[BTCT.CO] [IPO-cancelled] BTCGARDEN MINER---Eyes to the horizon

[Vbs]

To be fair they claim to be starting to put thei stuff online by September am I correct?  That chart a little misleading.

That chart is with a full bias towards them, on a best case scenario where they have 350TH mining in December from just the initial 2M sold shares, the chips turn out as good as expected and there is no more mining competition than what's been already increasing the past months, from the current hardware suppliers.

You can simulate easily other scenarios: http://mining.thegenesisblock.com/

Also, 75% monthly difficulty rise until forever?

Until forever? It's only going up from those 75%. Those are only based on the hashrate added on the last 30 days.

Yeah because that's sustainable, even though we will run out of all earth's resources by year 5 or so, we'll just have to start mining on Mars.

There's 11 years of ASIC development to catch up. 130nm is from 2002. Difficulty will start slowing down when the technical level approaches current die sizes.

[PeterB]

I think we all really appreciate your analysis and tough questions Vbs, but to be fair they are aiming to start mining in September.

All of the mining and sales profits will be paid out to the shareholders of BTCGARDEN weekly through btct.co. At the earliest,we will be start from the middle of September,2013, while our first batch of chips(200-300T) will be arrive and start to be deployed.As time is precious in current stage of the business, we have already paid for this first big-amount batch ,all shareholders can therefore expect a quicker & higher return than normal.

[Vbs]

I think we all really appreciate your analysis and tough questions Vbs, but to be fair they are aiming to start mining in September.

All of the mining and sales profits will be paid out to the shareholders of BTCGARDEN weekly through btct.co. At the earliest,we will be start from the middle of September,2013, while our first batch of chips(200-300T) will be arrive and start to be deployed.As time is precious in current stage of the business, we have already paid for this first big-amount batch ,all shareholders can therefore expect a quicker & higher return than normal.

That's why I've asked for their projections, because there's different TH values everywhere and precise values and times make or break this deal (and chip specs too).

A project of ASIC bitcoin mining is ongoing by our group, named btc-garden (www.btcgarden.com).  At the moment, we are at the stage of TAPE OUT.

We have started our project since Feb.2013.Also, according to our timetable, we will have around 100T hashrate online on this August or September as our best situation. The following paragraphs are written to give out a brief introduction of this item. A relative detailed version will be posted on this board & our website at the beginning of June, 2013. Any questions or advices are welcomed in this thread.

So, effectively, what is the size of the first batch?  

[richard_dein]

That chart is with a full bias towards them, on a best case scenario where they have 350TH mining in December from just the initial 2M sold shares, the chips turn out as good as expected and there is no more mining competition than what's been already increasing the past months, from the current hardware suppliers.

You can simulate easily other scenarios: http://mining.thegenesisblock.com/

Until forever? It's only going up from those 75%. Those are only based on the hashrate added on the last 30 days.

It's far, far from "full bias towards" BTCGarden. I have doubts in their operations, but you aren't giving the right amount of optimism to say that.

1. 30 days is quite an arbitrary time period.

If you take March 2013 - August 2013, the difficulty increased by a factor of 10, which averages to ~58% per month, in which case there's a >30% profit in the first year.

2. An increase in BTC price could increase profit dramatically

This is true when we assume our difficulty projections are accurate. They then have a higher profit margin, and that increase is always more than the effect of the growth of BTC itself.
Say originally $100 earns BTC1. That's about a 5% profit margin by the current Mt.Gox price. But BTC is then raised by 100% to $210; the profit margin becomes 110%, which is actually nearly 22-fold.
For a stock that is valued by its profits, this factor shouldn't be overlooked.

[dexX7]

Vbs...

* We use this 3 millions dollars IPO funds for :
                                                              Mass production of 1st gen chips to a big amount (exact no. might depends but 500TH as minimum beside the 200TH we have already paid),
                                                              deploying all of them.
                                                              the research and Tapeout (samples with fulll mask) 2nd gen chips (40nm most likely).

This process might last,as you said, several months.

