Why release ASIC miners?

[hazyrazors]

I imagine people would be less likely to support bitcoin if they knew 1 company was producing hardware that could potentially dominate the network. Also, selling ASICs does not preclude them from using their own ASICs to mine.

[Mitron]

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?

I'm just telling you my experience.  I have seen quite a few people say this crap for each device that is released, generally followed by, "you should just buy BTC instead" garbage.  Your ability to ROI depends on your initial investment.  Since mine was only $40 for 2.016GH/s, I didn't have far to go.

[Mitron]

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.

So I had a choice, buy a bottle of Scotch for $40 or buy 4 Block Erupters for $40.  The Scotch would have been fun for a weekend, but the Block Erupters have been fun for 3 months now and I made at least enough to buy a couple more bottles of Scotch. LOL

I bought my first 4 with cash, not BTC and they arrived in 3 business days.  The other five I got with the BTC they mined so that was one for free.    BTW, even the ones I got with BTC arrived 3 business days after I ordered them.  Of course I ordered most of them from a company in my own state.

[Mitron]

I imagine people would be less likely to support bitcoin if they knew 1 company was producing hardware that could potentially dominate the network. Also, selling ASICs does not preclude them from using their own ASICs to mine.

Shoot if I ran a company that made the chips and the devices, I'd be hard pressed to sell any of them.  I'd probably just setup a farm and maybe sell hosting.  Screw all the headaches dealing with customers, customs, shipping, returns, etc.

I do know why they do it, someone has to hype BTC to increase its value.  Targeting the geeks with new toys is a pretty slick way of doing it.  Its pretty hilarious how much people will pay for this stuff though, for geeks you would thing they would be smarter than that.  They must be spending daddy's money.. LOL

[xephireusMMX]

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?

Steps:
1. They need money to produce ASIC this is why preorder.
2. They delay shipment and mine themselves
3. They start sending the units once their facilites cannot use more miners because of electricity capacity usage.

Dont know if all steps done, but it would make sence

[pand70]

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?

Steps:
1. They need money to produce ASIC this is why preorder.
2. They delay shipment and mine themselves
3. They start sending the units once their facilites cannot use more miners because of electricity capacity usage.

Dont know if all steps done, but it would make sence

Steps two and three are not necessary because they are selling their miners for more bitcoins that they can ever mine.

[EdMine]

I don't believe that there is some massive conspiracy here. Apart from the real scammers, I think that most companies have probably underestimated the effort involved in designing an ASIC, and then producing a viable mining rig based around it. This probably leads to some questionable behaviour in some cases.

The pre-order piece makes sense (to the ASIC manufacturers) as the competition have proven that there is a queue of miners prepared to take the risk, and the money funds them (hopefully) through the development stage. If they are delayed, then the flow of pre-order money keeps the lights on until they ship, but some of them just won't make it. If they realise this then they might just keep taking money in the hope that they will recover and become quasi-ponzi schemes, or might have to mine using customer kit to get themselves out the hole.

We blame the ASIC producers, but it is demand from the mining community that fuels this arms race that we are all in.

[pand70]

We blame the ASIC producers, but it is demand from the mining community that fuels this arms race that we are all in.

Demand can't go down because the asic race is a race against time. It 's not like pre ordering a gpu so you can play your favourite game. Having an asic 2 month later might be the difference between positive roi and not.

[EdMine]

We blame the ASIC producers, but it is demand from the mining community that fuels this arms race that we are all in.

Demand can't go down because the asic race is a race against time. It 's not like pre ordering a gpu so you can play your favourite game. Having an asic 2 month later might be the difference between positive roi and not.

This also means that it's a race for the ASIC mining rig manufacturers. If they don't take your money now then then they know you will buy from the company that has product on the market the week before them. Hence the pre-order process which provides lock-in for the vendor. Of course that can mean that you've given your hard earned cash to a bedroom dreamer or a total flake. Some of us will get lucky and back the right horse, but most of us probably won't and will end up staring at expensive piece of kit that will never earn it's purchase price.

I know it's an unpopular view, but the mining community (including me) drive the ASIC manufacturers behaviour as we want absolute certainty, and won't accept any delay to a forecast date. The KNC thread is a great example. Despite everything, they delivered products that largely outperform their estimates and yet there are hundreds of posts complaining about being days (not months) late.

[qwertyuiopmnbvcxz]

Probably because a miner has an approximate set USD price. While BTC doesnt.  By selling them it removes a lot of the speculative risk involved in mining alone.  And others have said it costs a lot of money to create an asic from scratch and selling them again removes a lot of the risk compared to mining yourself.  You know people will buy the asic, you dont know how BTC will move.

