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

[CoinHoarder]

https://bitcointalk.org/index.php?topic=277864.0

[Carlton Banks]

Too many assumptions surround the mining outlook predictions.

- that difficulty will keep rising exponentially
- that all mining manufacturers will ship products (many all are SHA-2 ASIC only start-ups, I don't think Samsung are producing miners any time soon)
- that BTC price will stick long-term at $80-130 (what if it plunges tomorrow?)

People are getting caught up in their very fixed view of what should happen given current trends, without paying mind to possible severe trend reversals. Not being bearish, what if the price doesn't stop the current linear expansion? What if a high density 3d printed solar cell technology gets announced before December? What if an oil price shock hits the global market '70s style, causing price inflation madness? Mining depends on alot of variables, and assuming that so many will remain the same to support narrow predictions is pretty risky.

[bronan]

Too many assumptions surround the mining outlook predictions.

- that difficulty will keep rising exponentially
- that all mining manufacturers will ship products (many are SHA-2 ASIC  only start-ups, I don't think Samsung are producing miners any time soon)
- that BTC price will stick long-term at $80-130 (what if it plunges tomorrow?)

People are getting caught up in their very fixed view of what should happen given current trends, without paying mind to possible severe trend reversals. Not being bearish, what if the price doesn't stop the current linear expansion? What if a high density 3d printed solar cell technology gets announced before December? What if an oil price shock hits the global market '70s style, causing price inflation madness? Mining depends on alot of variables, and assuming that so many will remain the same to support narrow predictions is pretty risky.

All we can now do is use the machines what they are made for, and i personally will run it as long as the electricity usage is being paid by the machine.
As soon as it becomes a loosing money issue i will probably send it to the recycle industry which will try to scrape out as much usefull materials as possible.
I do not say anything about what bitcoin is doing since i still not got a crystal ball
As soon as i can predict what is going to happen and never fail in that i would be the richest man on the planet.
Since i am one of the simple worker slaves, you can fill in how rich i am.... (NOT if you could not guess it allready, we eu slaves are only good for pay taxes)

[af_newbie]

They will be replaced by more energy efficient ASICs or will be run in areas where electricity is dirt cheap.

Once we reach technological brick wall (10nm), the network hash rate will level off and difficulty might actually stay flat or go down.
At that level, mining=electricity & hosting costs + a tiny profit.

[erk]

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

The big farms like ASICminer need to make a profit or their shareholders will scream.

[bcp19]

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

The big farms like ASICminer need to make a profit or their shareholders will scream.

With the recent selloff of ASICMiner shares, maybe they are already screaming?

[DeathAndTaxes]

They will be replaced by more energy efficient ASICs or will be run in areas where electricity is dirt cheap.

Once we reach technological brick wall (10nm), the network hash rate will level off and difficulty might actually stay flat or go down.
At that level, mining=electricity & hosting costs + a tiny profit.

The economic brick wall is 28nm.  20nm is beyond rediculously expensive for anyone who doesn't know their own fab (Intel, Samsung).  Nobody is predicting high availability or decent prices of 20nm wagers from any foundry in 2014 either. Nobody (not even Intel) is using 14nm yet, the technical challenges of 10nm haven't even been addresses.   Still even if 20/14/10nm is techincally available what matters in mining is the cost per hash and Bitcoin mining is almost perfectly parallel.  This means a 20nm chip is going to cost MORE than a 28nm one (everything else being the same) until the cost per transistor is lower on 20nm then 28nm.   Usually that takes 2-4 years from process start and it is taking longer and the end benefits are getting smaller (higher NRE, more delays, more complexity, more yield issues, and overall a shrinking gain on the prior process node).  So 20nm SHA-2 ASICs probably won't make sense even in 2015 or 2016 and 14nm isn't even on the map yet (2020?+).



