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Author Topic: Will fund ASIC board for mining community. Need Hardware devs.  (Read 40199 times)
skyhigh
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July 15, 2011, 08:25:31 AM
 #101

What about financing it through shares? I mean, creating a sort of a cooperative that pays dividends in cards, so people pay the money and at the end when it is developed they get payed in cards. That way you are making sure you will get a number of sales before starting the project. Sort of like testing the waters to know if the demand is there.

Here is my idea.   Read it twice Smiley  It might still be somewhat messed up, but you will get the idea. I will also round up the numbers and explain why. If we go by JoelKatz numbers project upfront cost $2 mill, each unit would cost $650 to produce.

I will write on the example of 1000 investors. Each investor would invest $2500 for upfront cost and 5x$700  to receive 5 units of the product when it would be produced. Each of the 1000 investors would invest $6000 and receive 5 units of 5.x Gh/s at 250 W, so approx 25 Gh/s at 1250 W for $6000. This way we would have $2.5mill cash to develop and presold 5000 units at $700 each which is around production cost plus some spare.

When we would ship this 5000 units to initial investors, we would start taking pre-orders for a next batch of at least 1000 units at $2000 each for public / investors. There would be a time delay of at least  4 weeks between each batch of 1000 units. When this pre-order fills all 1000 units are shipped to their owners. Then we start taking pre-orders for at least 1000 units at $1750 each and repeat the process. Then at least 1000 units at $1500. We would stop lowering the price at $1000 per unit unless something drastically would change, like a new competitor or whatever.

*If there would be more than 1000 orders we would fill all before start taking pre-orders for next batch at a lower price.

The time delay between each shipment, would need to be calculated more precisely ( I used an estimate ),  is for the difficulty factor changes. It needs to be calculated in the way that the guys who would buy $2000 unit  would have time to earn enough coins compared to the next batch units that would sell for $1750 and so on.


Where would all the profit go, if there would ever be any?   

Back to original 1000 investors. Company would buy bitcoins on the open market with all the profits and transfer it to the 1000 investors every quarter. Keep in mind that this example is for 1000 initial investors for $6000 each. If there would be more interest we would redo the math. If for example there would be 1500 investors, we would do $1500+ 4x$700. There has to be a minimum limit of at least 1000 investors so everyone could invest plus this would keep majority of the hashing power spread out. We don't want to get a small group to run ASICs while the rest would still use GPUs and would have to stop mining soon after.

Each investor would have 10000 shares in the company, which they could later on buy/sell on the open market for bitcoins, so everyone could be a part of this company. We would develop and add this exchange later on. This way we would get ASIC and everyone could get in on the action. Initial 5000 units would add 25 Th to the network, then each 1000 batch would add approx 5+ Th.



This is just a nutshell, community would work out every possible detail so it would be best for everyone involved. There is a lot more details I already know, but I don't want to write an essay here.

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hugolp
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July 15, 2011, 10:48:56 AM
 #102

Sounds fine. The problem is finding 1000 investors. Does not sound like an easy task.
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July 15, 2011, 10:53:06 AM
 #103

I would invest if A) it were feasible
                        B) the numbers were more concrete e.g cost defined

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July 15, 2011, 11:10:06 AM
 #104

I would invest if A) it were feasible
                        B) the numbers were more concrete e.g cost defined
Same here, funds are at the ready :-)

Want to see what developers are chatting about? http://bitcoinstats.com/irc/bitcoin-dev/logs/
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skyhigh
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July 15, 2011, 11:18:05 AM
 #105

Sounds fine. The problem is finding 1000 investors. Does not sound like an easy task.

Is it the money value that you think is the problem or sheer number of investors?

I think if the whole community can't come up with at least 1000 potential investors each risking $6000, then I think the whole bitcoin project isn't ready for ASIC yet. It needs more time for its natural growth.

We need to be careful here, I will give you an extreme example:

if only 50 people would invest each $100,000 they could put the whole bitcoin project in danger. Not in a way that they could ruin the whole thing, but just takeover mining and collect 40% of all coins in each round, then reinvest and keep growing, basically to the point where this small group of 50 people would hold 90+% of the market. By that time majority of the GPU miners would stop already, which could put the whole trust of the network into hands of 50 individuals, each only putting up $100,000 at the begining.



