here's just how screwed ASIC buyers are - READ THIS if you have a preorder

[deeplink]

Scrybe, reading what you just posted, you have absolutely not understood what my point was. You either read it all again or you don't. I do not care anymore. Also the aggressive tone and personal attacks are unnecessary.

[scrybe]

Scrybe, reading what you just posted, you have absolutely not understood what my point was. You either read it all again or you don't. I do not care anymore. Also the aggressive tone and personal attacks are unnecessary.

Deeplink, I respect your opinion, as well as yours Desolator...

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):

To all those people who think they get more BTC in the first few days-weeks.....

What will happen if the ASIC manufactures blow up the difficulty before they start shipping? they got there money anyways.... Who ever gets them late thinks they are not the first inline....

Whos gonna benefit...

i think i keep away from all this mining and just trade BTC's. its more profitable that way

who hit rewind...

BFL, CablePair, Avalon have all publicly stated they will use testnet in a box.

ASICMINER is the only one I worry about, because it is their intent to mine with them first, and they have stated so all along. It sounds like they might be 2-4 weeks behind BFL though, and Tom is shipping in November/December as well, so the race is on...

[Korbman]

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.

Nice, succinct post. +1

For reference, have you guys ever attended a business ethics course or workshop?

I have (yay)...I've got a degree in this sort of stuff haha...and part of the reason why I also agree with you scrybe.

[deeplink]

Scrybe, reading what you just posted, you have absolutely not understood what my point was. You either read it all again or you don't. I do not care anymore. Also the aggressive tone and personal attacks are unnecessary.

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.

Thanks for your clarification. Then I misinterpreted your intentions. Let's forget about it.

The idea that ASIC manufacturers might cheat is based on experiences in the real world and the Bitcoin community where I have seen people and businesses take the chance of getting caught and cheat the hell out of their customers. Some cases we know of, others we don't and whether or not we know, many have gotten away with it. Look at the scammer threads on this forum or pirateat40, Bitcoinica, GLBSE (both shareholders and most asset holders), or in real life, see your local newspaper: politicians left- to right-wing, company directors and boards, even CEO's of humanitarian organizations may cheat for their own gain. Even with a large risk of getting caught. It has always been like this as long as I can remember. Also, at the time it is happening, everyone suggesting so is attacked by people who have an interest in it not being true.

Of course I am not saying that everyone is a crook. But my belief is that most people are if it comes to money.

You may hold another view about the world and humanity and I sometimes wish I did, but I don't and I think this may be the root cause of our disagreement about the possibility that ASIC manufacturers may be dishonest. If that is it, we should just agree to disagree and go and grab that beer (or SR product of your choice) sometimes. I hope that all of them prove me wrong, I really do, but I am not betting on it.

[SgtSpike]

Scrybe, reading what you just posted, you have absolutely not understood what my point was. You either read it all again or you don't. I do not care anymore. Also the aggressive tone and personal attacks are unnecessary.

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.

Thanks for your clarification. Then I misinterpreted your intentions. Let's forget about it.

The idea that ASIC manufacturers might cheat is based on experiences in the real world and the Bitcoin community where I have seen people and businesses take the chance of getting caught and cheat the hell out of their customers. Some cases we know of, others we don't and whether or not we know, many have gotten away with it. Look at the scammer threads on this forum or pirateat40, Bitcoinica, GLBSE (both shareholders and most asset holders), or in real life, see your local newspaper: politicians left- to right-wing, company directors and boards, even CEO's of humanitarian organizations may cheat for their own gain. Even with a large risk of getting caught. It has always been like this as long as I can remember. Also, at the time it is happening, everyone suggesting so is attacked by people who have an interest in it not being true.

Of course I am not saying that everyone is a crook. But my belief is that most people are if it comes to money.

You may hold another view about the world and humanity and I sometimes wish I did, but I don't and I think this may be the root cause of our disagreement about the possibility that ASIC manufacturers may be dishonest. If that is it, we should just agree to disagree and go and grab that beer (or SR product of your choice) sometimes. I hope that all of them prove me wrong, I really do, but I am not betting on it.

I think scrybe's point is, even if they are crooks, it would be a dumb move to try and mine on the hardware before sending it out.  It is logically a bad choice, even if you assume they have ZERO morals.  This isn't an issue of morality - it is an issue of logicality.  It would be completely illogical for them to mine on the hardware before sending it out due to the extremely low revenues relative to their revenues made from selling the units.

