ASIC Miners

[miner2002]

Question, if you had the technical ability and resources to create an ASIC miner, why in the world would you sell the tech?

The whole point of the ASIC, as I understand it, is that it's custom built for mining to provide insane speeds.  If you build something like that, wouldn't it be more profitable to simply mine yourself?  You could argue that you need to recover capital costs for your investment, but mining would accomplish this AND not create a bunch of competition for the tech you invented. 

It seems to me that if you build a custom ASIC miner, you mine for a while with the hardware while you are developing even better tech, then sell off the stuff you have been using as "new" to the general public. You can almost even see this happening as all the ASIC's have a long wait time. 

It seems to me like ASIC mining isn't going to be a highly profitable game unless you're the one developing the tech yourself.  What am I missing?

[BitcoinBarrel]

That's why there have been an assortment of Asic Miner scams over the past year or two with pre-order delays, faulty manufacturing, etc. I think the technology is being held back, but at the same time slowly released for profit because eventually the tech will be widely available.

[timk225]

This is what the ASIC manufacturers do.  They build them and they mine with them, until the excuses for delays start to run out, then they finally sell them.  They'd be fools not to do that!

I certainly would if I were making ASICs! 

[Acidyo]

I don't understand why I haven't been able to figure this out before. It's so obvious. That's why I hear stories about people getting their ASIC miners over 6 months late, etc.

[chuckscap]

Well we got a little burned then got a little lucky.  We ordered our BFL Jalapenos in April (way too late), got them in October, thanks to the bitcoin value going up so much we should be even by the end of January (minor burn).   Then we ordered a KNC Jupiter on Nov 8th (barely got in) and it was delivered a week ago.   Finger's crossed should be even before Christmas then making some bitcoin profit until the terrahashers show up.  From our experience I'd rather have a KNC running at 600 GHs in the hand than an unproven company's terra hash miner on preorder.  It's all a gamble.  Enjoy it.

[bluedragon]

It's easy to picture the ASIC manufacturers mining with customers' equipment for as long as they can before shipping, but I don't think it's actually all that easy to pull off.

Getting caught would likely mean big fines or a PR nightmare. They would somehow have to hide it from the majority of employees so the secret doesn't get out.

[SoNic67]

Question, if you had the technical ability and resources to create an ASIC miner, why in the world would you sell the tech?

Because it's a rip-off. The hardware prices are twice or four times what they need to be in order to be able to make a return on your investment. It's more profitable to have a quick turn-around of capital that way. Check the facts with one of the online calculators like this one:
http://minercharts.com/
Plus, I am positive they get to hold your money, not the actual hardware, for months and play 'investment' with them.

[Sheldor333]

I can explain it simply to you. Think of the gold rush in America, who do you think earned more money, people looking for gold or people selling them equipment?
Hint: Equipment is overpriced, because people are willing to pay more when there is a possibility to get more back.

[timk225]

As is the current situation of trying to buy a 7950 pretty much anywhere.

[DrG]

It's easy to picture the ASIC manufacturers mining with customers' equipment for as long as they can before shipping, but I don't think it's actually all that easy to pull off.

Getting caught would likely mean big fines or a PR nightmare. They would somehow have to hide it from the majority of employees so the secret doesn't get out.

You're new here so you missed all the scamming.  Big fines?  By who? Avalon mined with their customers equipment for months and then shipped the units which had obvious signs of use.  Users even found their machines configured to mine on pools and when the addresses were checked they saw the machines mined for weeks-months and payments sent to Avalon.  Hence the hatred of all things Avalon and Yifu.

BFL is suspected of doing the same but no confirmation with definitive proof as far as I know.  They shipped units that have build dates from weeks prior.  And they're suspected of giving their COO and other privileged people mining equipment ahead of paying queued customers.

Then there are the fails and scams companies which just run away with money like bASIC.

None of these companies have paid any regulatory agency a single penny.  PR nightmare?  Doesn't stop BFL and Avalon from selling to new users 

[bluedragon]

It's easy to picture the ASIC manufacturers mining with customers' equipment for as long as they can before shipping, but I don't think it's actually all that easy to pull off.

Getting caught would likely mean big fines or a PR nightmare. They would somehow have to hide it from the majority of employees so the secret doesn't get out.

You're new here so you missed all the scamming.  Big fines?  By who? Avalon mined with their customers equipment for months and then shipped the units which had obvious signs of use.  Users even found their machines configured to mine on pools and when the addresses were checked they saw the machines mined for weeks-months and payments sent to Avalon.  Hence the hatred of all things Avalon and Yifu.

BFL is suspected of doing the same but no confirmation with definitive proof as far as I know.  They shipped units that have build dates from weeks prior.  And they're suspected of giving their COO and other privileged people mining equipment ahead of paying queued customers.

Then there are the fails and scams companies which just run away with money like bASIC.

None of these companies have paid any regulatory agency a single penny.  PR nightmare?  Doesn't stop BFL and Avalon from selling to new users 

Thanks for the examples. I guess it's easier to get away with than I thought

[stickerzlab]

There is not some electronical experts who could do some reverse on hardware to extract how much time chips had already run ?? Is that possible?

[DrG]

There is not some electronical experts who could do some reverse on hardware to extract how much time chips had already run ?? Is that possible?

Who needs electronics experts:

http://www.coindesk.com/avalon-accused-of-mining-with-customer-asics/

10 minutes is all it took to see the scam.

[vadoff]

Let's say it costs $200 to produce an ASIC machine, but you could sell it for $2000.

Would you:
A) Mine with it and earn $100 per day, earning $1900 in profit after 21 days?
B) Sell it and earn $1900 in profit instantly?

These companies chose the latter. Some of the companies didn't even have the capital to produce the machines in the first place, hence why so many took/continue to take preorders.
So in the above example it would be $1900 profit now, instead of several months down the line.

[DrG]

Let's say it costs $200 to produce an ASIC machine, but you could sell it for $2000.

Would you:
A) Mine with it and earn $100 per day, earning $1900 in profit after 21 days?
B) Sell it and earn $1900 in profit instantly?

These companies chose the latter. Some of the companies didn't even have the capital to produce the machines in the first place, hence why so many took/continue to take preorders.
So in the above example it would be $1900 profit now, instead of several months down the line.

Uh, no, please see my post above.  Avalon took BTC payments for all 3 batches even as the BTC price rose.  In fact they gouged Batch 3 customer (I was one) for 102BTC for a 85GH/s unit stating they would earn their money back in 1-1.5 months.

As evidenced above, not only did they collect the preorder money but they also received mining income for some time while driving up difficulty for everybody else.  In your example, it would be selling the pre-order for $2k, mining $1500 dollars on it, then shipping it to the customer who can now only mine a lifetime of $1000 with the device.

Can get more evil than that.  Well I guess they could put a GPS in there for the NSA or maybe a pipe bomb or something....Yifu getting any ideas?