If you consider getting an ASIC machine, read this

[crazyivan]

I ve read a very nice piece on Bitcoin mining these days, basically comparing mining rig to a golden goose, very interesting. It sums up to the following, why would ASIC manufacturers sell their machines if they can use them for mining:

“The only logical reason would either be because you know the productivity of the golden goose (ASIC) will go down over time — something which is the case for bitcoin because its hash rate doubles roughly every month — the goose was faulty or because someone was offering more than its value in the first place. Which means — unless you know how to make a rig yourself — chances are you won’t be making millions from a rig investment any time soon because the Bitcoin system is literally “rigged” against you from the outset.”

Here is the entire piece:

http://www.cryptocoinsnews.com/news/mining-rigs-killed-golden-goose/2014/05/20

Think twice before buying.

[ChetnotAtkins]

Jap the days of easy mining are long gone

[greenlion]

I ve read a very nice piece on Bitcoin mining these days, basically comparing mining rig to a golden goose, very interesting. It sums up to the following, why would ASIC manufacturers sell their machines if they can use them for mining:

This is a very naive perspective that misapplies the experience of a small basement operation to a large enterprise.

Once you're talking about the volume that an ASIC manufacturer would produce, there are two EXTREMELY critical issues that come into play --

(1) Building equipment in order to mine instead of sell exposes the manufacturer to an additional level of risk that they might not be interested in taking on;

(2) It's not trivial at all to design and administer a facility in which to house all of this mining equipment.

[crazyivan]

I ve read a very nice piece on Bitcoin mining these days, basically comparing mining rig to a golden goose, very interesting. It sums up to the following, why would ASIC manufacturers sell their machines if they can use them for mining:

This is a very naive perspective that misapplies the experience of a small basement operation to a large enterprise.

Once you're talking about the volume that an ASIC manufacturer would produce, there are two EXTREMELY critical issues that come into play --

(1) Building equipment in order to mine instead of sell exposes the manufacturer to an additional level of risk that they might not be interested in taking on;

(2) It's not trivial at all to design and administer a facility in which to house all of this mining equipment.

Most of these manufacturers state reaching ROI in about 3-6 months. If this is really the case, only a total fool would sell instead of mine, regardless of any obstacle they might face.
Apart from reasons already stated, the only reason to sell which comes to my mind is that most of these companies are not sufficiently capitalized to develop their own products. To overcome this, they sell preorders, get your money, develop the product, use it for MINING for a few months and then deliver to you when it almost useless.

An excellent business model, whoever started this first should be nominated for Nobel prize in economics.

[notbatman]

I ve read a very nice piece on Bitcoin mining these days, basically comparing mining rig to a golden goose, very interesting. It sums up to the following, why would ASIC manufacturers sell their machines if they can use them for mining:

This is a very naive perspective that misapplies the experience of a small basement operation to a large enterprise.

Once you're talking about the volume that an ASIC manufacturer would produce, there are two EXTREMELY critical issues that come into play --

(1) Building equipment in order to mine instead of sell exposes the manufacturer to an additional level of risk that they might not be interested in taking on;

(2) It's not trivial at all to design and administer a facility in which to house all of this mining equipment.

Most of these manufacturers state reaching ROI in about 3-6 months. If this is really the case, only a total fool would sell instead of mine, regardless of any obstacle they might face.
Apart from reasons already stated, the only reason to sell which comes to my mind is that most of these companies are not sufficiently capitalized to develop their own products. To overcome this, they sell preorders, get your money, develop the product, use it for MINING for a few months and then deliver to you when it almost useless.

An excellent business model, whoever started this first should be nominated for Nobel prize in economics.

That would be Butterfly Labs (BFL). Correct me if I'm wrong but I think those guys are being indicted and the subject of a massive class action lawsuit.

[Malin Keshar]

with mining they would need to take the risk of bitcoin mining, they also would need to hire IT guys to setup the network, buy space to put the ASICs, be always informed about btc market, and so on. Plus most ASIC makers are on China, so there is always a risk of buy such a huge thing and btc be baned, or they don't have how to sell it.

Why the enterprises that do stuff to explore oil don't explore oil themselves ?


But i agree that in ASIC community there are scams, so better be aware

[skydiveguy]

If you had a machine that literally printed money, would you sell it?

[notbatman]

If you had a machine that literally printed money, would you sell it?

If my customer was a mint, then yes 

[sgk]

If you had a machine that literally printed money, would you sell it?

If my machine's cost was $100 and I could print $1000 out of its lifecycle, I would print $700 out of it and then sell it for $200.
The customer would be happy that he paid $200 and printed $300

That's what BFL-like companies are doing in ASIC pre-orders.

