If you preordered a BFL ASIC rig back in August and paid for it in Bitcoin...

[Unacceptable]

It's as realistic as it gets. Opportunity cost is still a cost and had BFL shipped in October you'd be sitting pretty right now with a paid off ASIC, but they screwed you on that one too. Don't worry though it wasn't their fault, it was those damn clock buffers.

You don't get it,do you..........I have lost nothing,I spent my BTC at the time I needed to spend it.For all you knew,BTC could have decreased in value,then what "haha,we got one over on BFL,they got ripped off by the lower BTC prices",no they would not have.The value at the time is just that 

It's an investment,my product will arrive when it arrives & I will profit from it...... & you won't,haha

[DobZombie]

BTC is a currency, meant to be traded and used to purchase things, so that's what most people will do with them.

+1

[bitboyben]

What If I bought BTC at $15? how much would I have lost?

[bitcoindaddy]

And my family went on vacation while BTC was $30 last summer. By all accounts, I lost $20,000 by being away from home when I could have sold.

[Inaba]

... that means...

($13.50 - $10.50) / $10.50 = 28.5%
$30,000 * 28.5% = $8,550

...you have lost $8,550 of potential bitcoin capital gains, or that a BFL ASIC Rig would have cost you $8,550, or that had BFL keept ASIC Rig customers' preorders in bitcoin, it would have owed each of them $8,550 by now.

... Is this in any way relevant?

When you do your profitability calculation for mining hardware you need to denominate in BTC, not in USD. The question is: how long does it take the hardware to generate the amount of bitcoin (ROI break even) you'd spend at that time for the hardware purchase. This is exchange rate independent.

Now - the reduced profitability (longer ROI break even) due to all the delays in delivery are a completely different story...

It kills me to agree with Jutarul, but this is actually a pretty good way to measure it.  The whole "If you bought BTC instead of XXXX device in YYY time, you would have made ZZZZ" is ludicrous and goes to show that the person making that argument does not understand how money works.  I know it's already been said, but the value of BTC could have just as easily gone down and you would have made out ahead.  Unless you have a crystal ball, saying "You would have made ZZZZ" after the fact is nothing but rhetoric.  Sure, I can say that about ANY financial transaction that involves the exchange of money... if I had known AUD would have dropped so much since 2008, I would be a millionaire right now... however, I didn't know the USD would lose value as quickly as it did against AUD.  Hindsight is great for making financial predictions, you are always 100% right.

Now you go apply that to the real world and see how you make out.

[Jutarul]

It kills me to agree with Jutarul, but this is actually a pretty good way to measure it.

Thank you for the flowers. I learned it the hard way myself. I started mining when the price of BTC was ridiculously low, thus I paid a significant amount in opportunity cost, even though all the cards eventually broke even USD wise.

The whole "If you bought BTC instead of XXXX device in YYY time, you would have made ZZZZ" is ludicrous and goes to show that the person making that argument does not understand how money works.  I know it's already been said, but the value of BTC could have just as easily gone down and you would have made out ahead.  Unless you have a crystal ball, saying "You would have made ZZZZ" after the fact is nothing but rhetoric.  Sure, I can say that about ANY financial transaction that involves the exchange of money... if I had known AUD would have dropped so much since 2008, I would be a millionaire right now... however, I didn't know the USD would lose value as quickly as it did against AUD.  Hindsight is great for making financial predictions, you are always 100% right.

Now you go apply that to the real world and see how you make out.

In the spirit "everything has been discussed before - somehow":
https://bitcointalk.org/index.php?topic=121624.msg1313267#msg1313267

The graphs in the linked post tell you something about the intrinsic bitcoin generating power for the first ASICs, which seems to be around 1000-2000 BTC per 100 BTC invested (at $13 exchange rate and a 4x increase in difficulty). However that figure will go down fast with the date of the delivery. The good news is that it will take a significant amount of hash power to push the profitability down to less than 100% (>40x). Thus ASICs in 2013 could be considered a safe investment - given that your concern is the accumulation of bitcoin.

Caveat emptor.

[michaelmclees]

So in other words, if you think the value of something wil go up, you should be more careful about trading it away and if you think the value will go down, you should be more ready to trade it away.  Are you a wizard or something?

[timeshareafrica]

I would recomend a book Data Analysis & Decision Making with Microsoft Excel. By Albright, Winston and Zappe.
Seems to me a good investment if the asic s comming out on time

[Rassah]

It kills me to agree with Jutarul, but this is actually a pretty good way to measure it.  The whole "If you bought BTC instead of XXXX device in YYY time, you would have made ZZZZ" is ludicrous and goes to show that the person making that argument does not understand how money works. 

