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Author Topic: Swedish ASIC miner company kncminer.com  (Read 3006504 times)
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September 25, 2013, 03:21:29 PM
 #10681

^^Puppet = ActiveMiner fanboi. 
Hopefully that puts his reasoning in perspective Smiley
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September 25, 2013, 03:27:14 PM
 #10682

Yeah, it will surely be unimportant in march next year when every watt will be counted if your miner is plugged from the wall or not  Roll Eyes
Perhaps, by that point you could always underclock kit, or move on to next gen - nothing lasts forever, especially at the rate at which Bitcoin mining tech is racing towards the smallest feasible die shrink, if the BTC price justifies a worthwhile investment

Regarding your idea about undercloking: It is not an option. Electricity costs eat up the generated BTC profits so fast that you have no window to mine with underclocked device. Look at KnC profit calcuclation for example:
http://mining.thegenesisblock.com/a/c14d336591
See how electricity costs kick in march next year and there is no profitability only month later? It's not only because off diff increase but also the watts you are spending. Reducing the hashrate for that month won't give you essentially nothing. That's why KnC energy 100% inefficiency compared to other 28nm manufacutrers and 60% compared to Bitfury will be very important in a few months, regardless it is not an issue this month. You can always claim that both Hashfast & CoinTerra lie they are 100% more efficient than KnC, but that's also be claimed for Bitfury and came out to be false, they are really that efficient.
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September 25, 2013, 03:28:09 PM
 #10683

Sort'a true.  The thing to keep in mind is profits fall exponentially as the difficulty climbs exponentially.  Power consumption becomes increasingly relevant with time, but, at the point when it begins to matter (coins mined ~= cost of electricity), being 50% more energy-efficient only buys you an extra month of mining at a ridiculously low profit (if the difficulty doubles during that month).

It is more complex than that.  Lets look forward a little bit.

My guess is that by end of Q1 2014 we are probably looking at 16 Ph/s.  That would be difficulty of 2.2 billion.

At this point ROI will be significantly reduced.  Even if ASIC companies slash prices to the bone electricity will be making up a larger and larger portion of gross revenue.  An Avalon miner at $0.10 per kWh will be spending 80% of gross revenue on electricity.  All of these things will weigh into future sales.  The next 16 PH/s isn't going to be "easy money" even optimistically the ROI% (using the term correctly) will be measured in % PER YEAR.

During that slow climb from difficulty 2.5 billion to difficulty 5.0 billion the more efficient devices will allow miners to keep a greater portion of the gross revenue.

For example at difficulty 5 billion, $0.10 per kWh, and current exchange rate:
Avalon & AsicMiner - negative operating revenue.  would need electricity <$0.056 just to break even ($1 in electricity produces $1 in coins)
BFL (65nm) - roughly break even higher difficulty will require going idle or selling unit to someone with lower costs
KNC - power cost is 36% of gross revenue
Bitfury - power cost is 18% of gross revenue
Other 28nm players - power cost is 17% of gross revenue

Note at this point I don't think it makes sense for anyone to place any NEW order (analyzing existing orders is more complex because a lot depends on early growth, timing, etc).  It is very likely every single company will be forced to cut prices 50% to 75% or more over the next three months to move units.  Since new units aren't going to reach break even in the next 90 days it makes more sense to wait for the inevitable price drops.

https://bitcointalk.org/index.php?topic=281279.0

The simple version.  Sure if you think difficulty will grow exponentially (doubling every 2 months) until we hit 50 billion or so and everyone even a Conterra miner with no AC costs and $0.05 per kWh electricity is mining at double digit losses then sure efficiency doesn't matter.  However the more realistic scenario is that as difficulty piles up and the "day 0" returns drop sales will slow.  ASIC providers can cut the costs of the chips but that only means efficiency becomes even MORE important.  There will be an inflection point where the growth curve flattens.   The laws of physics ensure that will happen otherwise in roughly 4 years mining will use more energy than the entire human race uses for all other purposes combined.




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September 25, 2013, 03:48:19 PM
 #10684

it makes more sense to wait for the inevitable price drops. 

didn't everyone learn from ASICMiner?   

