BFL are expecting 100,000 chips...

[nibor]

According to this:
https://forums.butterflylabs.com/bfl-forum-miscellaneous/437-asic-update-26-november-2012-a.html

Each single has 8 I think so that means 100,000 chips are 750THash/sec

So difficulty would jump by a factor of 30 to about 100million.

This means a single will earn you about $114 a month after the diff drop on a single (and cost you about $5-$10 in power).


Everyone agree with my maths?

[crazyates]

They're not going to actually have sold 750TH/s by the end of the year.

750TH/s is 12,500 Singles. At $1300 per unit, that's $16million USD in preorders. I don't think they have that many preorders, but I could be wrong.

They're going to get 100,000 chips in 2 waves, the first of those waves being stated previously as being ~20,000 chips. This will cover the first batch, which puts us right at about 150TH/s. That's about a 5-6x difficulty compared to where we are now.

Eventually we will get to 750TH/s, but not for another few months, at the earliest.

[crazyates]

Also, shouldn't the title be "BFL is expecting 100,000 chips..." ? Of course the chips are plural, but BFL is singular, is it not?

[dust]

I think they will sell 100k chips by the end of 2013.  After the first generation products ship, they will drop prices 2-10x and sell more units throughout the year.  The marginal cost of producing an ASIC chip is extremely low.

[cunicula]

I think they will sell 100k chips by the end of 2013.  After the first generation products ship, they will drop prices 2-10x and sell more units throughout the year.  The marginal cost of producing an ASIC chip is extremely low.

Really. After they sell the first batch, how much extra would it cost them to 51% the network? $500k? less than that? Can they 51% the network for the price of a new Honda? Might be interesting to take bitcoin for a test drive.

[Technomage]

Really. After they sell the first batch, how much extra would it cost them to 51% the network? $500k? less than that? Can they 51% the network for the price of a new Honda? Might be interesting to take bitcoin for a test drive.

We've been through this before but again it makes no sense whatsoever to attempt a 51% since if they are caught doing that, it would crash the Bitcoin market. In that situation they would be doing much worse than they are if they play nice.

They have actually commented on this many times and said that it's in the best interest of Bitcoin to do it this way. I call BS on that though, it's in the best interest of them to do it this way. It just happens to be good for everyone else as well.

[DiCE1904]

I dont believe it

[MoonShadow]

I think they will sell 100k chips by the end of 2013.  After the first generation products ship, they will drop prices 2-10x and sell more units throughout the year.  The marginal cost of producing an ASIC chip is extremely low.

Really. After they sell the first batch, how much extra would it cost them to 51% the network? $500k? less than that? Can they 51% the network for the price of a new Honda? Might be interesting to take bitcoin for a test drive.

That's the wrong question, because if BFL can make ASICs, others can too.  And BFL isn't really making anything, third party manufactuers in China are.  Their ASIC design isn't safe, and they know it, even if it was unique, which it isn't.  The ASIC market is really a race to get the first batch to market, each new offering is going to limit the profitablility of all previous offerings, and thus the value of it's own offering.  That's what real competition is supposed to do, it's just in an extra fast cycle in Bitcoin.

[MrTeal]

I think they will sell 100k chips by the end of 2013.  After the first generation products ship, they will drop prices 2-10x and sell more units throughout the year.  The marginal cost of producing an ASIC chip is extremely low.

Really. After they sell the first batch, how much extra would it cost them to 51% the network? $500k? less than that? Can they 51% the network for the price of a new Honda? Might be interesting to take bitcoin for a test drive.

Once they ship 750TH/s, they'd need the equivalent of 500 Minirig SCs to 51% the network. Considering that just the power supply used in the Minirig SC costs $450, I would imagine they would have a hard time launching a 51% attack on the network for $500k.

They'd also need a datacenter that could supply them 7.5MW.

[MoonShadow]

I think they will sell 100k chips by the end of 2013.  After the first generation products ship, they will drop prices 2-10x and sell more units throughout the year.  The marginal cost of producing an ASIC chip is extremely low.

Really. After they sell the first batch, how much extra would it cost them to 51% the network? $500k? less than that? Can they 51% the network for the price of a new Honda? Might be interesting to take bitcoin for a test drive.

Once they ship 750TH/s, they'd need the equivalent of 500 Minirig SCs to 51% the network. Considering that just the power supply used in the Minirig SC costs $450, I would imagine they would have a hard time launching a 51% attack on the network for $500k.

They'd also need a datacenter that could supply them 7.5MW.

And this argument also applies to any other attacker.  There is not scenario that ASICs could be bad for Bitcoin at large.  The door is closing for a serious 51% attack even for an attacker with nation-state resources.