"Hindsight" wasn't my argument. BFL converts all BTC to USD, thus avoiding all currency risk. Buyers on the other hand preorder with BTC, and have their spent BTC sit in limbo until the product they purchase is finally delivered. True, BTC could have fallen instead of risen, which would have made those who have preordered much better off (and BTC did fall from $12 to $10.50 for a time), but this currency risk is taken on entirely by the customers. The decision to preorder a long time ago, which resulted from a huge opportunity cost, turned out to be a bad decision, but the main reason that decision was made to begin with was because BFL claimed that the delivery date was only a couple months away, i.e. BFL claimed that the currency risk would be smaller than it turned out to be. In the end, BFL was not affected, since it is not affected by BTC fluctuation due to holding USD, those who have preordered a long time ago have experienced a huge opportunity cost, and BFL is to blame. (If you think opportunity cost isn't a real cost, the extra $3,000USD worth of BTC that I have and that you don't says otherwise).
Now, I'm not saying that this is something that BFL needs to repay to those who have preordered. Currency exchange risk is often unpredictable, and something those who preordered (maybe) likely expected. I'm just pointing out that delays that happen when dealing with two currencies that fluxuate against each other do have very real costs, begin just annoyed customers and whining on forums.

By the way, it could have been MUCH worse if BFL had kept all their customer preorder funds in BTC instead, because if people asked for a refund, had BTC lost value, they could refund BTC, and had it gained value, sell it for the USD price equivalent and just return the USD, netting the BTC gains for themselves. It would have been an almost risk-free investment for them.

BTW, did BFL mention whether they are still keeping customer's preorder funds in a separate account? Because until they start shipping products, that money is still technically Unearned Revenue, and does not belong to them. I'm assuming that's what they are doing, since they are an LLC, will have to file taxes, and will have to declare it as such, lest they bring the wrath of IRS auditors upon their heads.

[Inaba]

It kills me to agree with Jutarul, but this is actually a pretty good way to measure it.  The whole "If you bought BTC instead of XXXX device in YYY time, you would have made ZZZZ" is ludicrous and goes to show that the person making that argument does not understand how money works.

"Hindsight" wasn't my argument. BFL converts all BTC to USD, thus avoiding all currency risk. Buyers on the other hand preorder with BTC, and have their spent BTC sit in limbo until the product they purchase is finally delivered. True, BTC could have fallen instead of risen, which would have made those who have preordered much better off (and BTC did fall from $12 to $10.50 for a time), but this currency risk is taken on entirely by the customers. The decision to preorder a long time ago, which resulted from a huge opportunity cost, turned out to be a bad decision, but the main reason that decision was made to begin with was because BFL claimed that the delivery date was only a couple months away, i.e. BFL claimed that the currency risk would be smaller than it turned out to be. In the end, BFL was not affected, since it is not affected by BTC fluctuation due to holding USD, those who have preordered a long time ago have experienced a huge opportunity cost, and BFL is to blame. (If you think opportunity cost isn't a real cost, the extra $3,000USD worth of BTC that I have and that you don't says otherwise).
Now, I'm not saying that this is something that BFL needs to repay to those who have preordered. Currency exchange risk is often unpredictable, and something those who preordered (maybe) likely expected. I'm just pointing out that delays that happen when dealing with two currencies that fluxuate against each other do have very real costs, begin just annoyed customers and whining on forums.

By the way, it could have been MUCH worse if BFL had kept all their customer preorder funds in BTC instead, because if people asked for a refund, had BTC lost value, they could refund BTC, and had it gained value, sell it for the USD price equivalent and just return the USD, netting the BTC gains for themselves. It would have been an almost risk-free investment for them.

BTW, did BFL mention whether they are still keeping customer's preorder funds in a separate account? Because until they start shipping products, that money is still technically Unearned Revenue, and does not belong to them. I'm assuming that's what they are doing, since they are an LLC, will have to file taxes, and will have to declare it as such, lest they bring the wrath of IRS auditors upon their heads.

