Swedish ASIC miner company kncminer.com

[canth]

(...)

$/Gh and timing of delivery matters far more than watts/Gh.

Depends I'd say.

It depends one the environment: competitor's $ per GH/s, W per GH/s  as well as shipping date and total amount to be shipped

And I'd say that it really doesn't depend upon the environment, unless you are a large scale operation. Once difficulty gets to 20bn in 2014 or 2015, the average miner who has only 1 Jupiter isn't going to care about getting .1 BTC per month even if they have free electricity.

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[efodix]

The problem here is the preorders.

Whoa! Easy buddy. Last time I said something so radical in this thread I had to dodge some thrown stones.

Surprised ?
In earlier times the bearer of bad news usually got killed..

I guess not, it's just rather disappointing that even people familiar with mining don't seem to see the risks even after BTCFPGA, BFL, Avalon, BFL, & BFL. Nasty mining has multiple orders in for monarchs and Cognitive just ordered 14*2Th from CoinTerra for January delivery. I don't know with absolute certainty if these guys that are plainly knowledgeable about mining are making +EV bets or no, but I do know with reasonable certainty that they cannot know what exchange rates or vendor margins will look like by the time they're receiving gear. Ordering expensive equipment should not be such a gamble and it wouldn't be if people would stop sending vaporware vendors zero interest loans multiple months in advance of expected shipping dates.

I think the amount of monarchs will be enormous. Before BFL announced the monarch, they were shipping 2-3 days of singles preorders per day. Now they're shipping like 20 days.

So yeah, the exponential growth will ultimately come to an end, but we have something like 3-4 months of it ahead of us. Unless BFL announes a "monarch 2.0" that hashes 6TH/s and offers all the monarch guys to jump the queue once again...

[canth]

(...)

$/Gh and timing of delivery matters far more than watts/Gh.

Depends I'd say.

It depends one the environment: competitor's $ per GH/s, W per GH/s  as well as shipping date and total amount to be shipped

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).

+1. Crumbs, if you posted like this even half the time, that big ignore button would slowly fade away. I'm taking my ignore off, let's see how long you can maintain that! (as if you care about being ignored by me or anyone else).

[btcusr]

Right question to ask (related to huge increase in BTC exchange rate),

  What's the cost of keeping
  BTC exchange rates low?

[Nemo1024]

In the meantime, everyone should get used to the new number: 148.819.199

[ImI]

In the meantime, everyone should get used to the new number: 148.819.199

Far below what i expected.

[vesperwillow]

Why is hashfast able to provide the order chain and KnC is not willing to do so?
https://hashfast.com/order-chain/

Someone really bought 200 jets in one go?  How reliable is this information?

It was me.  It was I. 

LOL.. maybe I'm the only one who gets the correlation between this aircraft and the KNC prototypes. If that's what you're trying to say.

[vesperwillow]

In the meantime, everyone should get used to the new number: 148.819.199

My prediction is only a few percent off, not bad.

[Ghrindy]

...

Someone really bought 200 jets in one go?  How reliable is this information?

It was me.  It was I. 
http://www.militaryfactory.com/aircraft/imgs/horten-go229_3.jpg

That was 1 of the most amazing/interesting "off-topic" images I've seen on any fora in the last couple of years, crumbs!

Thanx 4 posting that pic!

http://en.wikipedia.org/wiki/Horten_Ho_229

[kendog77]

Bitcoin difficulty just hit 148,819,200, and the next bitcoin difficulty is likely to be ~200,000,000! 

Do you know where your miner is?

[soy]

In the meantime, everyone should get used to the new number: 148.819.199

Difficulty and network hashrate, how do they differ?  If one were to look at at the return on a fixed hashrate, say 10GH/s, and the network hashrate doubles, would the BTC returned per week on that 10GH/s halve?  Or does it take a doubling of the difficulty to halve the return on that 10GH/s - understanding we're talking probability not absolutes.

[DeathAndTaxes]

In the meantime, everyone should get used to the new number: 148.819.199

Difficulty and network hashrate, how do they differ?  If one were to look at at the return on a fixed hashrate, say 10GH/s, and the network hashrate doubles, would the BTC returned per week on that 10GH/s halve?  Or does it take a doubling of the difficulty to halve the return on that 10GH/s - understanding we're talking probability not absolutes.

Difficulty and hashrate and perfectly linear.   If network hash rate doubles, then difficulty doubles (eventually), and the GROSS return on x GH/s is cut perfectly in half.  The net return is reduced by more than 50% because the electrical cost remains fixed.

Based on existing (not future) pre-orders we are looking at 6 PH/s min by end of Dec.  If you want to be more conservative you should consider 8 PH/s.  

1 PH/s ~= 140 mil difficulty
1 billion difficulty ~= 7 PH/s

If you want the exact formulas

hashrate = (2^32 * difficulty) / 600
difficulty = (600 * hashrate) / 2^32

Remember the network/protocol has no way on "knowing" the hashrate (and neither do any sites which chart it).  We can only estimate the hashrate based on the frequency that blocks are found.

[Puppet]

The Genesis Block is false as it claims an exponential rise that won't occur.

exponential curve has been a pretty darn good fit so far.
http://bitcoin.sipa.be/speed-small-lin.png
Of course it wont last forever, but its only the next ~6 months or so that are truly relevant for a purchase decision today. Either way, its a much better tool than what asic vendors give you, who will gladly calculate and publish your monthly profits assuming no difficulty increase whatsoever.

What will occur is one monstrous leap by the first significant production run fulfilled in a two week window.

Yeah, so we agree;  by using previous growth to predict future growth, in the coming months it may well even be far worse than what TGB predicts. They are not scaring miners nearly enough. Is that what you meant to say?

Though personally I doubt all these asic vendors will have a supply chain in place thats actually capable of living up to their promises and ship products as fast as consumers buy them. KnC may or may not, and  I hope they wont all falter as badly as BFL and avalon,  but in reality there will be shipping delays and production ramp ups, which would translate to continued exponential curve. No one expects that curve to be a perfect fit, but that its exponential does make sense because of production ramps and one other thing you are not factoring in : price drops. These will be inevitable.

To me its simple: difficulty curve will follow the production ramp of all those vendors combined. Whatever they produce will be sold or deployed, until market price approaches production cost. We are miles away from there. Once we get close to that, exponential growth will end and taper off, but not before. The resulting curve wont be a perfect exponential curve, but the bumps we are about to experience will flatten out and become invisible over time, just like its impossible to spot the bumps in the current charts, that we had  in the past due to BTC fluctuation or  the CPU to GPU and FPGA transitions

ASICminer structured a whole business around selling items in hand for gross premium compared to what they could mine. I don't know who buys them, but someone does, so the market exists.

Whether the market is ebay or direct doesnt matter. Yes higher prices are achieved on ebay for now, but that makes no difference to the overall picture. 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. You think Apple cares about ebay premiums?

[crumbs]

^^Puppet = ActiveMiner fanboi. 
Hopefully that puts his reasoning in perspective

[itod]

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  

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.

[DeathAndTaxes]

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.

[DPoS]

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!

[crumbs]

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.  

[DeathAndTaxes]

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.

[soy]

....
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.