[bcpokey]

I think they will sell 100k chips by the end of 2013.  After the first generation products ship, they will drop prices 2-10x and sell more units throughout the year.  The marginal cost of producing an ASIC chip is extremely low.

Really. After they sell the first batch, how much extra would it cost them to 51% the network? $500k? less than that? Can they 51% the network for the price of a new Honda? Might be interesting to take bitcoin for a test drive.

Once they ship 750TH/s, they'd need the equivalent of 500 Minirig SCs to 51% the network. Considering that just the power supply used in the Minirig SC costs $450, I would imagine they would have a hard time launching a 51% attack on the network for $500k.

They'd also need a datacenter that could supply them 7.5MW.

Small correction: 750kW not 7.5MW. Still large and expensive, but not impossible. Certainly uninteresting I would imagine, both for expense and logistical issues.

More practical might be hiding 50TH/sec (or whatever number) of their own within the network.

[cunicula]

Small correction: 750kW not 7.5MW. Still large and expensive, but not impossible. Certainly uninteresting I would imagine, both for expense and logistical issues.

More practical might be hiding 50TH/sec (or whatever number) of their own within the network.

You are assuming they will sell $15 million dollars worth of equipment. Highly doubtful in my opinion. But it doesn't matter. Competing with customers is still the wise move.

Why ship the chips out of China? It is a waste of money. The attack doesn't need to be conducted from NYC real estate.

You can rent an internet cafe capable of supporting 60 computers in China for less than US$300 a month. (e.g. http://cq.ganji.com/fang6/400435890x.htm)

At 350 W per computer minumum that is 21 kW. Now rent 40 such cafes. (probably just better to focus on really big ones) We are up to US$12000 a month.

What about electricity? Say it is US$0.10 cents a kWH. Then for 750 kW, that is $75 per hour or US$54000 per month. Here we are getting expensive. However, I think you could get away with just attacking for 24 hours and then managing your load so that you regulate on any asshole who tries to mine. So it is probably more reasonable to think of 2 days of electrcity per month or US$3600.

We also need say 5 employees to keep stuff running 24/7. I'd say that each will run about US$1 an hour per body. That is another US$3600 per month.

So our total variable costs so far are 3600+3600+12000=$19200 per month. It is the price of a Honda. We just need the hardware.

If it works, the revenue per month is up to US$1 million. You are trying to convince me that the managers of the company are braindead. Sonny, extradited from Italy, multimillion dollar scammer, an idiot. I don't think so.

Maybe they won't 51% attack. Instead they can just earn US$500,000 per month and keep their complete control of the network secret to avoid panic. That might be a smart move. No one will know the difference. You idiots will just think that people massively overinvested in hardware and celebrate how "secure" the network has become. It will demonstrate that people are willing to mine at a loss. LOL.

This ends badly.

[bcpokey]

Small correction: 750kW not 7.5MW. Still large and expensive, but not impossible. Certainly uninteresting I would imagine, both for expense and logistical issues.

More practical might be hiding 50TH/sec (or whatever number) of their own within the network.

You are assuming they will sell $15 million dollars worth of equipment. Highly doubtful in my opinion. But it doesn't matter. Competing with customers is still the wise move.

Why ship the chips out of China? It is a waste of money. The attack doesn't need to be conducted from NYC real estate.

You can rent an internet cafe capable of supporting 60 computers in China for less than US$300 a month. (e.g. http://cq.ganji.com/fang6/400435890x.htm)

At 350 W per computer minumum that is 21 kW. Now rent 40 such cafes. (probably just better to focus on really big ones) We are up to US$12000 a month.

What about electricity? Say it is US$0.10 cents a kWH. Then for 750 kW, that is $75 per hour or US$54000 per month. Here we are getting expensive. However, I think you could get away with just attacking for 24 hours and then managing your load so that you regulate on any asshole who tries to mine. So it is probably more reasonable to think of 2 days of electrcity per month or US$3600.

We also need say 5 employees to keep stuff running 24/7. I'd say that each will run about US$1 an hour per body. That is another US$3600 per month.

So our total variable costs so far are 3600+3600+12000=$19200 per month. It is the price of a Honda. We just need the hardware.

If it works, the revenue per month is up to US$1 million. You are trying to convince me that the managers of the company are braindead. Sonny, extradited from Italy, multimillion dollar scammer, an idiot. I don't think so.

Maybe they won't 51% attack. Instead they can just earn US$500,000 per month and keep their complete control of the network secret to avoid panic. That might be a smart move. No one will know the difference. You idiots will just think that people massively overinvested in hardware and celebrate how "secure" the network has become. It will demonstrate that people are willing to mine at a loss. LOL.

This ends badly.

