BFL Minirig seems like a spectacular bargain?

[niko]

Something to think about is that the network generates 25 btc every 10 min more or less depending on the difficulty. When you use a newer more efficient tech you are essentially taking profits from those in the network who are using the lesser tech. Mining is a competition not just a race for finite resource.

This.

The cost of best available technology (in $s/H), and energy efficiency (in J/H) are approximately same for everyone. Everyone is competing for a piece of the same cake by deciding how much to invest based on expected BTC price, RoI period, and the two figures given above.   Plug in the past numbers (for GPUs), with the RoI of 6 months, and you'll be able to "predict" past difficulty. This is why, as has been shown many times here, price drives difficulty (with a few weeks worth of a lag).

So, in answer to OP: mining will always be marginally profitable. You could gamble on BTC price going up, and invest, and if you get lucky the RoI period might get shorter and profits higher - because others decided not to gamble. The biggest advantage is to be able to afford to keep mining at a loss: weak miners will be shaken off in these periods, and you will be able to get cheap equipment and consolidate power. This is why optimal setting for mining is hobby, where you don't really care if you are losing a little bit once in a while during dry spells.

The only catch in this analysis is the assumption that best available technology is accessible to everyone at the same price. ASICMINER might change the game and push mining ecosystem from a hobby towards a large, private entities competing to exclusively and perpetually grow their farms and optimize their technology, and ultimately to get the cheapest possible power. Eventually, they will have to start competing for payees by offering cheaper and/or faster and/or more private processing of payments.

[gogxmagog]

seems like the old idea that says "you don't get anything for free" is alive and well here. Pessimistic attitudes demand we believe that as soon as technology improves, and more "labor saving devices" appear, rather than simply making things easier, space is freed up for new difficulties to arise. A "damned if you do and damned if you don't" situation.
All ASICs will do is force GPU mining into obsolescence and make the manufacturers a load of cash. That said, adopters of ASIC will have a corner on the mining market and the increase in difficulty and hash will be balanced by the changeover in numbers of actual miners as the people involved shifts from GPU to ASIC. that should take about a year or so.
It reminds me of the film industry when everything became digital back in the 90s. Some doors shut in the face of long time analogue technicians, many doors opened for both those adept at change and newbies to the biz. now everything is digital and things look more or less the same as before the changeover.
What I reiterate here is the long-term view that ASIC profitability and difficulty will simply level out until the next-gen technology comes out.
However, I do believe that making specialized and expensive equipment essential to mining of BTC may adversely affect its value. If I have to invest thousands to be in the game in any sort of substantial way, that alone could be enough for me to decide BTC is not a viable currency. Why should I participate in an economy that is dominated by the few who are in a position to invest heavily. Its techno-elitism, which is poisonous to non-geeks i.e. 95% of the population.

[vdragon]

gogxmagog that is exatly what i was wanting to say all these days, just couldnt find the right words...

[niko]

However, I do believe that making specialized and expensive equipment essential to mining of BTC may adversely affect its value. If I have to invest thousands to be in the game in any sort of substantial way, that alone could be enough for me to decide BTC is not a viable currency. Why should I participate in an economy that is dominated by the few who are in a position to invest heavily. Its techno-elitism, which is poisonous to non-geeks i.e. 95% of the population.

You don't have to invest thousands just to stay in thr game. This is a misconception. As somebody already pointed out, the per-dollar return is pretty much the same for everyone who mines with off-the-shelf products. Scaling up does not lead to significant savings - on the contrary: unlike hobby miners, you need to start worrying about administrative overhead, heat management, investors, wiring, and general dependance of your life and career on the operation.

The only minor difference stems from the cost of electricity. Building your own ASICs is a different story.

[Bicknellski]

Why should I participate in an economy that is dominated by the few who are in a position to invest heavily. Its techno-elitism, which is poisonous to non-geeks i.e. 95% of the population.

It always has been. There are billions who have no access to clean water, proper housing and food. Mining BTC has always been techno-elitism, now it is even more rarefied. 99.999% of people on the planet have never mined a bit coin and probably never will and that is the perspective I like to use. Asics for poverty reduction I say.

[Bemtje]

Only time will tell as the increase in difficulty is still unknown. I doubt it'll be less than a year ROI.

[OrangeVonPurple]

So, the name of the game is to always stay on the bleeding edge of the available tech...in the hopes that you are implementing and bringing that tech to bare so you can collect an increased percentage of profits before all the other guys catch up. Then it's rinse and repeat with the next innovation?