There will be a market that buys miners, even hot off the shelf, knowing full well they are not getting the basic ROI that everyone quotes.
Many more variables exist in what 'Return' means to some people and also the means of 'Investment' different greatly in their non-basic ROI determination

So good luck waiting for the time that the market will just have these miners sitting on a shelf waiting to give anyone 2.5x basic ROI..  I mean no one would corner that in a split second right?  They would just sit there in an online shopping cart endlessly waiting and ready to be shipped that day right??

 quacks, all of ya!


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September 25, 2013, 03:54:30 PM
 #10685

Sort'a true.  The thing to keep in mind is profits fall exponentially as the difficulty climbs exponentially.  Power consumption becomes increasingly relevant with time, but, at the point when it begins to matter (coins mined ~= cost of electricity), being 50% more energy-efficient only buys you an extra month of mining at a ridiculously low profit (if the difficulty doubles during that month).

It is more complex than that.  Lets look forward a little bit.

My guess is that by end of Q1 2014 we are probably looking at 16 Ph/s.  That would be difficulty of 2.2 billion.

At this point ROI will be significantly reduced.  Even if ASIC companies slash prices to the bone electricity will be making up a larger and larger portion of gross revenue.  An Avalon miner at $0.10 per kWh will be spending 80% of gross revenue on electricity.  All of these things will weigh into future sales.  The next 16 PH/s isn't going to be "easy money" even optimistically the ROI% (using the term correctly) will be measured in % PER YEAR.

During that slow climb from difficulty 2.5 billion to difficulty 5.0 billion the more efficient devices will allow miners to keep a greater portion of the gross revenue.

For example at difficulty 5 billion, $0.10 per kWh, and current exchange rate:
Avalon & AsicMiner - negative operating revenue.  would need electricity <$0.056 just to break even ($1 in electricity produces $1 in coins)
BFL (65nm) - roughly break even higher difficulty will require going idle or selling unit to someone with lower costs
KNC - power cost is 36% of gross revenue
Bitfury - power cost is 18% of gross revenue
Other 28nm players - power cost is 17% of gross revenue

Note at this point I don't think it makes sense for anyone to place any NEW order (analyzing existing orders is more complex because a lot depends on early growth, timing, etc).  It is very likely every single company will be forced to cut prices 50% to 75% or more over the next three months to move units.  Since new units aren't going to reach break even in the next 90 days it makes more sense to wait for the inevitable price drops.

https://bitcointalk.org/index.php?topic=281279.0

I can't argue with your conclusion (and already read the thread you linked & your thread estimating hashrate based on pre-orders -- thanks).  I think we disagree on minor details -- i think the irrational component, and inability to accurately predict the difficulty three months in advance (the average pre-order time -- i might be off), play a greater role in the hashrate increase.  It's not simple math -- it's estimating the ability of others to estimate the ability of others (...) to do simple math.  
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September 25, 2013, 03:54:53 PM
 #10686

it makes more sense to wait for the inevitable price drops.

didn't everyone learn from ASICMiner?  

There will be a market that buys miners, even hot off the shelf, knowing full well they are not getting the basic ROI that everyone quotes.
Many more variables exist in what 'Return' means to some people and also the means of 'Investment' different greatly in their non-basic ROI determination

So good luck waiting for the time that the market will just have these miners sitting on a shelf waiting to give anyone 2.5x basic ROI..  I mean no one would corner that in a split second right?  They would just sit there in an online shopping cart endlessly waiting and ready to be shipped that day right??

 quacks, all of ya!



Who said anything about 2.5x basic ROI.  In the real world best prices are based on large volume, and lean operations.  Something like buying $200K worth of ASICS and operating at $0.05 per kWh and even THEN realistically shooting for <30% per year return on investment. 