I understand it might not be an easy task, but we won't know unless we come up with detailed plans and see what community thinks. Right now we are only talking approx costs of the whole thing to get a frame work done.
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July 15, 2011, 11:33:54 AM
 #106

Sounds fine. The problem is finding 1000 investors. Does not sound like an easy task.

Is it the money value that you think is the problem or sheer number of investors?

I think if the whole community can't come up with at least 1000 potential investors each risking $6000, then I think the whole bitcoin project isn't ready for ASIC yet. It needs more time for its natural growth.

We need to be careful here, I will give you an extreme example:

if only 50 people would invest each $100,000 they could put the whole bitcoin project in danger. Not in a way that they could ruin the whole thing, but just takeover mining and collect 40% of all coins in each round, then reinvest and keep growing, basically to the point where this small group of 50 people would hold 90+% of the market. By that time majority of the GPU miners would stop already, which could put the whole trust of the network into hands of 50 individuals, each only putting up $100,000 at the begining.



I understand it might not be an easy task, but we won't know unless we come up with detailed plans and see what community thinks. Right now we are only talking approx costs of the whole thing to get a frame work done.

I dont know if we will be able to find the investors. Maybe is easier than I think, who knows. The obvious move now is that someone capable and with some respect in the Bitcoin community ( **cough** JoelKatz **cough** ) picks up the project, writes down a viable plan both from the economical and engineering point of view and then throws the idea out to see if the investors are there or not.
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July 15, 2011, 01:06:33 PM
 #107

The cost per ASIC would be under $100 plus a share of the development costs. So it all comes down to how many chips you can make/sell. That would give you a 5.6GHash/s mining peripheral for around $650 including baseboard, cooling, power supply, and so on, but not including the cost of development.

To have it make business sense to borrow money to fund the development (assuming you could even arrange it), you'd have to be able to sell the miners for $1,500 each or so and you'd have to be able to sell 5,000 units. I think people would pay $1,500 for 5.6GHash/s at 250W, but I'm not sure 5,000 units would sell, especially as early sales raise the difficulty. (And if that happened, the total network hashing power would jump to three times what it is now!)
Extending these numbers, 5000 units at 5.6GH/s each is a total of 28,000 GH/s
Given the current non-ASIC hash rate of about 11,000 GH/s, the new hardware would constitute 72% of the network
Assuming block generation levels out at 144 blocks/day and 50 BTC per block, that's 7200 BTC per day, 72% of which is 5169 BTC per day.
Divided among 5000 modules, each module would earn approx 1BTC per day.
At (say) $10 per BTC, that's $72,000 per day for the entire network
72% of that for the ASICS would return about $51,700 daily.
5000 modules at $650 each is $3.25 M, plus NRE of $2 M is $5.25 M.  It would take 101 days at $51,700 to recover the initial investment.

There is diminishing returns in producing more modules, as each additional module adds fewer BTC to the ASIC total.  According to my estimates, the highest return on investment occurs at about 2500 modules, paying off the initial investment in about 90 days instead of 101.

If a massive wave of zombies with GPUs drove up the total hash rate, that could hurt the return, but it would require quite a zombie army.  Or if BTC were to drop precipitously, that would obviously be a risk.  Owning more than half the network also hurts the perceived security, which could in turn hurt the value, which could be a reason to sell the hardware to diversify the ownership.  It would also be good to plan for, or at least consider when the coinbase drops to 25.

But aside from these risks, the idea seems sound.
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July 15, 2011, 02:28:21 PM
 #108

I dont know if we will be able to find the investors. Maybe is easier than I think, who knows. The obvious move now is that someone capable and with some respect in the Bitcoin community ( **cough** JoelKatz **cough** ) picks up the project, writes down a viable plan both from the economical and engineering point of view and then throws the idea out to see if the investors are there or not.
I'm not an ASIC expert. I can manage engineering projects, design complete systems, write software, and design hardware above the chip level. I have some FPGA/PLD experience, but that was more than a decade ago. Someone with real ASIC-specific expertise would need to make a detailed plan and firm up my numbers (remember, these were back of the envelope calcuations).