I can't read chinese so I had to use google translate. That says 40 computers not 60. I don't see why it would require 350Watts per computer for an Internet cafe, seems mildly unreasonable, as it is not necessarily designed to be a 3d gaming cafe. I would expect less capacity than the 14kW (close to 120A on 120V, not sure what China uses, but that is a huge breaker box for a single store) that your 350W calculation provides. That is usually for Industrial applications, not commercial property. 40 computers averaging 180W would be closer to 7.2kW (somewhat more reasonable 60A load). Assuming you could find > 100 locations with similar capacities for the same price (I'm no China expert) that's closer to $30,000 / month in cost for space. $54000 in Electricity cost seems reasonable for 750kW, however that is with 0 cooling costs, for 750kW of heat. Probably don't want to just leave your doors open all day and night with some fans on (especially come August when it's ~90F). Assuming that there is already Industrial cooling installed (very unlikely, need more machine costs there), I'm not a cooling expert but google suggests 1TON AC for every 3.5kW of cooling, or for 750kW ~220TON units of AC. 2.5ton of central cooling googles out to about 2520kwh / month, so we're at 221760kwh for cooling, or another $22,176 a month, and we haven't even included that power draw on our infrastructure (increasing the spread requirements).
I'm guessing that you would require more than 5 local yokels to administer to > 100 sites, but I'm not going to bother estimating that.

Without any logistical issues, we're at rent + asic cost + cooling cost = $30,000 + $54,000 + $20,000 =  >$100,000 / month to run 750THash/sec.

Another note to keep in mind:

Utility costs for industrial purposes have been on the rise since power shortages occurred across the nation in early 2011. Manufacturing facilities throughout the past five years have been expanding so quickly that China’s infrastructure is finding it hard to supply the necessary resources to keep up. In some cases, China has cut back production hours to meet electricity and water supply.

China is struggling to meet Electrical Capacity nationwide, doubly so in the "Industrial Park" areas such as Chongqing (your listing), this does not make for a bastion of reliability for a fairly extensive mining operation, especially when you are utilizing cut-rate commercial sites putting huge loads on the local infrastructure.

So, again, not a trivial matter, but yes, assuming that they have some sort of connections in China (and ignoring that cost), ignoring the fact that the PCBs and other parts need to be shipped to China (they have stated that those are not MFGd there), ignoring the costs of all parts of the chips, ignoring the costs to have the parts assembled, ignoring the costs of the chips, ignoring the cost to retrofit their cutrate buildings rentals to handle a huge constant electrical load + cooling, ignoring the infrastructural problems in China, assuming no one minds your constant heavy usage for minimal pay, assuming cheap efficient labor keeping mining going at all times, assuming the network does not grow beyond 750THash of "legitimate" miners, ignoring the hassle of translating massive quantities of BTC into usable operating capital, etc., then yes, it certainly is possible to run a very hefty and profitable large scale mining operation.

More likely they would just set up shop not in the bargain basement street shops, but in some tech development zone in large warehouses with existing power and cooling infrastructures. The cost would be higher, but it would be less ridiculous a proposition.

It is and has been a concern, but it is not inevitable. There are lots of costs and headaches involved, and requires a belief in bitcoin itself, rather than selling on the belief of bitcoin, which may or may not be evident in a scammer who sees greenbacks, not digital bits.

[MrTeal]

My bad, I was doing it in my head and must have been biased by a previous response to someone claiming that ASICMINER could just print out a couple petahash/s for cheap. That one was almost 10MW.

You wouldn't even have to do it in China, if you think they would make enough equipment to actually try over a weekend to 51% the network. You could probably just cut a deal with someone that operates a large industrial facility to use it over the Christmas weekend or something. Still, what would that get you? A 51% attack doesn't let you just take all the coins. I find it hard to believe that they would be able to pull off any double spends large enough to justify the cost of the operation.

On the flip side, there is absolutely no incentive for BFL to mine on any hardware until they get to the point where there's product sitting on the shelf. For now and for the foreseeable future, they can sell the hardware and make more than self mining anyway.

[Fcx35x10]

On the flip side, there is absolutely no incentive for BFL to mine on any hardware until they get to the point where there's product sitting on the shelf. For now and for the foreseeable future, they can sell the hardware and make more than self mining anyway.

My gut feelings would have to agree. Think of ASIC companies as if they were selling pickaxes to mine gold during the Gold Rush. :p

[salfter]

Also, shouldn't the title be "BFL is expecting 100,000 chips..." ? Of course the chips are plural, but BFL is singular, is it not?

It's a Britishism...in their usage, either "is" or "are" is correct.

[cunicula]

My bad, I was doing it in my head and must have been biased by a previous response to someone claiming that ASICMINER could just print out a couple petahash/s for cheap. That one was almost 10MW.

