BitForce SC - full custom ASIC

[rjk]

Just to clarify your earlier statements, the trade in for Singles/Minirig buyers is only for the original buyers and not people who have purchased BFL Singles second hand, correct?

Not sure why it would matter, as long as they got their box back.

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[MrTeal]

Not sure why it would matter, as long as they got their box back.

Not sure either, I'm just going off this quote from BFL, which makes it sound like only singles purchased from BFL would be covered.

The trade-in program involves return of a single, a mini-rig or mini-rig cards purchased from Butterfly Labs.
The date of purchase does not really matter, the credit is given to the customer as soon as the unit
reachs our office.


Regards,
BF Labs Inc.

[Epoch]

Not sure why it would matter, as long as they got their box back.

Not sure either, I'm just going off this quote from BFL, which makes it sound like only singles purchased from BFL would be covered.

The trade-in program involves return of a single, a mini-rig or mini-rig cards purchased from Butterfly Labs.
The date of purchase does not really matter, the credit is given to the customer as soon as the unit
reachs our office.

Straight off the BFL SC FAQ on the website:

"Upon release of BitForce SC based Singles & Mini Rigs, all previous generation BitForce products will enjoy a full 100% trade in value when used towards the purchase of the newer generation replacements.  This means your current device is protected from depreciation through this evolution in technology.  This buy back offer is good for all previous generation BitForce units whether purchased directly from us or from a third party."

So to answer your question, yes, they will accept anything whether purchased from BFL directly or not.

[||bit]

Not sure why it would matter, as long as they got their box back.

Not sure either, I'm just going off this quote from BFL, which makes it sound like only singles purchased from BFL would be covered.

The trade-in program involves return of a single, a mini-rig or mini-rig cards purchased from Butterfly Labs.
The date of purchase does not really matter, the credit is given to the customer as soon as the unit
reachs our office.

Straight off the BFL SC FAQ on the website:

"Upon release of BitForce SC based Singles & Mini Rigs, all previous generation BitForce products will enjoy a full 100% trade in value when used towards the purchase of the newer generation replacements.  This means your current device is protected from depreciation through this evolution in technology.  This buy back offer is good for all previous generation BitForce units whether purchased directly from us or from a third party."

So to answer your question, yes, they will accept anything whether purchased from BFL directly or not.

Didn't someone send a broken BFL Single to the maker of Lancelot to hack?  ....    ooops

[BFL-Engineer]

Not sure why it would matter, as long as they got their box back.

Not sure either, I'm just going off this quote from BFL, which makes it sound like only singles purchased from BFL would be covered.

The trade-in program involves return of a single, a mini-rig or mini-rig cards purchased from Butterfly Labs.
The date of purchase does not really matter, the credit is given to the customer as soon as the unit
reachs our office.

Straight off the BFL SC FAQ on the website:

"Upon release of BitForce SC based Singles & Mini Rigs, all previous generation BitForce products will enjoy a full 100% trade in value when used towards the purchase of the newer generation replacements.  This means your current device is protected from depreciation through this evolution in technology.  This buy back offer is good for all previous generation BitForce units whether purchased directly from us or from a third party."

So to answer your question, yes, they will accept anything whether purchased from BFL directly or not.

Didn't someone send a broken BFL Single to the maker of Lancelot to hack?  ....    ooops

If anyone receives a broken single, they would definitely send it back to us for replacement. I don't think 600$ of investment
is something people would easily overlook...



Regards,
BF Labs Inc.

[||bit]

Can you give us any indication of price? >$5,000? >$25,000?

Can't give you any exact numbers yet. But for a certain model, both numbers are too big,
and for another, probably both are still big... we have to decide, but it won't be unaffordable...


Regards,
BF Labs Inc

BF Labs,

Would the performance per dollar of the certain ASIC based models vary slightly, modestly or greatly as compared to other ASIC based models? Granted, these comparative terms are all somewhat subjective. ... For example, the bang/buck of single versus mini is something like ~1.3MH/$ versus ~1.6MH/$. A clear but modest difference - imo.

I suspect the difference will be based on, if anything, a typical quanity discounting curve and not a technological difference. That is, since you probably only have one ASIC chip designed and ready. Is that a correct assumption?

BTW: I appreciate your role in all this. I think the ASIC development is great. It might very well set the stage for the most stable period of mining for all invested miners, I suspect anyway. Like you indicated, nothing will really be the next step in technology anytime soon. Perhaps, the difficulty rating will change more normally - after the ASIC transition/shift.

||bit.out

[wogaut]

Very interesting thread.

I'm watching you closely, BFL 

[P4man]

I suspect the difference will be based on, if anything, a typical quanity discounting curve and not a technological difference. That is, since you probably only have one ASIC chip designed and ready. Is that a correct assumption?

Put yourself in their shoes. Assume you invested a few million dollar and you now have an asic design that costs $1 per GH to produce. What do you do?

