ngzhang did not make that much profits from previous FPGA sales, and yifu did not bring capital AFAICS.

Also, selling hardware guarantees that:
- you make an instant profit the day the sale is made
- you "lock" such profits in USD
- scaling up is easy: no mining farm to maintain, just shipping parcels to customers

Whereas mining is inherently more risky:
- what if an ASIC miner competitor causes the difficulty to quickly increase before you deploy your own mining capacity
- what if the bitcoin exchange rate crashes
- maintaining a mining farm introduces additional complexities (case in point: ASICMINER supposedly manufactured 12 Thash/s, but they have been unable to deploy more than 6-7 Th/s for 1.5 months)
- etc

All in all, it is a risk/reward tradeoff. Yes mining can be more profitable, but it is a lot riskier.

[hardpick]

Suppose, you have equipment to produce ASICs. Why would you want to sell those ASICs to anybody instead of mining bitcoins and other coins yourself?

Because this:

You don't understand the whole context of the Avalon project. It is very simple:

Avalon was started by 2 young engineers who had almost no money (*), and no or little experience designing ASICs. They had no choice but to sell pre-orders at a low price (due to the overall risk and uncertainty of the project) to acquire the initial capital required to develop a 110nm chip and the machines ($200-300k or so). Once they successfully manufactured the first batch of Avalons, they honored the pre-orders because they are ethical persons. If they had say at this point "f*ck you, customers, we will mine with your hardware and not ship it to you", this would have enraged the community, destroyed their reputation (so no batch #2 and no batch #3 sales revenues for them), and it would have possibly disrupted confidence in Bitcoin due to 2 guys controlling the majority of the hashing power, possibly destroying the exchange rate and their potential mining profits.

That's why. If you knew the 2 guys, you would see they care deeply about the future of Bitcoin and about ethics.

(*) ngzhang did not make that much profits from previous FPGA sales, and yifu did not bring capital AFAICS.

Also, selling hardware guarantees that:
- you make an instant profit the day the sale is made
- you "lock" such profits in USD
- scaling up is easy: no mining farm to maintain, just shipping parcels to customers

Whereas mining is inherently more risky:
- what if an ASIC miner competitor causes the difficulty to quickly increase before you deploy your own mining capacity
- what if the bitcoin exchange rate crashes
- maintaining a mining farm introduces additional complexities (case in point: ASICMINER supposedly manufactured 12 Thash/s, but they have been unable to deploy more than 6-7 Th/s for 1.5 months)
- etc

All in all, it is a risk/reward tradeoff. Yes mining can be more profitable, but it is a lot riskier.

Also, selling hardware guarantees that:
- you make an instant profit the day the sale is made
Get Hardware cost in about 1 day --- then all profit

- you "lock" such profits in USD

go to mtgox and convert BTC to $ or any other money



- scaling up is easy: no mining farm to maintain, just shipping parcels to customers

who want to ship product to customer ? they complain -- lose orders -- want support-- return product to be fixed - put shit comments on forums---
- easier to put rig in warehouse and turn on

[mrb]

- you make an instant profit the day the sale is made
Get Hardware cost in about 1 day --- then all profit

Look at it from this viewpoint: when starting an ASIC project you have the choice between: (1) pre-selling the device and getting the money today even before starting most of the project's work, or (2) spending months to develop it then maybe mining your money back, if no competition as launched before you, if the exchange rate has not dropped, and if you do not get delayed by the complexity of scaling up a mining farm (again, see ASICMINER).

Frankly, you should understand why most chose option (1).

- you "lock" such profits in USD
go to mtgox and convert BTC to $ or any other money

- scaling up is easy: no mining farm to maintain, just shipping parcels to customers
who want to ship product to customer ? they complain -- lose orders -- want support-- return product to be fixed - put shit comments on forums---
- easier to put rig in warehouse and turn on

If it is so easy, perhaps you should just go offer your services to ASICMINER and show them how it is done They still struggle to deploy more than 6-7 Thash/s 2 months after they started (Feb 12) and they supposedly have another 5-6 Thash/s powered off doing nothing due to lack of power/cooling and network scaling issues, while Avalon has deployed 20 Th/s to customers in 2 months (batch 1), and is about to ship 40 Thash/s in the next month (batch 2).

[yvv]

Thanks, this clears things up.