* the Mass production of our 2nd gen chips might be a possible reason to launch our 2nd batch of shares.

To add some more details: the first batch contains 312 wafers * 2000 chips/wafer * 400 MH/s/chip = 249 TH/s. And according to the first post this batch should arrive mid september and the other batch will be ordered immediately after they receive/test the first batch. If this is all correct, a total of roughly 850 TH/s should be covered by the IPO.

[Vbs]

To add some more details: the first batch contains 312 wafers * 2000 chips/wafer * 400 MH/s/chip = 249 TH/s. And according to the first post this batch should arrive mid september and the other batch will be ordered immediately after they receive/test the first batch. If this is all correct, a total of roughly 850 TH/s should be covered by the IPO.

Thanks for the info. OK, so realistically, 312 wafers * 2000 chips/wafer * 400 MH/s/chip * ~90% yield = 225 TH/s @ 843,750W. Using a 90% efficient power-supply, 937.5kW. Are there plans for an industrial-grade Power Substation? Can they guarantee the delivery of 1MW? (1MW is enough for an average of 400-900 US households). In reality, I'm expecting them to sell most of it, since the electrical overhead is just too much.

At 225TH/s@937.5kW, the profit margins will be very different if they start in September (~250%) than in October (~90.9%) or November (~1.29%).

Forget about the power infrastructure required to run 850TH/s on those 130nm chips, most will have to be sold.

[KCBitcoin]

We will deploy our rooms in 3 cities (Beijing,Xi An,ShenZhen)  in the meantime

As they said their deployment will be in 3 separate cities. Therefore, the power-supply problem is reduced by 66.7% comparing to deployment within one city.


Edit: They also mentioned in their next steps to be taken as follows,

 a) we will DIY-deploy our first batch of 200T at Shenzhen/beijing/Xian/Suzhou simultaneously once the chips finished.

If the latter is the case, i.e. 4 cities are planned for deployment, their power-supply problem will be reduced by 75%.

[yuansuyi]

in China,in the small city where I lived, tiny family factory normally has 100-200kw power transformer.

why do you think btcgarden cant aford 1000kw？

and power is half price in night.

[User705]

Let's assume for a second that the VC investment in Avalon is true.

Wouldn't that mean that BTCGARDEN is worth more, not less?  The panic selling only makes sense if the company isn't well positioned.  Of the companies competing in this space, Asicminer has the best shot at competing due to their current market position/experience and capital.  They however are already highly valued and investment in them at the current time has a limited upside.

BTCGARDEN I believe are next in line of those companies able to realistically compete in a meaningful way.  Now that they've raised the 3 million from the IPO, there really isn't anything in their way in delivering on their plan.  The upside for us of course is that there is a huge potential upside from the current value.

After all, any one company can only control ~35%-~40% or it becomes self defeating.

Thoughts?

It only becomes self defeating if the community knows about it.  Otherwise a single company could mine 99% and as long as they don't double spend you'd be none the wiser.

[Ytterbium]

command of chinese language seems more important than anything else at the moment -

谷歌翻译是你的朋友，朋友。无论如何，LABCOIN将拥有BTCGARDEN的归根到底

After all, any one company can only control ~35%-~40% or it becomes self defeating.

Thoughts?

It only becomes self defeating if the community knows about it.  Otherwise a single company could mine 99% and as long as they don't double spend you'd be none the wiser.

No, the problem is as you increase your percentage, you decrease the amount of profit you make, because you cause more and more of the difficulty.  If you own 99% of the network, then you cause 99% of the difficulty. Adding more capacity would mostly only increase the difficulty without increasing your profits at all.

[Ytterbium]

What worries me the most is the lack of testing before mass production, they skip an entire phase in IC development life cycle.
It may either be an overconfidence or a gamble. I am not a hardware expert and I don't know how simple the design of a SHA256 chip could be, but without testing...really? Even simple HelloWorld programs could go wrong without testing... Does the time saved justify the much elevated risk?
It would be wise to sideline and wait for the result of their test run before buying, they have yet to provide any evidence of their chips working, the enormous risk taken now is more like a gamble than an investment.