[deeplink]

I think scrybe's point is, even if they are crooks, it would be a dumb move to try and mine on the hardware before sending it out.  It is logically a bad choice, even if you assume they have ZERO morals.  This isn't an issue of morality - it is an issue of logicality.  It would be completely illogical for them to mine on the hardware before sending it out due to the extremely low revenues relative to their revenues made from selling the units.

Yes - we have a list of variables that influence the decision of a manufacturer to decide to mine on the hardware:

Manufacturer morality
Likelihood to get caught (and the event of being caught leading to an unknown loss on revenue due to angry customers)
Pre-order and future revenue of selling the units
Additional revenue by mining for themselves

Whether it is illogical for a manufacturer to mine is a function of ALL variables. All variables are extremely uncertain and we have found to disagree on at least two of them.

[scrybe]

Hey ASIC pre-order people, you're screwed Here's why:

#'s have been corrected with more accurate info.  Unfortunately not much has changed

I've been going around trying to get more exact numbers from the major ASIC manufacturers and so far they don't even seem to know how many preorders they have   So we're going on ballpark estimates and rumors.  Many weeks ago, BFL had stated they have 7000 pre-orders total.  I heard from several other users that it's now stated to be 14,000, but taking into consideration other things, it's now much lower.  Let's say 5000.

Let's be conservative yet realistic and say that that's 4800 Jalapenos, 150 singles, and 50 mini-rigs.  That's 16,800 GH/s + 9,000 GH/s + 75,000GH/s =  100.8TH/s.

BTCFPGA's line of products:  They're the only other ones expected to ship before 2012 concludes so they've got to be a pretty good target.  Rumor has it, they're around 400 so let's go with that and split em between their 2 product levels.  That = another 16.2 TH/s.

The Avalon allegedly has a lot more than I thought despite shipping in fairly late 2013, like 3-4 months after their competition at which point ASIC mining will be extremely hard to profit form.  Well, they have some special 300 pricing but haven't hit it yet so let's say 150. That's another 9 TH/s.

So that's 126 TH/s total added in just preorders.

The number of people willing to risk lots and lots of money on a preorder for an experimental device from somewhat sketchy companies is definitely less than the number of people who will buy mining hardware soon after it's released to the public and proven to work for at least a short period of time.  I'd say it's 5:1 but let's go conservative and say for every 1 preordering daredevil, there are 2 people that will buy the hardware once it actually comes out and works.  Also they'd obviously be more inclined to buy higher end hardware than the Jalapenos for example once there's practically 0 risk (post-release) but once again, let's go conservative with a best case scenario and not adjust for that.  So with my numbers, that's another 252 TH/s for a total of 378 TH/s.

And the current total computational of the network is around 22.5TH/s.

So, since difficulty and price all scale evenly with each other, I can do this in any order.  A BFL jalapeno runs at 3.5GH/s and at the last price I recall from MTGox ($12.80 USD per BTC) and the current difficulty, that will pay for its $149 price tag in 11.19 days.  Not bad!  HURRAY, let's all pre-order!  Hell no, keep reading, lol.

By the time ASICs are released, 25BTC instead of 50 will be the mining reward per block and I think we all know the price won't magically jump to 2x overnight so let's go ahead and double that.  That's a 22.38 day payoff.  Now let's add all those new miners and readjust for the resulting difficulty increase of approx 16.8x, and you'll pay off your Jalapeno in 376 days which means you're making $0.40 USD per day.  That's all assuming that from release time to about 1-2 months afterwards, nobody ever buys another ASIC miner for that entire 376 days.  Let's factor back in future sales rates and....you're not going to pay it off, lol.  So let's say my numbers or estimates are somehow drastically off and give it a + or - 70% accuracy variance.  That results in...you still being screwed, lol.

Good luck with that!

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.

[scrybe]

I think scrybe's point is, even if they are crooks, it would be a dumb move to try and mine on the hardware before sending it out.  It is logically a bad choice, even if you assume they have ZERO morals.  This isn't an issue of morality - it is an issue of logicality.  It would be completely illogical for them to mine on the hardware before sending it out due to the extremely low revenues relative to their revenues made from selling the units.

Yes - we have a list of variables that influence the decision of a manufacturer to decide to mine on the hardware:

Manufacturer morality
Likelihood to get caught (and the event of being caught leading to an unknown loss on revenue due to angry customers)
Pre-order and future revenue of selling the units
Additional revenue by mining for themselves

If it is illogical for a manufacturer to mine is a function of ALL variables. All variables are extremely uncertain and trying to quantify them we have found to disagree on at least two of them.

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...

[Korbman]

[....] 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 [....]

Interesting. How does the BTC/USD price point react to such scenarios? I'm assuming you've included economic modeling into your hash rate predictions?