You wouldn't even have to do it in China, if you think they would make enough equipment to actually try over a weekend to 51% the network. You could probably just cut a deal with someone that operates a large industrial facility to use it over the Christmas weekend or something. Still, what would that get you? A 51% attack doesn't let you just take all the coins. I find it hard to believe that they would be able to pull off any double spends large enough to justify the cost of the operation.

Why would you double-spend? It is idiotic. Double-spending would be profoundly disruptive and would not yield that much money. It is also pretty clearly illegal.

LukeJr 51%'d coiled coin for example. He did not double-spend. He merely mined 100% of the block reward and imposed larger fees on txns. That is potentially quite profitable. Once you have exhausted your opportunities to sell equipment, there is no reason not to do this. It is also not clearly illegal. At most it violates antitrust law, but good luck getting someone to prosecute.

The worst case scenario is if a new ASICs gets announced that is better than what BFL can offer. This would mean that BFL wouldn't have any reason to care about their reputation as a mining equipment vendor. In this case, assuming rationality, a 51% attack is guaranteed.

[MoonShadow]

My bad, I was doing it in my head and must have been biased by a previous response to someone claiming that ASICMINER could just print out a couple petahash/s for cheap. That one was almost 10MW.

You wouldn't even have to do it in China, if you think they would make enough equipment to actually try over a weekend to 51% the network. You could probably just cut a deal with someone that operates a large industrial facility to use it over the Christmas weekend or something. Still, what would that get you? A 51% attack doesn't let you just take all the coins. I find it hard to believe that they would be able to pull off any double spends large enough to justify the cost of the operation.

Why would you double-spend? It is idiotic. Double-spending would be profoundly disruptive and would not yield that much money. It is also pretty clearly illegal.

LukeJr 51%'d coiled coin for example. He did not double-spend. He merely mined 100% of the block reward and imposed larger fees on txns. That is potentially quite profitable. Once you have exhausted your opportunities to sell equipment, there is no reason not to do this. It is also not clearly illegal. At most it violates antitrust law, but good luck getting someone to prosecute.

In this case, I'd say that BFL can do it as long as they can maintain it.  Good luck with that.

[cunicula]

My bad, I was doing it in my head and must have been biased by a previous response to someone claiming that ASICMINER could just print out a couple petahash/s for cheap. That one was almost 10MW.

You wouldn't even have to do it in China, if you think they would make enough equipment to actually try over a weekend to 51% the network. You could probably just cut a deal with someone that operates a large industrial facility to use it over the Christmas weekend or something. Still, what would that get you? A 51% attack doesn't let you just take all the coins. I find it hard to believe that they would be able to pull off any double spends large enough to justify the cost of the operation.

Why would you double-spend? It is idiotic. Double-spending would be profoundly disruptive and would not yield that much money. It is also pretty clearly illegal.

LukeJr 51%'d coiled coin for example. He did not double-spend. He merely mined 100% of the block reward and imposed larger fees on txns. That is potentially quite profitable. Once you have exhausted your opportunities to sell equipment, there is no reason not to do this. It is also not clearly illegal. At most it violates antitrust law, but good luck getting someone to prosecute.

In this case, I'd say that BFL can do it as long as they can maintain it.  Good luck with that.

Right and afterwards they just mine like regular guys. Is there some way they lose from this?

[MoonShadow]

My bad, I was doing it in my head and must have been biased by a previous response to someone claiming that ASICMINER could just print out a couple petahash/s for cheap. That one was almost 10MW.

You wouldn't even have to do it in China, if you think they would make enough equipment to actually try over a weekend to 51% the network. You could probably just cut a deal with someone that operates a large industrial facility to use it over the Christmas weekend or something. Still, what would that get you? A 51% attack doesn't let you just take all the coins. I find it hard to believe that they would be able to pull off any double spends large enough to justify the cost of the operation.

Why would you double-spend? It is idiotic. Double-spending would be profoundly disruptive and would not yield that much money. It is also pretty clearly illegal.

LukeJr 51%'d coiled coin for example. He did not double-spend. He merely mined 100% of the block reward and imposed larger fees on txns. That is potentially quite profitable. Once you have exhausted your opportunities to sell equipment, there is no reason not to do this. It is also not clearly illegal. At most it violates antitrust law, but good luck getting someone to prosecute.

In this case, I'd say that BFL can do it as long as they can maintain it.  Good luck with that.

Right and afterwards they just mine like regular guys. Is there some way they lose from this?

I can see one, if they mine with those produts before they sell them, then they will drive up the difficulty in the meantime, and reduce their market value.  I don't know which path is more profitable, but if you are in the business of manufacturing pickaxes it's generally counterproductive to stake the gold claims yourslef.