As for people buying ASICMiners today.  They do it because the "day 0" ROI% is still high.   Sure that will rapidly decline to nothing and they probably will never make up the purchase price but the
"day 0" return is still good.  Looking at current difficulty an Eruptor blade makes about 1.1 BTC per month.  People can always delude themselves into thinking future difficulty won't grow or it wont' grow that fast.  However it is another thing to have negligible or negative ROI% on the first day.  When difficulty is 10x higher and an Eruptor Blade makes 0.01 BTC per month after electrical costs, based on "day 0" return and ignoring future difficulty growth I don't expect to see them flying off the shelves.
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September 25, 2013, 03:56:57 PM
 #10687

....
There is only a demand on ebay because there is an (incorrect) assumption of profitability. Exploiting that ignorance for as long as it exists is a valid though risky business model for individuals, its not something you can count on when producing those miners.

So, looking into the future, the best profitability would be to buy when the cost of miners is just a bit more than cost of production and the manufacturers are about to quit.  But, somewhere in the future before that, the cost of buying then presently available miners which can truly see ROI within 12 months might happen?  One might assume that would be within 12 months of one of more major manufacturers permanently halting production.



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September 25, 2013, 03:58:50 PM
 #10688

I can't argue with your conclusion (and already read the thread you linked & your thread estimating hashrate based on pre-orders -- thanks).  I think we disagree on minor details -- i think the irrational component, and inability to accurately predict the difficulty three months in advance (average pre-order time -- i might be off), play a greater role in the hashrate increase.  It's not simple math -- it's estimating the ability of others to estimate the ability of others (...) to do simple math.  

BFL is largely to blame with their >1 year "pre-orders".  However the good news is pre-order timeframes are coming down.  

BFL >1 year delivery time
KNC started taking orders in June? and will ship in Oct (last day of Sept is close enough to Oct) = 4 month delivery time
Bitfury started taking orders in July and delivered early Sept = 3 months delivery time
HF started taking orders in Aug and will ship in Nov = <3 months (last batch 1 order was Aug 24)

Second batches should tighten that schedule further. As that shrinks and the network gets larger there becomes more visibility on what difficulty will be the day you get your unit.  The combo working together will be very powerful.  Still I agree on the larger point and the one reason I find mining unattractive at the current time is the largest factor on your return is the actions of others.
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September 25, 2013, 04:02:16 PM
 #10689

I think the missing factor in all of these analyses of ROI is how much of the daily volume on all the currency exchanges combined comes from mining output. Above a certain threshold and the price is influenced by the costs of entering the mining arena. In other words, miners can convert their gains to fiat with limit orders and as the cost of mining goes up or the amount of bitcoins received per miner goes down, surely some of those miners will insist on a higher ask price?

Obviously markets are chaotic and unpredictable, but I haven't seen any decent analysis of how much an impact the mining community does have on the exchange rates. Any theories or evidence?

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September 25, 2013, 04:04:17 PM
 #10690

I think the missing factor in all of these analyses of ROI is how much of the daily volume on all the currency exchanges combined comes from mining output. Above a certain threshold and the price is influenced by the costs of entering the mining arena. In other words, miners can convert their gains to fiat with limit orders and as the cost of mining goes up or the amount of bitcoins received per miner goes down, surely some of those miners will insist on a higher ask price?

Obviously markets are chaotic and unpredictable, but I haven't seen any decent analysis of how much an impact the mining community does have on the exchange rates. Any theories or evidence?

Market volume is significantly higher than the rate of coin generation and that trend will only continue the subsidy will be cut by 50% again in 3 years and one would certainly hope year over year market volume will continue to rise.  Miners have very little pricing power today and it will only be reduced in the future.  Difficulty follows price, price doesn't follow difficulty.
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September 25, 2013, 04:05:46 PM
 #10691

Market volume is significantly higher than the rate of coin generation and that trend will only continue the subsidy will be cut by 50% again in 3 years and one would certainly hope year over year market volume will continue to rise.  Miners have very little pricing power today and it will only be reduced in the future.  Difficulty follows price, price doesn't follow difficulty.

Any numbers to quantify that statement?