That means for the convieable future 28nm is as good as it gets.  There may be more efficient 28nm designs but that would mean a brand new NRE cost and it would have to be a lot better to make sense (i.e. a company's new chip would need to be so much cheaper (MH/$ and MH/W) that even after a share of the NRE it added it is still a better deal that then existing design).  It remains to be seen if that will happen.  Regardless once everyone is on 28nm and shipping in volume, the market will become highly saturated and mining margins will be a small percentage over electrical cost of the most efficient miners.  Have a less efficient miner, have higher than normal electrical costs, paying for expensive datacenter space expect it to only be a question of how long before your net operating margin goes negative.  Really no different than GPU mining.  Those with excessive electrical costs or poorly though out rigs could only profit marginally when the price/difficulty was high and when it tanked they had to idle or mine at a loss.

[k9quaint]

They will be replaced by more energy efficient ASICs or will be run in areas where electricity is dirt cheap.

Once we reach technological brick wall (10nm), the network hash rate will level off and difficulty might actually stay flat or go down.
At that level, mining=electricity & hosting costs + a tiny profit.

The economic brick wall is 28nm.  20nm is beyond rediculously expensive for anyone who doesn't know their own fab (Intel, Samsung).  Nobody is predicting high availability of 20nm in 2014 either.  Nobody (not even Intel is using 14nm) given how parallel Bitcoin mining is the only advantage of going to a smaller process is when the cost per transistor is lower.  That usually takes 2-4 years.  So 20nm probably won't make sense even in 2015 or 2016.

So while I agree with your final sentence replace 10nm with 28nm.  The market will become highly saturated and mining margins will be a small percentage over electrical cost of the most efficient miners.  Have a less efficient miner, have higher than normal electrical costs, paying for expensive datacenter space expect it to only be a question of how long before your net operating margin goes negative.

I am making a 11 nm hashing chip. It does 800GH/s and I am selling them for 200 BTC each. Pre-order now. http://www.Minegoto11.com

[bcp19]

They will be replaced by more energy efficient ASICs or will be run in areas where electricity is dirt cheap.

Once we reach technological brick wall (10nm), the network hash rate will level off and difficulty might actually stay flat or go down.
At that level, mining=electricity & hosting costs + a tiny profit.

The economic brick wall is 28nm.  20nm is beyond rediculously expensive for anyone who doesn't know their own fab (Intel, Samsung).  Nobody is predicting high availability of 20nm in 2014 either.  Nobody (not even Intel is using 14nm) given how parallel Bitcoin mining is the only advantage of going to a smaller process is when the cost per transistor is lower.  That usually takes 2-4 years.  So 20nm probably won't make sense even in 2015 or 2016.

So while I agree with your final sentence replace 10nm with 28nm.  The market will become highly saturated and mining margins will be a small percentage over electrical cost of the most efficient miners.  Have a less efficient miner, have higher than normal electrical costs, paying for expensive datacenter space expect it to only be a question of how long before your net operating margin goes negative.

I am making a 11 nm hashing chip. It does 800GH/s and I am selling them for 200 BTC each. Pre-order now. http://www.Minegoto11.com

^^^ scam.  We need a scammer tag.

[af_newbie]

They will be replaced by more energy efficient ASICs or will be run in areas where electricity is dirt cheap.

Once we reach technological brick wall (10nm), the network hash rate will level off and difficulty might actually stay flat or go down.
At that level, mining=electricity & hosting costs + a tiny profit.

The economic brick wall is 28nm.  20nm is beyond rediculously expensive for anyone who doesn't know their own fab (Intel, Samsung).  Nobody is predicting high availability or decent prices of 20nm wagers from any foundry in 2014 either. Nobody (not even Intel) is using 14nm yet, the technical challenges of 10nm haven't even been addresses.   Still even if 20/14/10nm is techincally available what matters in mining is the cost per hash and Bitcoin mining is almost perfectly parallel.  This means a 20nm chip is going to cost MORE than a 28nm one (everything else being the same) until the cost per transistor is lower on 20nm then 28nm.   Usually that takes 2-4 years from process start and it is taking longer and the end benefits are getting smaller (higher NRE, more delays, more complexity, more yield issues, and overall a shrinking gain on the prior process node).  So 20nm SHA-2 ASICs probably won't make sense even in 2015 or 2016 and 14nm isn't even on the map yet (2020?+).



