bitcoin ASIC mining hardware price bubble?

[erk]

Would you care to share the maths behind that statement?
 
The back of my napkin tells me that @ 40MH/W FPGA's are good to ~200M difficulty, ASIC Miner chips @ ~133MH/W are good until 666M difficulty - all assuming a $0.22/kWh power cost.

IMHO the difficulty can't keep rising at the current rate because it is a hell of a lot easier and therefore cheaper to go from 30TH/s to 60TH/s than from 400TH/s to 800TH/s. The next doubling to 1.6PH/s will be even more costly, unless the people building the next generation of ASICs are basically giving them away, and as the process technology shrinks down to the bleeding edge 20nm processes, the cost per wafer will actually increase...

see http://mining.thegenesisblock.com/ As you can see from the red line on the graph, the latest difficulty hike was much larger than predicted!

Bitcoin used to buy ASICS - RISKY (as most will never get ROI on their bitcoins)
USD to Asics - less risky (with btc price going up this can attain ROI with a higher chance -however, you could be able to buy more bitcoins with the cash you used to buy the asics)

risk risk risk

Many got ROI very quickly after receiving preordered unit. The key is to have the device soon, but this preorder game is like gambling

I was chatting to someone yesterday that just received his batch #3 Avalon, which cost about 100BTC all up, and was looking at 2-3mnths ROI, with today's diff hike, he will not achieve ROI unless BTC/USD price goes up.  I have a few BFL devices on back order from April/May, and they will probably not cover their power costs by the time they arrive.

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[Bitcoinorama]

Would you care to share the maths behind that statement?
 
The back of my napkin tells me that @ 40MH/W FPGA's are good to ~200M difficulty, ASIC Miner chips @ ~133MH/W are good until 666M difficulty - all assuming a $0.22/kWh power cost.

IMHO the difficulty can't keep rising at the current rate because it is a hell of a lot easier and therefore cheaper to go from 30TH/s to 60TH/s than from 400TH/s to 800TH/s. The next doubling to 1.6PH/s will be even more costly, unless the people building the next generation of ASICs are basically giving them away, and as the process technology shrinks down to the bleeding edge 20nm processes, the cost per wafer will actually increase...

see http://mining.thegenesisblock.com/ As you can see from the red line on the graph, the latest difficulty hike was much larger than predicted!

Bitcoin used to buy ASICS - RISKY (as most will never get ROI on their bitcoins)
USD to Asics - less risky (with btc price going up this can attain ROI with a higher chance -however, you could be able to buy more bitcoins with the cash you used to buy the asics)

risk risk risk

Many got ROI very quickly after receiving preordered unit. The key is to have the device soon, but this preorder game is like gambling

I was chatting to someone yesterday that just received his batch #3 Avalon, which cost about 100BTC all up, and was looking at 2-3mnths ROI, with today's diff hike, he will not achieve ROI unless BTC/USD price goes up.  I have a few BFL devices on back order from April/May, and they will probably not cover their power costs by the time they arrive.

What's BTC/USD got to do with recovering an item valued in Bitcoins?

[erk]

What's BTC/USD got to do with recovering an item valued in Bitcoins?

I didn't know you could pay your electricity bill in Bitcoins, please tell me more!

[SebastianJu]

Everything that comes as hardware in some months will have a hard time since after the diff update the difficulty went up 94% in the last 30 days. So only one month can change everything in a preorder. I wont order any asic's when its a preorder and not delivered fast anymore now.

[erk]

Everything that comes as hardware in some months will have a hard time since after the diff update the difficulty went up 94% in the last 30 days. So only one month can change everything in a preorder. I wont order any asic's when its a preorder and not delivered fast anymore now.

This is a sensible attitude, the pre-order game has been exposed as pretty much nonviable so far, we don't how KNCminer will go yet, if they deliver as promised on their pre-orders then all is good, if they stall customers like Avalon and BFL then their days are numbered too.

[SebastianJu]

Everything that comes as hardware in some months will have a hard time since after the diff update the difficulty went up 94% in the last 30 days. So only one month can change everything in a preorder. I wont order any asic's when its a preorder and not delivered fast anymore now.

This is a sensible attitude, the pre-order game has been exposed as pretty much nonviable so far, we don't how KNCminer will go yet, if they deliver as promised on their pre-orders then all is good, if they stall customers like Avalon and BFL then their days are numbered too.

I only mean there were, for example, not a few people that went out of avalon chips to buy KNCMiner. They are priced half of the price per GH but in exchange you have to wait months. In the current development, where the diff doubles each month this will, i think, turn out as not the best decision. But of course i didnt think that the diff will skyrocket so fast too.

