Why release ASIC miners?

[strikerforce1996]

This one has been bothering me for a while now. Why did companies like butterfly labs release ASIC miners. Back when they first made them, 5 gh/s was hard to come by and the ASIC did it in just one unit. Here is the thing that makes me confused, they release the units for a small profit and they flood the market with them, making it even harder to mine. Why not keep them for themselves and mine the majority of the bitcoins using the ASIC units. With as much processing power they have, they could of found a bitcoin block everyday. I understand there was competition too, but still, why?

[WG47]

I kinda see your point, but people want to buy miners. If you don't sell them, other people will. If you're already making them for yourself, it's not all that more costly to make more to sell.

I'm sure BFL are mining for themselves as well, of course.

[gyop]

Good question

[GBGglenn]

They are probably and probably have loads of BTC already. Don't know how much money they get but im sure they can quit their normal jobs and focus on just selling miners and earn money that way. Who does'nt want to run an own bussiness?

+ They don't have to worry to much about the BTC price going up and down. (?)

[K7]

This one has been bothering me for a while now. Why did companies like butterfly labs release ASIC miners. Back when they first made them, 5 gh/s was hard to come by and the ASIC did it in just one unit. Here is the thing that makes me confused, they release the units for a small profit and they flood the market with them, making it even harder to mine. Why not keep them for themselves and mine the majority of the bitcoins using the ASIC units. With as much processing power they have, they could of found a bitcoin block everyday. I understand there was competition too, but still, why?

I read somewhere a while back when someone else asked this very same question this response: that during the gold rush in the 1800s in the US, it wasn't the average miner making big bucks in that day and age, but rather the guy selling the pickaxes and other mining supplies.  Perhaps the same holds true here?

I don't know if I buy into that, but it was an interesting response.  Unlike gold mining though, these manufacturers would likely be guaranteed some cash flow, unlike a bunch of rusty old pickaxes gathering dust in a shed (or even these suppliers going out to mine for themselves could be a bust).  I suppose it isn't a 1:1 comparison.

I'm rambling.

[pand70]

Because they sell them for more btc that they can ever mine. You should ask why people are buying them instead...

[strikerforce1996]

K7, Thats a very good comparison. When I think of it in that sense, it's a no-brainer

[Shimata]

I would think that they would sell the hardware they are making to promote their company brand in the event that they are mining using that same hardware. Plus, it offers a lot of security for the company because if Bitcoin ever experiences a massive price drop, they won't suffer from heavy losses from their assets that are then deemed as worthless.

[Gator-hex]

I'm pretty sure they all have a mining farm. Just now they call it hosting. Can you tell which one is your and which one is theirs?  

They sell them because they need to raise typically about $5 million in funds to produce an ASIC.

They will have the pick of the best chips and the earliest run, you will take whatever is handed you.

I always predicted ASICs would kill the Bitcoin network. We've ended up getting rid of one elite with the printing press and replacing it with another. Litecoin waits in Bitcoin's shadow for it's moment to shine as the true peoples currency.  

[CoinGeneral]

This one has been bothering me for a while now. Why did companies like butterfly labs release ASIC miners. Back when they first made them, 5 gh/s was hard to come by and the ASIC did it in just one unit. Here is the thing that makes me confused, they release the units for a small profit and they flood the market with them, making it even harder to mine. Why not keep them for themselves and mine the majority of the bitcoins using the ASIC units. With as much processing power they have, they could of found a bitcoin block everyday. I understand there was competition too, but still, why?

It's a conspiracy, they sell them because they need a small amount of money to 'make more miners for themselves' and make it look like other people stand a chance, but in reality no individual does against these corporations

Read more here: https://bitcointalk.org/index.php?topic=346037.msg3712424#msg3712424

[Mitron]

Because they sell them for more btc that they can ever mine. You should ask why people are buying them instead...

I simply don't think this statement is true.  I started with 6 USB Block Erupters.  They not only paid for themselves, I was able to buy 5 more and a 10 port hub with the profits.  I now have 11 USB Block Erupters running at 100% profit minus electricity costs.  So people are making money on these things, just not as fast as everyone would like I suspect.

[CoinGeneral]

Because they sell them for more btc that they can ever mine. You should ask why people are buying them instead...

I simply don't think this statement is true.  I started with 6 USB Block Erupters.  They not only paid for themselves, I was able to buy 5 more and a 10 port hub with the profits.  I now have 11 USB Block Erupters running at 100% profit minus electricity costs.  So people are making money on these things, just not as fast as everyone would like I suspect.

But how long ago did you start? And how long did it take you to even out?

[zimmah]

Because they sell them for more btc that they can ever mine. You should ask why people are buying them instead...

I simply don't think this statement is true.  I started with 6 USB Block Erupters.  They not only paid for themselves, I was able to buy 5 more and a 10 port hub with the profits.  I now have 11 USB Block Erupters running at 100% profit minus electricity costs.  So people are making money on these things, just not as fast as everyone would like I suspect.

the problem is people calculate the profits they would make when they got instantly delivered, and than compare the profit 3 months later to the profit today and they become disappointed. It's better to guess what they would make if the difficulty quadripled and see if they'd still be worth it.

Some aren't, especially not when they get delivered too late (looking at you BFL), but others are.

[pand70]

Because they sell them for more btc that they can ever mine. You should ask why people are buying them instead...

I simply don't think this statement is true.  I started with 6 USB Block Erupters.  They not only paid for themselves, I was able to buy 5 more and a 10 port hub with the profits.  I now have 11 USB Block Erupters running at 100% profit minus electricity costs.  So people are making money on these things, just not as fast as everyone would like I suspect.

Seriously? You say that my statement isn't true and you bring as an example the usb block erupters? ROI wise the worst miner in the history of bitcoin?
The only miner that noone ever made roi of?

[Mitron]

But how long ago did you start? And how long did it take you to even out?

I started with the Block Erupters in October.  Since I got 2 for free and 4 for $10 each, ROI on those only took a couple weeks, however I reinvested all that in more, again for $10-15 each.  Once I got 8, I had to get a hub, which took another week and a half.  All together, it will be three months next week and I currently still have 0.11 BTC.

So for me dollar wise with electricity an all, two months ROI and a month to get the 0.11 BTC.  My son bought 10 Block Erupters all at once for $15 each and it took him three months to ROI.  Last week we combined our hashing power into a single worker on BTCGuild and we get a payout per day (24-26 hours) at 8.4GH/s, which at this point is all profit minus our electricity costs.

[TrabajoDeLaNoche]

While you buy miners, they buy bitcoins, the bitcoin price raise more fast than the bitcoins you can mine with the miners.

When you send them 25 000 USD for a ASIC, they buy bitcoins, by the time you get your machine, their bitcoins double in price, they make profits. You instead will have to wait much longer to maybe break even.

It's more profitable to sell the machines and buy bitcoins for them than mine for bitcoins.

[2RoyalSox]

Because they sell them for more btc that they can ever mine. You should ask why people are buying them instead...

It's the alure of get rich quick. ASICs are a a shiny new toy that promises to magically pour out money, but they halve in efficiency so often that they barely break even...

[Morbid]

i believe they were very important for bitcoin economt still. if they were to do what you think then they would instantly gain monopoly causing users to abandon the coin bringing the price down.

[Sb123]

because it would be very difficult to find buyers for all your BTC. This way they get USD immediately.

[Ecurb123]

because as much as we like bitcoin, today dollars are more safe. So they made a lot of dollars by selling bitcoin miners.