I guess I'm not understanding why/how you are applying this opportunity cost to only one side of the transaction, which then results in an unbalanced transaction.  Yes, BFL is late and the opportunity cost is real, but it applies to both sides of the transaction (and thus cancels out).  Saying BFL was not affected is the fundamental problem here - BFL is only not affected if the transaction is unilaterally applied to the customer and not BFL, which is not the case (as you point out in a later paragraph).  BFL would have to hold on to the BTC and then issue refunds in USD for that to apply, and that is not what's happening.  The opportunity cost that affects the customers also affects BFL.  If we had held on to the BTC, we could have gained quite a bit (again, as you already pointed out).  So yes, the opportunity cost is real in so far as "if someone had held on to the BTC, they'd have more USD value than they did before," but again that's only valid with hindsight, not with future predictions.  If BFL had known that BTC was going to rise, BFL should have kept the BTC instead of the USD.  Anyway, I'm rambling at this point... the take away from this is that the potential opportunity cost applies to both the customer and BFL and thus cancels each other out as providing an advantage to one party over another.

To answer your question, yes we maintain preorder funds separate from expenditure funds.

[420]

One would think the preorder funds were needed to be expended to develop the new product...

[DobZombie]

One would think the preorder funds were needed to be expended to develop the new product...

According the some of the 'Business Scholars' in this forum, invested money floats around in Imagination land acquiring profits and dancing with the fairys.

O.o

[Rassah]

Yeah, sorry, I was kinda rambling a bit with that long post. Was too tired when I posted it.
I guess from BFL's perspective, they have USD costs for the devices and USD denominated revenues, so their business makes the same USD based profits from the sale of devices regardless of what BTC does. For buyers who paid with BTC that's not the case. But you're right, it's not very relevant. Maybe I'm just feeling guilty that I missed my chance to preorder due to stupid banking restrictions, and thus managed to realize those BTC gains entirely due to dumb luck.

[bitboyben]

R&D at BFL was paid for by venture capitalists. All deposit money's are safe. Been documented for long time.

But in the interest of fairness, you have a good point. Diversified investing is always a good idea and miners should also be encouraged to purchase and trade BTC. IMHO

[bcpokey]

R&D at BFL was paid for by venture capitalists. All deposit money's are safe. Been documented for long time.

But in the interest of fairness, you have a good point. Diversified investing is always a good idea and miners should also be encouraged to purchase and trade BTC. IMHO

Being "documented" suggests that there is some hard evidence somewhere, which there is not (at least not for public consumption). A more accurate phrase would be that it has been "stated" for a long time.

[creativex]

Why collect 100% of the cost of pre-order units so many months in advance then? Why not a 10 - 20% earnest deposit? That would've given the company an accurate measure of demand and protected them from unfunded commitments. Are these funds just sitting under a mattress or collecting interest somewhere? The whole thing is just shady and unprofessional, and yes I'm aware other companies have done this too, though I do not believe any of them have sat on other people's money for such an extended time frame.

[smoothie]

IMHO people who pre-ordered ASICs from BFL should be considered share holders of the company given they basically funded the entire development process with their pre-order funds.

The fact that it has been about 6 months and nothing has been delivered to customers, and also that people likely have lost "value" in their holdings in BTC if they paid in that method, says people/customers with ASIC preorders are entitled to be shareholders in the company.

But then again the agreement with BFL is not retroactive as I would hope.

Some people are just too stupid to realize that BFL had their own interests in mind and will continue to have them in mind for the foreseeable future.

"jump off a cliff because someone tells you there is gold at the bottom that will make you rich. But you can't jump off the cliff unless you pay them...all the while knowing you will die when you get to the bottom if you don't have the proper equipment for jumping off a cliff (i.e. parachute, hand glider, etc.). "

[420]

Why collect 100% of the cost of pre-order units so many months in advance then? Why not a 10 - 20% earnest deposit? That would've given the company an accurate measure of demand and protected them from unfunded commitments. Are these funds just sitting under a mattress or collecting interest somewhere? The whole thing is just shady and unprofessional, and yes I'm aware other companies have done this too, though I do not believe any of them have sat on other people's money for such an extended time frame.

then it would be much easier for people to jump ship or pre-order something else

bfl has the best business strategy, get your money the earliest

[Jutarul]

Why collect 100% of the cost of pre-order units so many months in advance then? Why not a 10 - 20% earnest deposit? That would've given the company an accurate measure of demand and protected them from unfunded commitments. Are these funds just sitting under a mattress or collecting interest somewhere? The whole thing is just shady and unprofessional, and yes I'm aware other companies have done this too, though I do not believe any of them have sat on other people's money for such an extended time frame.

then it would be much easier for people to jump ship or pre-order something else

bfl has the best a business strategy, get your money the earliest

FTFY. It's called a lock-in. The same thing happens in marriage.

[creativex]

FTFY. It's called a lock-in. The same thing happens in marriage.

...and ending it means someone gets half your sh1t.