Sorry if this is an ultra-noob understanding of all this I'm just fascinated by the whole process.

[niko]

So, the name of the game is to always stay on the bleeding edge of the available tech...in the hopes that you are implementing and bringing that tech to bare so you can collect an increased percentage of profits before all the other guys catch up. Then it's rinse and repeat with the next innovation?

Sorry if this is an ultra-noob understanding of all this I'm just fascinated by the whole process.

That sounds reasonable. There has been lots of discussion lately of mining economics in the context of transaction fees and various proposed changes (or lack of changes) to the maximum block size. Might wanna look into that - lots of guesswork, speculation, and wishful thinking about an immensely complex issue (coding, game theory, human nature, economics, networking, moore's law...).

[Fuzzy]

It's an arms race [that] fills up the order books of manufacturing facilitities.

That about sums it up. The manufacturers get rich, while the miners compete for a share of the pie, and there are more and more contenders entering the game, so you have to keep expanding your operation just to maintain the size of your stake.

It's proven (to me) to be about twice as profitable as buying and holding, but also 4 times as stressful and time consuming.

[OrangeVonPurple]

That about sums it up. The manufacturers get rich, while the miners compete for a share of the pie, and there are more and more contenders entering the game, so you have to keep expanding your operation just to maintain the size of your stake.

It all has a very "goldrush" feeling to it that, honestly, is pretty exciting


Thanks for taking the time to answer my questions guys!

[opentoe]

Assuming:

1) The BFL Minirig ships
2) Network hash rate stays under 500Th/s
3) Bitcoin price remains stable
4) Actual performance of the minirig is close to expeted performance

Then, it seems to me that having a Minirig is basically having a license to print Bitcoins. It would pay for itself after a few short months, and by the time a year has passed you have thousands of extra coins. Maybe even 10,000BTC?

Is this right, or is my math off?

Considering BFL won't ship for another few months is very likely. I've been reading/following their blogs and it's all about delays, delays, delays and am I wrong or there isn't even a working prototype yet? What if the whole things fails terribly? The incentive of money lured so many people in and BFL indicating shipping dates so wrong is just unethical and immoral.

[bonker]

Assuming:

1) The BFL Minirig ships
2) Network hash rate stays under 500Th/s
3) Bitcoin price remains stable
4) Actual performance of the minirig is close to expeted performance

Then, it seems to me that having a Minirig is basically having a license to print Bitcoins. It would pay for itself after a few short months, and by the time a year has passed you have thousands of extra coins. Maybe even 10,000BTC?

Is this right, or is my math off?

5) BFL aren't mining themselves IF they actually have the technology

But you are correct. ASICs are effortless, free money for the masses.. Praise Be!

[firefop]

So, the name of the game is to always stay on the bleeding edge of the available tech...in the hopes that you are implementing and bringing that tech to bare so you can collect an increased percentage of profits before all the other guys catch up. Then it's rinse and repeat with the next innovation?

Sorry if this is an ultra-noob understanding of all this I'm just fascinated by the whole process.

I suppose you could look at it that way...

What it really comes down to is economy of scale. Yes, I know that the useful idiots tend not to agree. But listen this is more about simple economics than anything else. If you invest to the point that you're making whatever income level from mining that you want. Then you re-invest to compensate for total network hash rate increases so you continue to make that income level (or more). The economy of scale comes into effect in how much gross btc you can generate in a short enough time frame to keep pulling that income.

Because the more income you have the more quickly you can add hardware. It will of course all come down to power consumption in the run. Once we reach that point then you have to make the decision of stopping purchases of new hardware and profit taking or finding better hardware, cheaper power, etc.

I say - drop your 120k on mining hardware. Pull in 20k a month... spend half your profits to buy more hardware... be happy to hit 100% a year on your investment.

[Puppet]

So, the name of the game is to always stay on the bleeding edge of the available tech...in the hopes that you are implementing and bringing that tech to bare so you can collect an increased percentage of profits before all the other guys catch up. Then it's rinse and repeat with the next innovation?

Sorry if this is an ultra-noob understanding of all this I'm just fascinated by the whole process.

I suppose you could look at it that way...

What it really comes down to is economy of scale. Yes, I know that the useful idiots tend not to agree. But listen this is more about simple economics than anything else. If you invest to the point that you're making whatever income level from mining that you want. Then you re-invest to compensate for total network hash rate increases so you continue to make that income level (or more). The economy of scale comes into effect in how much gross btc you can generate in a short enough time frame to keep pulling that income.