I can tell just from my own expertise that if the ASIC meets its design goals, the rest of the system is not particularly difficult. Generating and moving the work units and collecting the shares is not difficult at all. Providing power and cooling is simple.

Also, I can't take on significant time commitments that don't provide certain revenue because I've already taken on more of them than I should have.

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July 15, 2011, 09:24:49 PM
 #109

I'm probably in about the same boat as JoelKatz. I would not call myself an ASIC expert, but I've been involved in ASIC design projects for nearly 20 years, so I have a reasonable feel for the time and money it would take to get the job done in the context of a small engineering startup. I agree that it's about a $2 million, 1-year job to get one to production, using the open source FPGA miner as a starting point.

So, here's the thing. I have the technical expertise to participate in such a project, and I'd even enjoy it. However, I presently have a good job at a huge semiconductor company, with good compensation and a good expectation of stability over the next few years. If I were to pursue a Bitcoin mining ASIC project, then life might be good for up to a year, and then I'd find myself out of work. I have a mortgage to pay, and my bank doesn't take Bitcoins yet. And I don't have a nest egg stashed away that would let me do a one-time job like this and then be out of work for a while as I look for the next job. I'm interested in Bitcoin and would like to see it succeed, but I don't think it's in a state yet where I'd bank my career on it.

There may be good ASIC engineers out there who are in a much better financial/career position than me to take on this sort of project. If there's also somebody with a couple million bucks they'd like to front on this, then GPUs might go the way of the CPU for Bitcoin mining by this time next year!

Regarding USB vs. Ethernet as the interface for these proposed ASICs, there are lots of options for embedded microcontrollers that would be suitable for managing a herd of ASIC miners. A little ARM processor, running Linux, with an Ethernet interface would be quite do-able. The end product could be a standalone appliance that just needs to be plugged into power and an Ethernet jack, configured to log in to your favorite pool, and then left alone. There are even all sorts of off the shelf embedded microcontroller boards that could be used for prototyping.
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July 15, 2011, 09:27:52 PM
 #110

I dont know if we will be able to find the investors. Maybe is easier than I think, who knows. The obvious move now is that someone capable and with some respect in the Bitcoin community ( **cough** JoelKatz **cough** ) picks up the project, writes down a viable plan both from the economical and engineering point of view and then throws the idea out to see if the investors are there or not.
I'm not an ASIC expert. I can manage engineering projects, design complete systems, write software, and design hardware above the chip level. I have some FPGA/PLD experience, but that was more than a decade ago. Someone with real ASIC-specific expertise would need to make a detailed plan and firm up my numbers (remember, these were back of the envelope calcuations).

I can tell just from my own expertise that if the ASIC meets its design goals, the rest of the system is not particularly difficult. Generating and moving the work units and collecting the shares is not difficult at all. Providing power and cooling is simple.

Also, I can't take on significant time commitments that don't provide certain revenue because I've already taken on more of them than I should have.

Fair enough.
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July 16, 2011, 01:58:36 AM
 #111

I'm not an ASIC expert. I can manage engineering projects, design complete systems, write software, and design hardware above the chip level. I have some FPGA/PLD experience, but that was more than a decade ago. Someone with real ASIC-specific expertise would need to make a detailed plan and firm up my numbers (remember, these were back of the envelope calcuations).

I can tell just from my own expertise that if the ASIC meets its design goals, the rest of the system is not particularly difficult. Generating and moving the work units and collecting the shares is not difficult at all. Providing power and cooling is simple.

Also, I can't take on significant time commitments that don't provide certain revenue because I've already taken on more of them than I should have.

Thanks for clearing up some of the math behind the feasibility - what do you think we as a mining community can do to prevent some company from rolling in and taking over? Should we try to stop that kind of behavior?

Maybe changing the bitcoin code? Developing our own ASIC? Distributing the bitcoins amongst a larger amount of people?