That means for the convieable future 28nm is as good as it gets.  There may be more efficient 28nm designs but that would mean a brand new NRE cost and it would have to be a lot better to make sense (i.e. a company's new chip would need to be so much cheaper (MH/$ and MH/W) that even after a share of the NRE it added it is still a better deal that then existing design).  It remains to be seen if that will happen.  Regardless once everyone is on 28nm and shipping in volume, the market will become highly saturated and mining margins will be a small percentage over electrical cost of the most efficient miners.  Have a less efficient miner, have higher than normal electrical costs, paying for expensive datacenter space expect it to only be a question of how long before your net operating margin goes negative.  Really no different than GPU mining.  Those with excessive electrical costs or poorly though out rigs could only profit marginally when the price/difficulty was high and when it tanked they had to idle or mine at a loss.

http://www.electronicsweekly.com/mannerisms/manufacturing/apple-signs-tsmc-for-16nm-and-10nm-nodes-2013-06/

http://www.eetimes.com/document.asp?doc_id=1264668

[DeathAndTaxes]

http://www.electronicsweekly.com/mannerisms/manufacturing/apple-signs-tsmc-for-16nm-and-10nm-nodes-2013-06/

http://www.eetimes.com/document.asp?doc_id=1264668

Not sure if you were agreeing or disagreeing but given no Bitcoin ASIC company is on the same scale as Apple and Apple isn't looking at volume 20nm shipments until end of 2014 it kinda shows how far out 20nm is right now.

[Beaflag VonRathburg]

I am making a 11 nm hashing chip. It does 800GH/s and I am selling them for 200 BTC each. Pre-order now. http://www.Minegoto11.com

 

[erk]

Not sure if you were agreeing or disagreeing but given no Bitcoin ASIC company is on the same scale as Apple and Apple isn't looking at volume 20nm shipments until end of 2014 it kinda shows how far out 20nm is right now.

For sure we will see some 20nm next year, but will it be better ROI than 28nm? Normally new tech has a premium. There is lots of margin on the current 28nm ASIC offerings, so room to move there.

[Xian01]

For sure we will see some 20nm next year

 IMO, while it should be technically possible, gut-check says I don't see it happening for Bitcoin ASICs in 2014 due to excessive NRE costs. If we're extremely lucky, we might hear about something near Christmas 2014, but more than likely 2015 before being able to own physical 20nm ASICs.

[DeathAndTaxes]

For sure we will see some 20nm next year

 IMO, while it should be technically possible, gut-check says I don't see it happening for Bitcoin ASICs in 2014 due to excessive NRE costs. If we're extremely lucky, we might hear about something near Christmas 2014, but more than likely 2015 before being able to own physical 20nm ASICs.

Exactly.  I am not saying 20nm is impossible but for it to make sense with Bitcoin it would have to have a lower cost per transistor than 28nm that isn't projected to happen until 2015 or later.  Even when the cost per transistor reaches parity with 28nm you still have the issue or a brand new NRE.  The cost will need to decline substantially so that even with NRE 20nm is cheaper to make than 28nm.   That isn't happening in 2014, maybe 2016.

20nm being "available" means nothing if it can't be priced under 28nm miner tech.  Nobody is going to pay a premium on new miners when ROI% are stretched out to 2+ years due to massive over capacity just to be cutting edge.  Proven, highly available, "good enough", and cheap 28nm will be the name of the game for 2014.

[DeathAndTaxes]

Re-read:

I think you are confusing "what is technically possible" with what is ECONOMICAL.   The price per transistor for 20nm is projected to be HIGHER than 28nm through 2014 (and possibly 2015).  That means same design, same efficiency, die shrinked down will be MORE EXPENSIVE (MH/$) than 28nm.  That is before you consider the new multi million dollar 20nm NRE which will have to be ammortized over the initial chips.

I agree that "any Bitcoin ASIC company" (aka, four engineers and a truck) will not have access to it.  But you never know, Avalon took millions from miners so they might be able to fund 16 nm and blow all the 28nm start ups out of water.

Once again since this doesn't seem to sink in (look at NVidia chart).  New tech generally has a HIGHER cost per transistor for a couple years.  That means Avalon dumping millions into 20/16nm would be an idiotic move.  It would allow them to produce chips which cost them more (MH/$) than it cost their 28nm counterparts.