[notbatman]

If you had a machine that literally printed money, would you sell it?

If my machine's cost was $100 and I could print $1000 out of its lifecycle, I would print $700 out of it and then sell it for $200.
The customer would be happy that he paid $200 and printed $300

That's what BFL-like companies are doing in ASIC pre-orders.

Lots of happy pre-order customers on this forum...

[alexrossi]

If you had a machine that literally printed money, would you sell it?

If my machine's cost was $100 and I could print $1000 out of its lifecycle, I would print $700 out of it and then sell it for $200.
The customer would be happy that he paid $200 and printed $300

That's what BFL-like companies are doing in ASIC pre-orders.

My idea is that at this round also a reputable asic player like KnC is doing this dirty thing (they are pushing at the limit the delivery date, end of q2, to squeeze the profit)

[greenlion]

Why the enterprises that do stuff to explore oil don't explore oil themselves ?

Exactly. This whole line of reasoning is the most naive view of market economics imaginable. If we are to accept these assumptions, then we should expect that every single market in the known universe would be completely vertically integrated.

[crazyivan]

Why the enterprises that do stuff to explore oil don't explore oil themselves ?

Exactly. This whole line of reasoning is the most naive view of market economics imaginable. If we are to accept these assumptions, then we should expect that every single market in the known universe would be completely vertically integrated.

But most of companies that mine oil have their own teams which explore oil. Why would they let somebody else do this. This is a very bad example.

[brian_23452]

I ve read a very nice piece on Bitcoin mining these days, basically comparing mining rig to a golden goose, very interesting. It sums up to the following, why would ASIC manufacturers sell their machines if they can use them for mining:

“The only logical reason would either be because you know the productivity of the golden goose (ASIC) will go down over time — something which is the case for bitcoin because its hash rate doubles roughly every month — the goose was faulty or because someone was offering more than its value in the first place. Which means — unless you know how to make a rig yourself — chances are you won’t be making millions from a rig investment any time soon because the Bitcoin system is literally “rigged” against you from the outset.”

Here is the entire piece:

http://www.cryptocoinsnews.com/news/mining-rigs-killed-golden-goose/2014/05/20

Think twice before buying.

The article reads like something written by a person who doesn't have a very firm grasp of finance.  Why would a company sell a "golden goose" machine?  Well one answer is the same reason why a company might sell commercial paper or bonds with a face value worth more then they are selling them for.  Cash up front is worth more then cash tomorrow or the next day or the day after that.  Perhaps the company has other investments they believe will bring a bigger return than mining?  Risk.  There is a certain risk involved with mining.  We don't know what btc will be worth tomorrow or the day after, but we have a pretty good idea what dollars will be worth.  Selling machines passes the risk on to the miner who takes a premium for absorbing that risk.  Of course, mining also takes effort, and has costs associated with it.  It is entirely possible for them to sell machines profitably to customers who are better positioned to handle these costs. 
In short, none of this means buying machines is a good (or bad) idea.  What it does mean is that there a lots of legit reasons why a company might sell machines to miners in a mutually beneficial transaction. 

[BCwinning]

Because tomorrow morning when you wake up bitcoin might be worth less than a doge.
That's why they continue to sell the machines. Sure they could manufacture and mine with all the gear.
Bank away all the bitcoins they mine and hope the market gets back to 1k a btc and cash in.
Or they can mine some and sell some and still be ahead of the game .
Who is investing millions in a digital currency and sitting on the coin? Not any smart investor..
Does that cryptocoinnews actually produce any good reads? Seems like a spamazine..

[crazyivan]

People, you need to factor in that most of these companies PRE-sell ASIC. Then deliver it once the difficulty goes up big time so the purpose of buying is quite dubious.
I would like to see some estimated profit chart comparing all these producers. At least at current crypto prices.

[peeveepee]

Those miners have a profit margin of more than 20-25%.

Once they sell those miners, the cash is free up for their next patch of sales.

And they will keep selling miners until the network difficulty reaches so high that the market no longer support additional miners and most of their previous buyers may not even ROI.

[scryptasicminer]

People, you need to factor in that most of these companies PRE-sell ASIC. Then deliver it once the difficulty goes up big time so the purpose of buying is quite dubious.
I would like to see some estimated profit chart comparing all these producers. At least at current crypto prices.

Think some of them delay shipping to their customers and use the ASIC to mine themselves.

[wenben]

Mining is no longer a small player game.

[alexrossi]

Mining is no longer a small player game.

Mining will be always for everybody that has at least a working PC, mining with profit now is no longer a small player game.