"How are you justifying these as fair use?  They are clearly and unequivocally a copyright violation."
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September 25, 2013, 04:14:41 PM
 #10692

I can't argue with your conclusion (and already read the thread you linked & your thread estimating hashrate based on pre-orders -- thanks).  I think we disagree on minor details -- i think the irrational component, and inability to accurately predict the difficulty three months in advance (average pre-order time -- i might be off), play a greater role in the hashrate increase.  It's not simple math -- it's estimating the ability of others to estimate the ability of others (...) to do simple math.  

BFL is largely to blame with their >1 year "pre-orders".  However the good news is pre-order timeframes are coming down.  As that shrinks and the network gets larger there becomes more visibility on what difficulty will be the day you get your unit.  The combo working together will be very powerful.  Still the one reason I find mining unattractive at the current time is that the largest factor in your return is the actions of others.

I would like The Genesis Block main page to have one large obvious button that gives a calculation of what cost, $/GH/s for a miner, if starting mining that instant, using the best projections for future miner shipments obtainable to estimate future difficulty, will produce ROI in 12 months - you enter only kw cost.



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September 25, 2013, 04:16:48 PM
 #10693

Market volume is significantly higher than the rate of coin generation and that trend will only continue the subsidy will be cut by 50% again in 3 years and one would certainly hope year over year market volume will continue to rise.  Miners have very little pricing power today and it will only be reduced in the future.  Difficulty follows price, price doesn't follow difficulty.

Any numbers to quantify that statement?

http://bitcoinity.org/markets/list?currency=ALL&span=6m

In the last 6 months there was >17,586,579 BTC traded.  That is >97,703.22 BTC per day.  Miners produce ~3,600 BTC per day.  The market trades over 27x as much.  Note that doesn't even include all exchanges, and excludes all off exchange transactions.   In reality it is probably closer to 50x.  Also remember those 3,600 BTC are spread out across thousands of miners.  It is far easier to be a big player on the market then to try and be a big player on the supply side.

I don't have a link but someone did a statistical analysis of price and difficulty way back in the dark ages of GPU mining and showed a correlation where difficulty is dependent on price but price isn't dependent on difficulty.  Anecdotally I have seen this effect in GPU mining.  There were many times were for marginal miners (those with low efficiency and high power costs) returns went negative.   Operating margins improved when difficulty went down not because some mining cartel removed enough supply to push prices up.
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September 25, 2013, 04:23:46 PM
 #10694

I can't argue with your conclusion (and already read the thread you linked & your thread estimating hashrate based on pre-orders -- thanks).  I think we disagree on minor details -- i think the irrational component, and inability to accurately predict the difficulty three months in advance (average pre-order time -- i might be off), play a greater role in the hashrate increase.  It's not simple math -- it's estimating the ability of others to estimate the ability of others (...) to do simple math.  

BFL is largely to blame with their >1 year "pre-orders".  However the good news is pre-order timeframes are coming down.  As that shrinks and the network gets larger there becomes more visibility on what difficulty will be the day you get your unit.  The combo working together will be very powerful.  Still the one reason I find mining unattractive at the current time is that the largest factor in your return is the actions of others.

I would like The Genesis Block main page to have one large obvious button that gives a calculation of what cost, $/GH/s for a miner, if starting mining that instant, using the best projections for future miner shipments obtainable to estimate future difficulty, will produce ROI in 12 months - you enter only kw cost.

So, some manufacturers or at least one will dump massively into advertising while not really shipping so as to take in as much money as possible while skewing the projections.  So the easy $/GH/s needed for 12 months would quickly kill sales of overpriced miners.

And add a separate Delivery Projection button.  Say, x miner ordered on March 15, 2013 expected to be delivered on .... all based on historical data.



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donch
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Updated ironic image.


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September 25, 2013, 04:28:39 PM
 #10695


http://bitcoinity.org/markets/list?currency=ALL&span=6m

In the last 6 months there was >17,586,579 BTC traded.  That is >97,703.22 BTC per day.  Miners produce ~3,600 BTC per day.  The market trades over 27x as much.  Note that doesn't even include all exchanges, and excludes all off exchange transactions.   In reality it is probably closer to 50x.  Also remember those 3,600 BTC are spread out across thousands of miners.  It is far easier to be a big player on the market then to try and be a big player on the supply side.