[Bitcoinorama]

Fact is the reasonable side of me said don't 'throw money at this' (a term i saw mentioned time and again in April-June) as we didn't know where the BTC price would settle (I figured $100 as it's psychological), so I only decided to get my feet wet per say.

I knew as soon as Bitsyncom announced bulk sales hashrate would fly, but i never expected this turn of events. You'd probably be expecting me to be rooting for KnC, but never at the expense of the group buy guys, or for that matter anyone, including BFL customers (I just never expected BFL to ship, and they haven't).

This really sucks for the DIYers.

[Loredo]

Now, finally, intelligent individuals are drawing the line in the sand regarding the pre-order model. 

And so that means: precisely, nothing.  For every one on this forum who will not pre-order any longer, there are dozens who will.

They will, patiently or stridently, tell you why you're deluded.  That there is no other model than pre-order which will work.  They will go ahead an pre-order the equipment as it appears, when it appears, for the price which is asked.

The fascinating thing is:  they're not all shills.

[Sitarow]

Now, finally, intelligent individuals are drawing the line in the sand regarding the pre-order model. 

And so that means: precisely, nothing.  For every one on this forum who will not pre-order any longer, there are dozens who will.

They will, patiently or stridently, tell you why you're deluded.  That there is no other model than pre-order which will work.  They will go ahead an pre-order the equipment as it appears, when it appears, for the price which is asked.

The fascinating thing is:  they're not all shills.

I posted details as to the return on the ASIC hardware form BFL, KNC, Bitfury at present difficulty % increase and it shows buying BTC at $100 is better then getting these units at these prices.

That shows there will be no more pre-order options for new projects in the works.

Next day or no way.

Well come October anyway

Here is the post link.

https://bitcointalk.org/index.php?topic=273264.msg2929060#msg2929060

[gingernuts]

I still think a lot of people on this forum have a rather short-term view of ROI. If I leave my money in the bank, it loses me ~2.5% a year. If I can make my money back on a miner within 12 months, I'm better off than if I'd just left it in a bank...

If it's still earning more than the cost of the electricity after 12 months, then I'm up even more...

[kmtan]

difficult up to MORE than predict/

[SebastianJu]

I still think a lot of people on this forum have a rather short-term view of ROI. If I leave my money in the bank, it loses me ~2.5% a year. If I can make my money back on a miner within 12 months, I'm better off than if I'd just left it in a bank...

If it's still earning more than the cost of the electricity after 12 months, then I'm up even more...

You dont speak of Bitcoins as money right? Then there is a difference. When you dont get the Bitcoins back you invested you lose. Nothing can change this.

[gingernuts]

I still think a lot of people on this forum have a rather short-term view of ROI. If I leave my money in the bank, it loses me ~2.5% a year. If I can make my money back on a miner within 12 months, I'm better off than if I'd just left it in a bank...

If it's still earning more than the cost of the electricity after 12 months, then I'm up even more...

You dont speak of Bitcoins as money right? Then there is a difference. When you dont get the Bitcoins back you invested you lose. Nothing can change this.

No, I do consider Bitcoins to be real money - I just don't agree that the difficulty rise is going so fast that if you can't make your BTC back within a couple of months you never will. You can mine until your electricity costs more than the coins produced - so mining factor is probably more important than difficulty in determining when you have to mothball your miners.

That's not to say that you can't over-pay for miners - you certainly can, but people on here seem to talk like every currently available miner is one difficulty rise away from the scrap-heap...

[SebastianJu]

I still think a lot of people on this forum have a rather short-term view of ROI. If I leave my money in the bank, it loses me ~2.5% a year. If I can make my money back on a miner within 12 months, I'm better off than if I'd just left it in a bank...

If it's still earning more than the cost of the electricity after 12 months, then I'm up even more...

You dont speak of Bitcoins as money right? Then there is a difference. When you dont get the Bitcoins back you invested you lose. Nothing can change this.

No, I do consider Bitcoins to be real money - I just don't agree that the difficulty rise is going so fast that if you can't make your BTC back within a couple of months you never will. You can mine until your electricity costs more than the coins produced - so mining factor is probably more important than difficulty in determining when you have to mothball your miners.

That's not to say that you can't over-pay for miners - you certainly can, but people on here seem to talk like every currently available miner is one difficulty rise away from the scrap-heap...

You realize that difficulty in the last 30 days went up 94%? Thats huge. Check out this: mining.thegenesisblock.com to see how linear and big the loss in profits is at the moment. If you cant make the investment back in the first 2 or 3 months its likely you will never because you will earn way less each month. Its even worse than that. Because the rise in difficulty is getting higher each time the diff is actualized. Thats because the big amount of preorders and asics flowing in the network. Its really tough and i never would buy some product at preorder now. Way too dangerous.