I definitely don't know what the answer is, but I've been getting the feeling that the invisible hand actually belongs to one or several people - and not the market (as it should).

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July 16, 2011, 02:15:39 AM
 #112

I definitely don't know what the answer is, but I've been getting the feeling that the invisible hand actually belongs to one or several people - and not the market (as it should).

It looks that way, especially with the cost of the hardware. What I mean is anybody can buy a decent video card, they are not that expensive. Also, they are useful for games, video encoding etc, so if mining does is not profitable, I can put the card in my main PC and play games on better graphic settings. It would not be a total loss (even though I would not have bought the card just for gaming). Even if I burn out the card trying to mine it's still ~$180, not $1000.

OTOH, the ASIC will cost at least $1000 (more than any one ATI video card) and while it will outperform any currently existing card, it it useful only for mining. If mining is not profitable, the $1000 is a total loss. And, $1000 is a lot of money. Of course, those who can afford to gamble $1k (or $2k) on this will make mining with a GPU not worth it (just like it is now with CPU mining), so the miners who have to pay for electricity will drop, leaving the majority of the hashing power in the hands of a few people who could pay a lot of cash up front for the devices.

I don't think that Bitcoin will be that distributed anymore, also, if the ASICs are made so that they can also forge transactions (for the manufacturer) it would be a big problem.

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July 16, 2011, 03:11:28 AM
 #113

Thanks for clearing up some of the math behind the feasibility - what do you think we as a mining community can do to prevent some company from rolling in and taking over? Should we try to stop that kind of behavior?
I think it is now evident that the mining algorithm probably should have been memory hard, not just processing hard. That is, the mining algorithm should have been designed to require at least 128MB of RAM. That would have made CPU and GPU mining practical and on a roughly even footing, and it would have made ASIC/FPGA mining impractical.

See 'scrypt' for an example of a memory hard hashing algorithm. It was designed to resist exactly this kind of 'attack'.
http://www.tarsnap.com/scrypt/scrypt-slides.pdf

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July 16, 2011, 03:13:32 AM
 #114

I'll just leave this here

http://news.slashdot.org/story/11/07/11/2232253/JPMorgan-Rolls-Out-FPGA-Supercomputer
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July 16, 2011, 03:17:28 AM
 #115


Ctrl-F
Bitcoin

...there's always someone.

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July 17, 2011, 01:30:11 AM
 #116

Personally I don't think I will join, at least not for now.

But I would advise you to wait for the HD 7000 generation gets released so you can measure what exactly you are up against, the graphics cards will jump TWO half nodes down to the latest state of the art 28nm process, this cannot be underestimated.
Furthermore, you will be going up against two microarchitectures, not just one. There is 2nd generation VLIW4 which you will be measured against. Then there is Graphics Core Next microarchitcture, which might turn out to be a very scary in addition to the two half node shrinks, but we don't have much info about this yet.

And as others have noted, the graphics cards are multipurpose, they can be used for other projects like F@H, they can be used for gaming, they can be given to family who can make use of them, they can be sold to other people as 2nd hand. This flexibility in itself also has a value, you need to somehow compensate for this to attract investors, I'm not sure if high hashrates alone is enough.

It won't hurt to be extremely careful when you're dealing with something like a 2 million dollar investment. But good luck you guys!

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July 25, 2011, 08:51:57 PM
 #117

I think that as the other ASIC thread (The one that seemed to be a Chinese scam) is now pretty much dead, this one should be bumped up so that everyone can carry on with this discussion.

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July 26, 2011, 06:38:31 PM
 #118

To the original OP, I think we should start compiling a list of interested ASIC investors here on the forum.  Perhaps the admins can send out an notice to let everyone know....

Regards,
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July 26, 2011, 07:30:29 PM
 #119

As I said already  i am a willing investor. My current plan is fully scheuled out until end of the year, but this can be redirected.... and is not insignificant,unless I stop to invest into mining, whichwould be stupid given I am just signinf a 350 square meter lease only for mining Wink
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July 26, 2011, 08:24:43 PM
 #120

I'd be interested.

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