ASIC resale value

[mechs]

When one considers either buying ASIC hardware outright or investing in a mining company, it would be useful to have some idea of book value.  You can safetly assume within 18 months (likely generous assumption), almost any ASIC purchased now will be non-cost effective to continue running.  I believe if you purchase for example a BFL 60GHZ (I see one on ebay going for about 10k), the chances of making that back in 18 months just off of the coins produced is very little (even if we assume the exchange rate stays around 65BTC/USD which seems optimistic).  In order to make a reasonable decision that buying an ASIC now can ever lead to a worthwhile ROI (to me that would be about 25% in 18 months), the question is will these ASIC units have any reasonable re-sale value?

For example, my friend had a GPU miner with 5 7950s, which he recently shut down and has sold the 7950s (just over a year old) for an average of $230 each on ebay - considering they only cost $320 each to buy, that is a pretty minute depreciation of only 30%.  That is because these GPUs still have use in gaming and you combine a couple in Crossfire mode, and they can keep up with even the newest GPU cards and a lower cost (especially with some overclocking).

In order for ASICs to not drop to near neglible value, they would need to have some use after it is no longer profitable to mine bitcoins.  If the Fiat/USD continues to decrease and the hash rate increase exponentially, this time will likely come soon for the "older" (ie a couple months old) Avalon and BFL units currently in use - especially some of these units are not very $/Watt efficient compared to the newer ASICs being developed.  So, I guess the question is: are there any alternate valuable uses for ASICs once BTC no longer profitable.  If not, then you need to base your entire investment on the Bitcoins produced assuming hardware resale goes to near 0, which is a much bigger challenge to face than the GPU miners ever had to since they can sell their hardware for about 70% if the original cost.

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[empoweoqwj]

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Its not like they can draw pretty graphics is it 

[mechs]

So people will be taking out the PSU and throwing away the rest?  It makes it hard to justify purchasing an ASIC if you cannot be guaranteed to get one of the earliest versions of the newest technology. 100% depreciation is pretty unheard of in most investments.

[cp1]

They have no other uses.  Everyone who is buying them factors this into their calculations.

[mechs]

I do not see how a BFL 60GHZ at 10k will ever make the 155BTC required to break-even - and that is assuming the usd/btc ratio does not continue to decline.  The only way I see to be profitable would be to pre-order the next "new" ASIC so you get it before others and then you of course take on the risk of whether the company will actually deliver on time or at all.  Not a great risk/reward ratio - seems buying ASICMINER shares a better risk then buying hardware directly.

[Trillium]

They will still be worth a lot for a while, even when most people find the power costs to run them are no longer worth the return, because there are always people who have free power, or extremely low electricity rates.

We see the same things happening right now... people setting up litecoin farms in their free-electricity residences etc.

[mechs]

At some point, the owners (guessing mostly dorms) of these electricity "free" residences will notice the higher utilities and crack down on it. 

[notlist3d]

At some point, the owners (guessing mostly dorms) of these electricity "free" residences will notice the higher utilities and crack down on it.  

Dorms don't pay any attention to electricity.  Only way they would ever know is a staff member seeing a farm of gpu's.  And its highly unlikely most will have it against rules anytime soon.

Asic resale value is at a premium ATM.  Until they there are more on the market i predict they sell for higher then cost for a while.  Once more are on market it will drop dramatically, specifically some of the cheaper per GH ones.  Another advantage of GPU is they are not tied to coin value, if a big drop hits GPU's still most likely the same value on resell.  

[DeathAndTaxes]

Why do you think the economic lifespan of an ASIC is only 18 months.  Imagine for a second you bought a GPU 18 months ago and no FGPA or ASICs existed.  Would the economic value (not resale) of your GPU be $0.

You may say "wait people can make faster ASICS" and that is true but we are talking about a marginal increase not a magnitude increase.  Going to a smaller process means about 2x the electrical efficiency (MH/W) and maybe 1.5x the MH/$.  So people have more efficient rigs but no so much more efficient rigs that yours will not be able to cover the cost of electricity.

[rograz]

They have no other uses. 

Space heater? 

[Quix]

This is exactly what I've been saying all along, the prices they're charging for ASICs is too high to make payoff a reasonable prospect (except for ones delivered a few months ago, obviously). This is why I'm not going to be buying a bunch of them, if I can get a few for a reasonable price I might just for fun but the ASIC price vs expected revenue is pretty bleak. The difficulty curve is ridiculous right now, constantly increasing at a huge rate. GPU mining isn't profitable anymore and ASICs are very pricey right now with no resale value. The whole situation makes mining very unattractive if you run the numbers.

There are two things that can keep you mining at this point, goldrush mentality and being an early adopter. I have niether so I'm staying away. If the price of ASICs drops enough I may pick up a few for fun but that's it. Electricity costs + my time make it unreasonable for me to GPU mine right now.

[Trongersoll]

I can think of one other use for the usb erupters, but i'd rather not mention it. i'll let someone else open pandora's box.

[tinus42]

Could a researcher develop software that uses SHA256 hashing for something like Folding@Home to make use of cheaply available discarded ASIC units?

[1l1l11ll1l]

When I look at ROI, my 5 BFL singles arrived June 31st, 4 of them have already been earned back, so resale value isn't much of an issue.

[Trillium]

Could a researcher develop software that uses SHA256 hashing for something like Folding@Home to make use of cheaply available discarded ASIC units?

Only if the distributed project relied solely on SHA-256 hashing operations. If it needed anything else the hardware would need to be redesigned or those operations performed on another device: CPU/GPU.

[cp1]

Could a researcher develop software that uses SHA256 hashing for something like Folding@Home to make use of cheaply available discarded ASIC units?

no, not really

[notme]

ASICMiner USBs are going for $140-$200 on ebay and amazon.

[MJGrae]

Keep in mind that even after these units are no longer "profitable" they will still be generating coins at a lower cost than buying them outright for some time after that. Many people would consider this to be an added benefit, as they will generate "x" amount of coins profitably, and then "x" amount of coins at a cost lower than outright purchase for some amount of time. If you factor this in they have a longer lifespan and I believe they would likely save enough money to be worth it in the long run for someone that is just trying to generate coins over time.

I haven't actually done the calculations, but that is something I consider when I argue with myself over whether I should invest in expensive gear.

[Reckman]

as long as the cost to mine, IE the electricity + time + environmental factors, is less than the value of coins generated there is inherent value in the ASICS.  Look at the difficulty required to make current ASICs "not profitable. You are crazy if you think people are going to keep adding to the network until the marginal gain is zero.

[relm9]

Regardless of rising difficulty, it's inevitable more competitors will enter the market. More saturation of ASICs is going to lower the resale value in a big way. I'd be surprised if an Avalon fetches any more than a few hundred bucks by year's end. Of course that's not a big deal to those that have them now, they have or will reach ROI soon.