What'll happen to ASICs when they're no longer profitable to run?

[Kluge]

I've been wondering this for a while.... Tens of millions of dollars in equipment will lose money if run in roughly a year (assuming price doesn't skyrocket).

So what happens with it? Will organizations, perhaps the Bitcoin Foundation, buy these units and keep the hashpower on the network for added security, running them at a slight loss, perhaps? Will they be repurposed somehow? Will they simply be thrown away? Will the current owners just keep mining?

While on the topic -- is running obsolete equipment a disservice (long-term) to Bitcoin by making newer, more effective ASICs less attractive? People talk about running their GPUs, FPGAs, and ASICs (in the future) for the sake of the network, but isn't that actually just making it less likely for people to buy or design/develop/manufacture new ASICs since the profit projection would be lower?

[Flying Hellfish]

I've been wondering this for a while.... Tens of millions of dollars in equipment will lose money if run in roughly a year (assuming price doesn't skyrocket).

So what happens with it? Will organizations, perhaps the Bitcoin Foundation, buy these units and keep the hashpower on the network for added security, running them at a slight loss, perhaps? Will they be repurposed somehow? Will they simply be thrown away? Will the current owners just keep mining?

While on the topic -- is running obsolete equipment a disservice (long-term) to Bitcoin by making newer, more effective ASICs less attractive? People talk about running their GPUs, FPGAs, and ASICs (in the future) for the sake of the network, but isn't that actually just making it less likely for people to buy or design/develop/manufacture new ASICs since the profit projection would be lower?

I don't see many folks turning off ASIC's in the next year.  I think miners are bulls by nature and so most of us here seem to think price will increase (which obviously doesn't affect BTC ROI but that is a very different discussion).  I think a lot of miners are hoping for an increase so they can stave off saturation point longer! 

Assuming no increase it's kind of hard to say what people will do.  I think there are just too many factors on an individual level for there to be a real majority of people doing one thing.

Factors like:
"free" electricity, hobbyist (helping secure/decentralize network, willing to run at slight loss), capital investment of hardware, efficiency of hardware (130nm or 110nm Avalon vs 28nm everyone else), how much (if any) profit was made before "saturation point" is reached (when electrical cost for 1 BTC = 1 BTC mined).

Because of the imperfect information system I can see us overshooting the mark (by how much I won't guess) and a lot of people will run these machines quite a while mining negligible amounts chasing their investment.
 

[frankenmint]

alt coins are mined as they have lower difficulty and will ultimately be convertable to btc.

[bcp19]

I've been wondering this for a while.... Tens of millions of dollars in equipment will lose money if run in roughly a year (assuming price doesn't skyrocket).

So what happens with it? Will organizations, perhaps the Bitcoin Foundation, buy these units and keep the hashpower on the network for added security, running them at a slight loss, perhaps? Will they be repurposed somehow? Will they simply be thrown away? Will the current owners just keep mining?

While on the topic -- is running obsolete equipment a disservice (long-term) to Bitcoin by making newer, more effective ASICs less attractive? People talk about running their GPUs, FPGAs, and ASICs (in the future) for the sake of the network, but isn't that actually just making it less likely for people to buy or design/develop/manufacture new ASICs since the profit projection would be lower?

You have different goups of people out there.  Some will sell their equipment, some will discard it, some may try an alt coin (doubtful), the rest will keep mining.  Since the ASIC is built for only 1 purpose, I really cannot see them being repurposed.  I cannot see turning a Formula 1 car into a family sedan.

I do not see how running any type of equipment could be a disservice.  I saw someone post that where they worked they had a server farm built and tested, but the customer would not be 'occupying' it for another month or so, and he decided to point them all at Primcoin to do some earning instead of sitting idle.  The only downside of obsolete equipment as you call it is that you are spending more than you are earning.  At that point it pretty much becomes a hobby.