Same with KnC, HashFast and Cointerra.  Skipping testing is the new normal.  Only Labcoin has a testphase in their plans.

[User705]

command of chinese language seems more important than anything else at the moment -

谷歌翻译是你的朋友，朋友。无论如何，LABCOIN将拥有BTCGARDEN的归根到底

After all, any one company can only control ~35%-~40% or it becomes self defeating.

Thoughts?

It only becomes self defeating if the community knows about it.  Otherwise a single company could mine 99% and as long as they don't double spend you'd be none the wiser.

No, the problem is as you increase your percentage, you decrease the amount of profit you make, because you cause more and more of the difficulty.  If you own 99% of the network, then you cause 99% of the difficulty. Adding more capacity would mostly only increase the difficulty without increasing your profits at all.

That's interesting.  Must think a bit more about that.  What I meant was that even if one company had over 50% they would find it unprofitable to double spend in the real world situations and risk a huge value decline if it got discovered but instead simply disguise their hash rate and keep on printing money.  Getting back to your statement wouldn't it still be profitable to mine even 99% as long as your asset costs and electricity costs were less then fiat value of coins mined?

[Ytterbium]

That's interesting.  Must think a bit more about that.  What I meant was that even if one company had over 50% they would find it unprofitable to double spend in the real world situations and risk a huge value decline if it got discovered but instead simply disguise their hash rate and keep on printing money.  Getting back to your statement wouldn't it still be profitable to mine even 99% as long as your asset costs and electricity costs were less then fiat value of coins mined?

I suppose it would be, but it would definitely make more sense to just sell chips at that point.

If you have 50% of the network, and double your hash power, you would cause the difficulty to go up 50%. So instead of doubling your revenue, you go from 50% of the network to 66.6% of the network. Only a 16% point increase in your network share, and a 33% increase in profit for twice the cost.

If you have 50% of the network and triple your hash power, you would double the difficulty, and have 75%. That means you tripped your costs, and your share of the network only goes up 25 points, your total profits go up 50%.

On the other hand, if you sell chips you'll be able to make money off people who would have less knowledge about how quickly the network hash-rate will go up.

[crumbs]

That's interesting.  Must think a bit more about that.  What I meant was that even if one company had over 50% they would find it unprofitable to double spend in the real world situations and risk a huge value decline if it got discovered but instead simply disguise their hash rate and keep on printing money.  Getting back to your statement wouldn't it still be profitable to mine even 99% as long as your asset costs and electricity costs were less then fiat value of coins mined?

I suppose it would be, but it would definitely make more sense to just sell chips at that point.

...and the chips you sell do what?  Sit on the shelf somewhere, or do the buyers, you know... mine with them?  [for those who don't get sarcasm the answer is yes.  The chips you sell mine & increase difficulty no matter who mines with them.  Duh.]
 

If you have 50% of the network, and double your hash power, you would cause the difficulty to go up 50%. So instead of doubling your revenue, you go from 50% of the network to 66.6% of the network. Only a 16% point increase in your network share, and a 33% increase in profit for twice the cost.

If you have 50% of the network and triple your hash power, you would double the difficulty, and have 75%. That means you tripped your costs, and your share of the network only goes up 25 points, your total profits go up 50%.

On the other hand, if you sell chips you'll be able to make money off people who would have less knowledge about how quickly the network hash-rate will go up.

 

EDIT:  Sell chips when mining with them yourself is not profitable.  OTOH if it's not profitable for you, it's not profitable for the buyer.  Dinowithclawatchin.gif

[redbeans2012]

That's interesting.  Must think a bit more about that.  What I meant was that even if one company had over 50% they would find it unprofitable to double spend in the real world situations and risk a huge value decline if it got discovered but instead simply disguise their hash rate and keep on printing money.  Getting back to your statement wouldn't it still be profitable to mine even 99% as long as your asset costs and electricity costs were less then fiat value of coins mined?

I suppose it would be, but it would definitely make more sense to just sell chips at that point.