Bitcoin tech will move to 20nm when the cost per transistor is CHEAPER than 28nm.  The bad news (see NVidia slide) is that there have been two trends in the last decade.  The first is that the TIME since process node is available until it is mature enough that is is CHEAPER is taking longer and longer with each process node shrink.  It initially was 1 years then became 2 and now is looking more like 3 to 4.  The second bad news is that even when mature each node is showing a smaller and smaller gain on the prior node.  Look at the difference between 80nm and 55 nm lines around 2011, now compare it to 40nm and 28nm around 2013.  Now look at the future proposed price improvements.

A 20nm chip would have to be significantly cheaper per MH/$ in raw cost so that it can absorb the increased NRE cost and the increased risk.  Just because 20nm is "available" doesn't mean those conditions apply.  2015 is conservative.  It might be 2017 or 2018 before those conditions apply.

[erk]

For sure we will see some 20nm next year

 IMO, while it should be technically possible, gut-check says I don't see it happening for Bitcoin ASICs in 2014 due to excessive NRE costs. If we're extremely lucky, we might hear about something near Christmas 2014, but more than likely 2015 before being able to own physical 20nm ASICs.

I am thinking Avalon via TSMC, and KNCminer gen 2. That's assuming the staff of Avalon haven't been lynched by an organized crime gang or something.

 

[DeathAndTaxes]

For sure we will see some 20nm next year

 IMO, while it should be technically possible, gut-check says I don't see it happening for Bitcoin ASICs in 2014 due to excessive NRE costs. If we're extremely lucky, we might hear about something near Christmas 2014, but more than likely 2015 before being able to own physical 20nm ASICs.

I am thinking Avalon via TSMC, and KNCminer gen 2. That's assuming the staff of Avalon haven't been lynched by an organized crime gang or something.

Avalon, Bitfury, and ASICMiner may launch chips using a smaller process in 2014 but 28nm is cheaper than 20nm.  Who would want to buy MORE expensive chips.  I think people just assume 20nm = cheaper than 28nm (or x < y using any two process nodes).  That isn't true.  Take a look at NVidia's chart for each process there is a date where the smaller process became more cost effective then the older one.  That doesn't occur the day the process is available.   In 2015 20nm will be EXPENSIVE more expensive than the more mature 28nm tech.  The only place where it will make sense is products where power usage & heat are more important than raw computing power.  Can you think of any products made by Apple that might fall into that category?

KNC said "2nd gen" they never said it would be a smaller process.  That is just an assumption being made.  If 20nm is more expensive per transistor and requires NRE why would KNC be launching 20nm tech?  Their customers want to pay more for less hashing power and have to wait for development relative to the highly available (in 2014) 28nm tech?

Avalon & ASCIMiner will likely launch 55nm or better versions in late 2013.  If they don't they might as well get out of the business because they will have no customers by 2014.  Bitfury is kinda an unknown.  For 55nm their tech is pretty friggin good, it has higher efficiency (MH/W and MH/mm^2) then KNC 28nm chip (based on pre-announced specs by both companies). It may simply not be worth the NRE to jump to 28nm if they can compete at 55nm.

[af_newbie]

Who would want to buy MORE expensive chips?

People who would not make any money mining 28nm devices.

Just because you bought 28nm pre-order, it does not mean every ASIC designer out there will not try anything that is more efficient than your pre-order.  Looks like you are trying to convince yourself that your purchase of hashfast will not become obsolete for a very long time.

The ASIC train is moving faster than anyone can say: WTF just happened...

Avalon already said they will be working on Gen 2, 3 and 4 (at the same time?).  Are you ready for your WTF moment?

[erk]

Is ROI from just mining important? It seems to be the holy grail.

The way I look at it, is if I mine with gen 1 ASICs at a loss and it now costs me $50 to mine each BTC, then guess what, I just got BTC for less than half the market price! I can trade on that. Obviously miners that just dump are going to loose out, but miners that know how to make profit trading will have an advantage over traders that paid more for their BTC. My ROI and more will come from the trading.