[jungle_dave]

It's a scary world now!

http://thegenesisblock.com/cointerra-500-ghs-chips-alydian-10-ths-hosting-and-icedrill-ipo-set-out-to-change-bitcoin-mining-landscape/

500 TH/s mining farm in Holland, thats + 150% and KnC, Bitfurry have not even shipped yet......
Its not impossible that the BTC-USD (RUB,EUR, Coconut or what ever else you use) rate will increase.
It did go from 30 to 100 USD this year alone.. Not saying it will but it could..
Lets see.
   

[astutiumRob]

because it is a hell of a lot easier and therefore cheaper to go from 30TH/s to 60TH/s than from 400TH/s to 800TH/s

You're misunderstanding the combination effects of greed, group-buys and ultimate delivery of pre-ordered kit

[Damnsammit]

Do your homework. Difficulty goes from 37 to ~47..

Looks like you should have done your homework as OP's guess was closer than yours.

[crazyates]

Assuming a constant price of 100USD/BTC and $0.25/kW, we can tell when each miner will no longer be profitable (meaning when the cost of electricity is more than the miner earns).

Avalon: 66GH/s @ 620W = 0.9Billion
BFL Single: 60GH/s @ 240W = 2.1Billion
KNC Jupiter: 400GH/s @ 1000W = 3.3Billion
BitFury: 400GH/s @ 400W = 8.4Billion

Going from 3Million to 50Million means we have another 850Million to go, which means we're only 5.2% of the way to even having an Avalon become no longer profitable. We're not even 0.6% of the way to getting to where a BitFury is no longer profitable. I think that price bubble you're talking about is still a LONG way off.

[kendog77]

Assuming a constant price of 100USD/BTC and $0.25/kW, we can tell when each miner will no longer be profitable (meaning when the cost of electricity is more than the miner earns).

Avalon: 66GH/s @ 620W = 0.9Billion
BFL Single: 60GH/s @ 240W = 2.1Billion
KNC Jupiter: 400GH/s @ 1000W = 3.3Billion
BitFury: 400GH/s @ 400W = 8.4Billion

Going from 3Million to 50Million means we have another 850Million to go, which means we're only 5.2% of the way to even having an Avalon become no longer profitable. We're not even 0.6% of the way to getting to where a BitFury is no longer profitable. I think that price bubble you're talking about is still a LONG way off.

I'm not talking about ASIC electricity usage. I'm talking about the effect that rising difficulty and the $100 bitcoin is having on ASIC hardware prices. Blades that sold for over 50 BTC back in May are now selling for 10 BTC. Block erupters are probably 2 to 3 difficulty increases away from no longer being a viable product because they will cost more to produce then they can sell for.

How much will KncMiner Jupiters sell for in November assuming Knc can deliver as promised and BTC stays at $100? I don't think folks would be willing to pay more than ~$1000 to $2000 (down from $8000) unless the value of BTC rises because the difficulty will be so high. 

[crazyates]

Assuming a constant price of 100USD/BTC and $0.25/kW, we can tell when each miner will no longer be profitable (meaning when the cost of electricity is more than the miner earns).

Avalon: 66GH/s @ 620W = 0.9Billion
BFL Single: 60GH/s @ 240W = 2.1Billion
KNC Jupiter: 400GH/s @ 1000W = 3.3Billion
BitFury: 400GH/s @ 400W = 8.4Billion

Going from 3Million to 50Million means we have another 850Million to go, which means we're only 5.2% of the way to even having an Avalon become no longer profitable. We're not even 0.6% of the way to getting to where a BitFury is no longer profitable. I think that price bubble you're talking about is still a LONG way off.

I'm not talking about ASIC electricity usage. I'm talking about the effect that rising difficulty and the $100 bitcoin is having on ASIC hardware prices. Blades that sold for over 50 BTC back in May are now selling for 10 BTC. Block erupters are probably 2 to 3 difficulty increases away from no longer being a viable product because they will cost more to produce then they can sell for.

How much will KncMiner Jupiters sell for in November assuming Knc can deliver as promised and BTC stays at $100? I don't think folks would be willing to pay more than ~$1000 to $2000 (down from $8000) unless the value of BTC rises because the difficulty will be so high. 

Ah, my mistake. I see now what you mean. I think anything priced in BTC is going to HAVE to drop in price as the difficulty goes up, regardless of price. People paid xBTC, and they want xBTC mined in return. Anything priced in USD only has to drop if the BTC price remains the same. If the BTC price goes up, they can keep the USD sale value the same. People paid zUSD, and they want zUSD mined in return.