...and the chips you sell do what?  Sit on the shelf somewhere, or do the buyers, you know... mine with them?  [for those who don't get sarcasm the answer is yes.  The chips you sell mine & increase difficulty no matter who mines with them.  Duh.]
 

If you have 50% of the network, and double your hash power, you would cause the difficulty to go up 50%. So instead of doubling your revenue, you go from 50% of the network to 66.6% of the network. Only a 16% point increase in your network share, and a 33% increase in profit for twice the cost.

If you have 50% of the network and triple your hash power, you would double the difficulty, and have 75%. That means you tripped your costs, and your share of the network only goes up 25 points, your total profits go up 50%.

On the other hand, if you sell chips you'll be able to make money off people who would have less knowledge about how quickly the network hash-rate will go up.

 

EDIT:  Sell chips when mining with them yourself is not profitable.  OTOH if it's not profitable for you, it's not profitable for the buyer.  Dinowithclawatchin.gif

Thats why you SELL them to people.  SELL ..

[User705]

That's interesting.  Must think a bit more about that.  What I meant was that even if one company had over 50% they would find it unprofitable to double spend in the real world situations and risk a huge value decline if it got discovered but instead simply disguise their hash rate and keep on printing money.  Getting back to your statement wouldn't it still be profitable to mine even 99% as long as your asset costs and electricity costs were less then fiat value of coins mined?

I suppose it would be, but it would definitely make more sense to just sell chips at that point.

If you have 50% of the network, and double your hash power, you would cause the difficulty to go up 50%. So instead of doubling your revenue, you go from 50% of the network to 66.6% of the network. Only a 16% point increase in your network share, and a 33% increase in profit for twice the cost.

If you have 50% of the network and triple your hash power, you would double the difficulty, and have 75%. That means you tripped your costs, and your share of the network only goes up 25 points, your total profits go up 50%.

On the other hand, if you sell chips you'll be able to make money off people who would have less knowledge about how quickly the network hash-rate will go up.

+1
Welcome to Asicminer.  Makes me want to buy some shares.

[Ytterbium]

Welcome to Asicminer.  Makes me want to buy some shares.

Labcoin and BTCGarden just IPO'd have the same business model, you can get much cheaper shares in them then ASICMiner. (0.0014 and 0.015 btc/share right now).  Of course, there's the question of whether or not their chips will work, and whether or not their devices will function properly. But right now their market caps are about $1.9m and $3.2m, compared to $127m

Does ASICMiner have a 28nm chip in the pipeline? If not, they may have trouble keeping up over the "long" term, depending on how many units KnC, Cointerra and HashFast ship.

[empoweoqwj]

Sigh ... sorry to keep repeating this, but ASICMiner have a high share price because they have mined thousands of coins every week and given that back as profit to shareholders.

So far, LabCoin and BitGarden have produced exactly zero coins between them. Of course their shares are cheaper, its called the real world difference!!

[User705]

The problem is none of these "investments" are likely to even be legal much less secured by assets in any way shape or form.  I don't know about rest of the world but in the US see below. 
https://www.courthousenews.com/2013/08/06/Bitcoin.pdf
That means all of these "investments" are unregistered securities and the SEC just had them ruled as such.  Meaning the government will likely confiscate anything that remains if they bail with the money and "investors" will get nothing, not even the hardware you paid for with your investment.  BTCGARDEN & LABCOIN appear to be in China for that matter so is ASICminer which doesn't engender any more trust either.

[Ytterbium]

Meaning the government will likely confiscate anything that remains if they bail with the money and "investors" will get nothing

Where did that come from? The government will return any assets they recover to the investors, that's obviously what they'll do in the Pirateat40 case.

Anyway neither the SEC nor any other branch of the US government has any control over what happens outside of the U.S.

BTCGARDEN & LABCOIN appear to be in China for that matter so is ASICminer which doesn't engender any more trust either.

Sure, the companies could all run off with the money. It's certainly a risk you run. My only point was comparing BTCGarden, Labcoin and ASICMiner, which are all in China and structured the same way.