I don't have a link but someone did a statistical analysis of price and difficulty way back in the dark ages of GPU mining and showed a correlation where difficulty is dependent on price but price isn't dependent on difficulty.  Anecdotally I have seen this effect in GPU mining.  There were many times were for marginal miners (those with low efficiency and high power costs) returns went negative.   Operating margins improved when difficulty went down not because some mining cartel removed enough supply to push prices up.


Thanks for the reply and don't want to go too off-topic, but a 6 month figure includes all the volatility (and associated volume) surrounding  the "external" factors such as media engagement and big players entering the market when the $260 point was reached. In periods of low volatility, such as in recent times, the volume to bitcoin mining supply ratio seems to be between 1:3 and 1:6 extrapolated from the last 30 day and 7 day periods:

http://bitcoinity.org/markets/list?currency=ALL&span=7d
http://bitcoinity.org/markets/list?currency=ALL&span=30d  

It's all speculation and time will tell, but I get a feeling that the market "idling" price is at least in some small way affected by mining costs.

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s1ms3
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September 25, 2013, 04:34:51 PM
 #10696

Has someone already asked for a refund at this late stage of developement?
DeathAndTaxes
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Gerald Davis


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September 25, 2013, 04:36:44 PM
 #10697

Well as a miner you can't control how much increased volatility there will be.  Over an extended time mining say 6 months you are going to go through multiple periods of both.  I never said miners have absolutely no influence on price just that they have very little pricing power.  Miners aren't a single unified cartel. They all have different price points, risk apetites, efficiencies (range from 0.8 J/GH to >8 J/GH) and power costs.  What is a negative operating margin for one miner is a a massive 90%+ margin for another.  Some miners may hold coins or place higher limit prices but some may just dump as they see the current price as good and have thousands of dollars a month in electrical cost.
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September 25, 2013, 04:36:56 PM
 #10698

Market volume is significantly higher than the rate of coin generation and that trend will only continue the subsidy will be cut by 50% again in 3 years and one would certainly hope year over year market volume will continue to rise.  Miners have very little pricing power today and it will only be reduced in the future.  Difficulty follows price, price doesn't follow difficulty.

Any numbers to quantify that statement?

http://bitcoinity.org/markets/list?currency=ALL&span=6m

In the last 6 months there was >17,586,579 BTC traded.  That is >97,703.22 BTC per day.  Miners produce ~3,600 BTC per day.  The market trades over 27x as much.  Note that doesn't even include all exchanges, and excludes all off exchange transactions.   In reality it is probably closer to 50x.  Also remember those 3,600 BTC are spread out across thousands of miners.  It is far easier to be a big player on the market then to try and be a big player on the supply side.

I don't have a link but someone did a statistical analysis of price and difficulty way back in the dark ages of GPU mining and showed a correlation where difficulty is dependent on price but price isn't dependent on difficulty.  Anecdotally I have seen this effect in GPU mining.  There were many times were for marginal miners (those with low efficiency and high power costs) returns went negative.   Operating margins improved when difficulty went down not because some mining cartel removed enough supply to push prices up.

It's not just about what miners produce, I agree that has a neglectable impact on the price. But the amount of money that goes into buying mining hardware can have a significant impact on the price, as when mining becomes an unprofitable investment a lot of money will be looking elsewhere to invest and part of that money will go back into bitcoin itself driving up the price. Until the price is high enough (and difficulty low enough) for mining hardware to become an attractive investment again. Smiley

Bitcoin = Gold on steroids
Vedran Yoweri
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September 25, 2013, 04:37:30 PM
 #10699

Has someone already asked for a refund at this late stage of developement?
Boom! Another one bites the dust.
Miz4r
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September 25, 2013, 04:41:20 PM
 #10700

Has someone already asked for a refund at this late stage of developement?
Boom! Another one bites the dust.

Those who ask for a refund now at least get their investment back, those who don't will be most likely looking at a negative ROI. Gonna be interesting to watch. Tongue

Bitcoin = Gold on steroids
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