If the manufacturers actually CAN make something that is better, I am sure they will.  The question will become whether their ability to improve upon what they have now will be profitable when sold to the customer *and* if the customer thinks it is worth buying.  The PS4 is coming out soon, yet I still have a PS2 and a PS3.  Even though I plan on purchasing one, I plan on keeping them, others may or may not agree.  

[kakobrekla]

Oh my, the things people come up with...

They will end up in dumps like old computer hardware today, what did ya think?

The PS4 is coming out soon, yet I still have a PS2 and a PS3.  Even though I plan on purchasing one, I plan on keeping them, others may or may not agree. 

ASIC are a pro tool and not some home entertainment center.

[joeventura]

What'll happen to ASICs when they're no longer profitable to run?

BFL will then ship them to customers.


(thank you, thank you very much)

[bcp19]

Oh my, the things people come up with...

They will end up in dumps like old computer hardware today, what did ya think?

I can definitely see them tossed if they no longer work, I can even see some tossed if it's too expensive to run them.  ASIC's are not like the old 8088 computers that take 10 days to do what my system can do in 10 minutes.  Unless someone cracks quantum computing, I see a minority being trashed.

The PS4 is coming out soon, yet I still have a PS2 and a PS3.  Even though I plan on purchasing one, I plan on keeping them, others may or may not agree. 

ASIC are a pro tool and not some home entertainment center.

I dunno, I'm entertained everytime I get a message in the corner of my screen that I got sent BTC from my pool.  While it doesn't not happen as often as it used to, it does still happen.

[Red_Wolf_2]

Profitability is a matter of perspective. Just like how an orebody can be ore one day, and dirt the next (ore is defined as being profitable to mine, once the costs outweigh the profits the rock is no longer considered to be ore), what is unprofitable to some people will be profitable to others.

Consider the requirements for operating mining equipment. You have inputs of power and an output of hashes. Those generally need to be put to a pool and onto the main network, so lets also call bandwidth an input here.

The cost of bandwidth for mining is almost negligible, and in most cases people pay a set amount for their bandwidth whether they use it or not. Power is a much bigger concern, however the cost of this varies from place to place - some pay a fortune for it while others may be able to get it for free.

Take my setup for example, my rigs are solar powered. I have costs of bandwidth but zero on power. If you want to get technical you could potentially factor in the cost of batteries and their associated degradation, but equally you could build a system without batteries, or using any other source of renewable "free" energy. These operations will in essence always be profitable, while those with high power costs will end up unprofitable much sooner.

What is likely to happen is those with highest power cost will end up selling their older equipment, which will be purchased for bargain basement prices by those with no concern for power costs. This will be in part replaced with newer more efficient gear, however the network hashrate won't increase anywhere near the rate it has with the transition from GPU and FPGA to ASICs, as there really isn't a huge improvement to be had.

The second hand market will be decidedly different to that of FPGAs and GPUs. These can both be used for other things, while ASICs can't (unless someone else figures out a use for SHA256(SHA256(x)) hashes)

[Kluge]

Profitability is a matter of perspective. Just like how an orebody can be ore one day, and dirt the next (ore is defined as being profitable to mine, once the costs outweigh the profits the rock is no longer considered to be ore), what is unprofitable to some people will be profitable to others.

Consider the requirements for operating mining equipment. You have inputs of power and an output of hashes. Those generally need to be put to a pool and onto the main network, so lets also call bandwidth an input here.

The cost of bandwidth for mining is almost negligible, and in most cases people pay a set amount for their bandwidth whether they use it or not. Power is a much bigger concern, however the cost of this varies from place to place - some pay a fortune for it while others may be able to get it for free.

Take my setup for example, my rigs are solar powered. I have costs of bandwidth but zero on power. If you want to get technical you could potentially factor in the cost of batteries and their associated degradation, but equally you could build a system without batteries, or using any other source of renewable "free" energy. These operations will in essence always be profitable, while those with high power costs will end up unprofitable much sooner.