Thats just... daft.
Apply your logic to a CPU miner today, to see how nonsensical your argument is. There is no economy of scale, the only one that does exist works against you, as you start competing with yourself at a too big scale. You have an implicit assumption that mining is and always will be profitable. Thats very far from certain. If one mining rig is not profitable, buying 100 more isnt going to make it profitable.

[thoughtfan]

Yes, I know that the useful idiots tend not to agree....

By 'useful idiots' do you mean those who can do the math?!

Edit:  OK, so maybe I could make this post a little more 'useful' than a sarky comment!

We've already covered above that there is no virtually no advantage in terms of ROI between spending $1k or $1,000k on units bought at the same time.  If it is still not clear I would recommend thinking of each unit bought as a separate investment.  Whether you buy from money obtained from other work or from mining makes no difference to the potential to profit.  The only difference between buying all together at the beginning and the longer term re-investing of mined moneys is that each subsequent (identical) unit will make you less because the difficulty will be higher.

Of course many see their profits from mining in a different way than other money and subsequently I guess think of the risk differently.  But in a way I suppose it is like the way people like to look at staking schemes for bets.  People are too easily convinced (most often by themselves) that timing and sophisticated staking plans are going to turn a bet or combination of bets that are not particularly attractive on their own into a virtually guaranteed success.  People still believe in Martingale despite all the information you need being available in seconds with a search engine.  But each bet and each piece of mining gear will or will not profit according to how much you paid, its hashing power, its consumption and the total hashing power out there.  No matter how 'sophisticated' the staking plan it will never make a success of shit bets.

I'm not saying the BFL Minirig or any other ASIC is a bad idea but make your judgement on your assessment of that single unit bought at the time you'll buy it and don't depend on any future re-investment programme to bail you out if it doesn't work out in the first place.

I happen to be awaiting a BFL Single and a Mini-Single.  If you start mining your Minirig the same day I start with my two little ones and we pay approximately the same for electricity we will get our money back not far off the same day.  If by the time we get them the difficulty is such that there's very little to be made but that I'll get a little something back from it I'll still be happy with it for novelty's sake and to be supporting the network.  What about you?

[opentoe]

Assuming:

1) The BFL Minirig ships
2) Network hash rate stays under 500Th/s
3) Bitcoin price remains stable
4) Actual performance of the minirig is close to expeted performance

Then, it seems to me that having a Minirig is basically having a license to print Bitcoins. It would pay for itself after a few short months, and by the time a year has passed you have thousands of extra coins. Maybe even 10,000BTC?

Is this right, or is my math off?

5) BFL aren't mining themselves IF they actually have the technology

But you are correct. ASICs are effortless, free money for the masses.. Praise Be!

I'll disagree. They cost quite a bit and you pay for it and then hope to see it one day. The day you actually receive the network could be completely different and what would take just a couple weeks to get your money back could change into months or even years in just a few months. "Free money" is for those that didn't have to buy it. I could walk down the street and make more money picking up change I find then with any BFL miner.

[MangoJ]

But you are correct. ASICs are effortless, free money for the masses.. Praise Be!

That would be something.  Amazing even,  if ASIC miners were even real.   

[Fuzzy]

But you are correct. ASICs are effortless, free money for the masses.. Praise Be!

That would be something.  Amazing even,  if ASIC miners were even real.   

Are you suggesting, that the ASIC's are a lie?

[crazyates]

But you are correct. ASICs are effortless, free money for the masses.. Praise Be!

That would be something.  Amazing even,  if ASIC miners were even real.   

Are you suggesting, that the ASIC's are a lie?

No, but the cake is.

[MangoJ]

But you are correct. ASICs are effortless, free money for the masses.. Praise Be!

That would be something.  Amazing even,  if ASIC miners were even real.   

Are you suggesting, that the ASIC's are a lie?

I am not suggesting, I am making a clear statement that I do not believe anyone that ordered an ASIC miner (from BFL or Avalon) will ever receive it.  "Jeff" and the "foundation" appear to be low quality fake "evidence".  I see zero "normal" people with youtube accounts that were not created in 1 day with 1 low quality video (IE the "foundation").

Where are the people that have been on youtube for over a month, showing these off? 
Please tell me if I am wrong, I would love to see that BFL didn't commit mail fraud.. (again.  He is on probation for mail fraud in the past.)