[creativex]

Great post scrybe. A whole lot of smart people begin their speculative musings with something like "difficulty = x and therefore pre-orders are screwed", but they fail to include a time element. I think you're correct, barring a huge scam scenario it is the pre-orders that will have a best opportunity to make a quick ROI and the subsequent batch orderers that should carefully consider the landscape before they invest.

[scrybe]

[....] 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 [....]

Interesting. How does the BTC/USD price point react to such scenarios? I'm assuming you've included economic modeling into your hash rate predictions?

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.

[kwoody]

OP is mad that he can't afford/doesn't have the guts to pre-order. That's all.

[Korbman]

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!?

Well, that's all well and good, but if, say, the hashrate went up to a nice 1.65PH/s (an average of your two extremes) the difficulty would be a nice 213,125,000,000 (rough estimate of course). That would mean at an exchange rate of $200 a coin, you'd be making a sexy $10.33 per year with your $1300 Single SC....losing it all to energy costs (or if you have free electricity, it would only take 126 years to break even).

But on the bright side, if that Single was $1 it would take just over a month to break even.

My point is that something has to give in order to support high hashing rates.

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.

A wise man, this investor is.

[scrybe]

Well, that's all well and good, but if, say, the hashrate went up to a nice 1.65PH/s (an average of your two extremes) the difficulty would be a nice 213,125,000,000 (rough estimate of course). That would mean at an exchange rate of $200 a coin, you'd be making a sexy $10.33 per year with your $1300 Single SC....losing it all to energy costs (or if you have free electricity, it would only take 126 years to break even).

But on the bright side, if that Single was $1 it would take just over a month to break even.

My point is that something has to give in order to support high hashing rates.

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.

[scrybe]

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.

[Desolator]

OP is mad that he can't afford/doesn't have the guts to pre-order. That's all.

Are you fucking retarded?  If I had one, I'd have sold it by now.  but I was smart enough to not get one in the first place, given BFL's past history with wrong specs and late releases.  Sounds like you're just mad that you're so utterly screwed.

By the way, there's so much wrong with Scythe's estimate that it's beyond all correcting.  He's off by a factor of 2-3x.

[scrybe]

OP is mad that he can't afford/doesn't have the guts to pre-order. That's all.

Are you fucking retarded?  If I had one, I'd have sold it by now.  but I was smart enough to not get one in the first place, given BFL's past history with wrong specs and late releases.  Sounds like you're just mad that you're so utterly screwed.

By the way, there's so much wrong with Scythe's estimate that it's beyond all correcting.  He's off by a factor of 2-3x.

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.

[MooC Tals]

If mining does not become profitable the companies that are creating the products to mine with will have no customers to sell to. The miners that stick it out over time with what they have and with the best products will profit and never need to upgrade.

I call that the plateau 

If the reward drops there will be less btc to mine and less btc to sell and that will increase demand and price of the btc. The other plateau will be the demand for the btc to retailers which will require customers in which most will be the miners. then you have the speculators that will be putting pressures on the price of the btc going up and down..


The way I see it if there is not enough reward to satisfy enough miners to keep the system going then the system will falter. BTC needs miners and the serious will stay.



The ones that stick it out will profit over time the rest will drop out or sell their stuff.

People buy houses on the top of the market and lose. It happens and people will continue.

If the risk is too much then by all means sit this round out and jump in when you feel more better. I appreciate the heads up and wish you well.


EDIT :I added a few more things

[hardcore-fs]

I got a shipment date from  BFL, just before doing a Pay Pal.

I decided based on what I was told , that I would NOT be placing an order.
Based on their own production figures quoted elsewhere and working backwards from the 'tag' i was given, means they are going to be dumping a SHIT load of product into the market before I receive mine.
Return on a 60GH rig would be over a year.

HC

[Korbman]

I got a shipment date from  BFL, just before doing a Pay Pal.

I decided based on what I was told , that I would NOT be placing an order.
Based on their own production figures quoted elsewhere and working backwards from the 'tag' i was given, means they are going to be dumping a SHIT load of product into the market before I receive mine.
Return on a 60GH rig would be over a year.

Few of things here...
1) For your 'tag', are you referring to the randomly large order number? And you think that's the amount ordered?
2) BFL is shipping in 1/3rds...some of the early buyers, some mid-range, some recent...all at the same time to "even it out".
3) Typical returns on purchased hardware in the past have stuck to around 8-10 months, depending on what you buy and when. My guess is that this will stay relatively the same, but the network hash rates and BTC/USD prices will fluctuate to match it.