What is likely to happen is those with highest power cost will end up selling their older equipment, which will be purchased for bargain basement prices by those with no concern for power costs. This will be in part replaced with newer more efficient gear, however the network hashrate won't increase anywhere near the rate it has with the transition from GPU and FPGA to ASICs, as there really isn't a huge improvement to be had.

Well - yeah, I can see that to an extent, but at some point, a solar farm will never pay for itself if all its daily intake is being spent on an ASIC farm mining the equivalent of $10/month. As for people with "free" electricity, no landlord's going to stand for them sucking down $1k in electricity per month on a $600/mo lease - so there's a scalability problem there, too.

I think while there may not be "revolutionary" performance improvements in ASICs over previous generations, there will at least be "revolutionary" improvements in the cost for consumers (as we've been seeing since the first ASICs were announced for pre-order) as ASIC manufacturers suddenly face a massive decline in demand and price equipment x% above cost to manufacture instead of x% below what the other guys are charging. That doesn't even factor in manufacturers becoming established/experienced and implementing real manufacturing techniques (instead of half a "line" being a row of plastic tables), and with dedicated purchasing departments.

[kakobrekla]

I dunno, I'm entertained everytime I get a message in the corner of my screen that I got sent BTC from my pool.  While it doesn't not happen as often as it used to, it does still happen.

Either you are irrelevant hobby miner or brand new.

[bcp19]

I dunno, I'm entertained everytime I get a message in the corner of my screen that I got sent BTC from my pool.  While it doesn't not happen as often as it used to, it does still happen.

Either you are irrelevant hobby miner or brand new.

Yes, I have admitted in the past I view this as a hobby.

[nexus99]

Hobbiests will run their ASIS forever... even when they are producing .0001 BTC/day. PROs will sell off old equipment when they think they can make more return by putting the effort to run the equipment into a new box.

[Stinky_Pete]

They'll be sold on eBay to those who don't do their research properly.

[beardays]

will mine unless the loss from electricity costs are more than a couple hundred dollars a month.

[Stinky_Pete]

Someone will create a clone coin which can be mined with current ASICs

[lumpycustard]

Someone will set up a black market distributed computing network for cracking passwords.  I'm sure there's some demand for a few PHash at rock bottom prices.

[erk]

People will switch them off to save electricity until such time are they are profitable to run again.

[bronan]

Asic's have a problem if they are no longer usefull on the task they are made for.

These chips are designed to do one task pretty well, so indeed the question is what can be done with them is limited to calculate sha256 security hashes
In fact they where allready used for this task.

The problem is that these chips can not be changed and reprogrammed like fpga.

So what will your expenssive toy be worth after new and faster designs enter the scene

Also i am kinda sure the companies using asic for other tasks do not want our asics, simply because they pay very little for their asics because the ones they use are made in massive numbers.

We pay enormous prices compared to the normal industry designed ones.

I will be expecting kinda 0.0 value after they no longer can be used on the bitcoin scene
Unless you can find an alternative sha256 coin which can be done on the same machines.

 

[crumbs]

Depends on the ASIC.  ASIC miners relying on dozens of chips per board will probably hang out for a few years under your desks first, get cannibalized for their PSs and a few case parts, and then get trashed.  Some chippers might offer next-gen chippery in a similar package with identical pinout, power specs & footprint, offering to retrofit them to your boards (this will be more difficult than simple board assembly, more like reflow repair).  Maybe one of the ASIC manufacturers is already thinking in terms of socketed PGA chips (HasFast has a chip rendering on their site that looks exactly like Intel CPUs, down to the heat spreader), so users may replace ASICs like they replace CPUs.

Or you can create a collector's market.  Think NEXT Cube

[tampazeus]

People will switch them off to save electricity until such time are they are profitable to run again.

Wont happen, If not big unprofitable, most will run in a hope of price rise