[Mitron]

Steps two and three are not necessary because they are selling their miners for more bitcoins that they can ever mine.

Wow, is this a recorded message or something?

There is a simply solution here, just don't buy them at those prices.  If people continue to buy chips and miners at rates that will never ROI then there is no incentive for the companies selling the hardware to lower their price.  In fact, the prices will only continue to increase until people stop buying.  When they stop buying, prices will go down.

[Mitron]

We blame the ASIC producers, but it is demand from the mining community that fuels this arms race that we are all in.

Yeah I don't blame the ASIC producers, after all they wouldn't even have designed them in the first place if people weren't willing to fund the project.  Anytime you mix greed with ignorance, you end up with a mess.

[brucevilanch]

Yep.

[cctekh]

Back during the 1849 California Gold Rush, few prospectors struck it rich. Most of the people who made money back then were those who sold shovels.

With the huge demand for ASIC hardware, their profit margin is probably insane, and its guaranteed profit regardless of whatever bitcoin's value changes to.  Plus, if they don't sell it, I'm sure some rival startup would.

[Mitron]

I know it's an unpopular view, but the mining community (including me) drive the ASIC manufacturers behaviour as we want absolute certainty, and won't accept any delay to a forecast date. The KNC thread is a great example. Despite everything, they delivered products that largely outperform their estimates and yet there are hundreds of posts complaining about being days (not months) late.

I agree.  I have little sympathy for those that invest in vaporware and cry later when they get ripped off.  Not only do they loose their hard earned cash, they open the door for more crooks to turn around and do the same thing, especially when the guy that got ripped off turns around and invests more money in the next pipe dream.  It's like strapping a sign to your chest that says "I'm rich and stupid, take my money please!".  In that case, most crooks would be happy to help you out.

[EdMine]

I know it's an unpopular view, but the mining community (including me) drive the ASIC manufacturers behaviour as we want absolute certainty, and won't accept any delay to a forecast date. The KNC thread is a great example. Despite everything, they delivered products that largely outperform their estimates and yet there are hundreds of posts complaining about being days (not months) late.

I agree.  I have little sympathy for those that invest in vaporware and cry later when they get ripped off.  Not only do they loose their hard earned cash, they open the door for more crooks to turn around and do the same thing, especially when the guy that got ripped off turns around and invests more money in the next pipe dream.  It's like strapping a sign to your chest that says "I'm rich and stupid, take my money please!".  In that case, most crooks would be happy to help you out.

I think that's a little harsh as none of us know who will produce vapourware next. I trust KNC after they delivered more than I'd ordered in an acceptable timeframe, but I'm not prepared to gamble over $12,500 that they can ship a Neptune to me by the beginning of March. If the Genesis block is correct, if it arrived at the start of April then it would be too late - I would be better just holding my coins. If the Genesis block is wildly over then my Jupiter will still be profitable. I guess I've bought my last mining rig!

[pand70]

Steps two and three are not necessary because they are selling their miners for more bitcoins that they can ever mine.

Wow, is this a recorded message or something?

Yes this is a recorded message because the concept of difficulty is not so easy for newcomers and they fall victims of companies selling the asics at outrageous prices. If you have another opinion about asics i 'll be glad to hear it.

Oh and noone cares how much a random like you bought some usb miners. We are talking about what usually happens.

[willpower101]

by the time you get your machine, their bitcoins double in price, they make profits.

You can only say this for fact in hindsight. at 1000/btc it's hard to imagine it doubling by March.

[pand70]

by the time you get your machine, their bitcoins double in price, they make profits.

You can only say this for fact in hindsight. at 1000/btc it's hard to imagine it doubling by March.

I don't like long term predictions for bitcoin but do you believe that anyone was thinking that bitcoin will go from 200$ to 1200$ in one month? Absolutely noone. Even the more bullish among the bulls couldn't have thought of such a rise.

[Mitron]

Yes this is a recorded message because the concept of difficulty is not so easy for newcomers and they fall victims of companies selling the asics at outrageous prices. If you have another opinion about asics i 'll be glad to hear it.

If it's that difficult to conceive, maybe they shouldn't be investing in the first place.  Like any investment, you should do your homework before giving away your money to strangers.  Didn't everyone's mom tell them that?  My point is, you don't have to pay those prices and you don't have to fall victim to the scams, but you do have to do a little research.

Oh and noone cares how much a random like you bought some usb miners. We are talking about what usually happens.

Maybe you don't, but maybe if people see there are deals to be had, maybe they won't be so hasty to jump on those outrageous prices.  I would think that in a community of techies, people would be smarter than this.