Ill tell you what I would do; I would sell the first systems at a GH/$ ratio thats better than FPGAs, but no more than a factor 2x or so. Why would you?  Better performance per $ and vastly better performance/W, that will make you dominate the market anyway, nothing else would make sense to buy, so you basically capture 100% of the bitcoin mining hardware market. Yet you are selling for say $300 per GH while the chip costs you $1 in marginal cost. But thats okay, you do have to make up for those millions you invested.

Fast forward a few months. You've sold a few terrahash worth of those chips, as a result, difficulty begins to rise, and therefore, demand for your product begins to drop, because the ROI starts taking much longer. What do you do? Simple, you slash prices, cut them in half if you must, its not like your margins wont allow it. And so you sell a few more thousand units at $150 per GH. Until difficulty catches up again and demand slows.... rince, repeat.   until you reach $3 per GH and the bitcoin network is 100x faster than it is now. And early asic customers are making 100x less than they were when they invested.

Now BFL may say they dont want to rip off their customers, and Im inclined to believe them its not what they want to do, but even absent a competitor it will be very hard to avoid doing just that without resorting to a non profit business plan. Factor in a competitor in the above scenario and a price war is a certainty and therefore difficulty will explode even faster and render all those early ASIC miners expensive paperweights that will never earn their investment back.

Unless BFL comes up with some sort of guarantee or promise to limit their sales (!) AND they retain a monopoly,  Id like to short all mining corporations that invest in those early asics. Or later asics for that matter.

[SgtSpike]

I suspect the difference will be based on, if anything, a typical quanity discounting curve and not a technological difference. That is, since you probably only have one ASIC chip designed and ready. Is that a correct assumption?

Put yourself in their shoes. Assume you invested a few million dollar and you now have an asic design that costs $1 per GH to produce. What do you do?

Ill tell you what I would do; I would sell the first systems at a GH/$ ratio thats better than FPGAs, but no more than a factor 2x or so. Why would you?  Better performance per $ and vastly better performance/W, that will make you dominate the market anyway, nothing else would make sense to buy, so you basically capture 100% of the bitcoin mining hardware market. Yet you are selling for say $300 per GH while the chip costs you $1 in marginal cost. But thats okay, you do have to make up for those millions you invested.

Fast forward a few months. You've sold a few terrahash worth of those chips, as a result, difficulty begins to rise, and therefore, demand for your product begins to drop, because the ROI starts taking much longer. What do you do? Simple, you slash prices, cut them in half if you must, its not like your margins wont allow it. And so you sell a few more thousand units at $150 per GH. Until difficulty catches up again and demand slows.... rince, repeat.   until you reach $3 per GH and the bitcoin network is 100x faster than it is now. And early asic customers are making 100x less than they were when they invested.

Now BFL may say they dont want to rip off their customers, and Im inclined to believe them its not what they want to do, but even absent a competitor it will be very hard to avoid doing just that without resorting to a non profit business plan. Factor in a competitor in the above scenario and a price war is a certainty and therefore difficulty will explode even faster and render all those early ASIC miners expensive paperweights that will never earn their investment back.

Unless BFL comes up with some sort of guarantee or promise to limit their sales (!) AND they retain a monopoly,  Id like to short all mining corporations that invest in those early asics. Or later asics for that matter.

Maybe it cost them less than a "few" million to develop.  And 12 TH/s would have to be added to the network before the price/earning ratio would be dropped in half.  If they managed to get 12 TH/s of sales @ $300/1GH/s, that'd be $3.6M.  I doubt we'd see very much of a drop in demand with less than a halving in the price/difficulty ratio.

That's not even taking in to account that ASICs will be profitable miners for a LONG time.  If they could get it down to say, 25w for 1 GH/s, then difficulty would have to increase 49 times what it is now, with NO increase in price, for them to start being unprofitable in many areas.  Granted, the payback period would be far extended if difficulty were to increase that much, but 49 times is 588 TH/s.  Even if BFL only had a fraction of those sales, they would still payback far more than their initial investment.

The only way I can see this going wrong for BFL is if the Bitcoin price drops drastically, down to the $0.10 range or less.  But I don't believe that will happen any time soon at all.

[||bit]

I suspect the difference will be based on, if anything, a typical quanity discounting curve and not a technological difference. That is, since you probably only have one ASIC chip designed and ready. Is that a correct assumption?

Put yourself in their shoes. Assume you invested a few million dollar and you now have an asic design that costs $1 per GH to produce. What do you do?

Ill tell you what I would do; I would sell the first systems at a GH/$ ratio thats better than FPGAs, but no more than a factor 2x or so. Why would you?  Better performance per $ and vastly better performance/W, that will make you dominate the market anyway, nothing else would make sense to buy, so you basically capture 100% of the bitcoin mining hardware market. Yet you are selling for say $300 per GH while the chip costs you $1 in marginal cost. But thats okay, you do have to make up for those millions you invested.

Fast forward a few months. You've sold a few terrahash worth of those chips, as a result, difficulty begins to rise, and therefore, demand for your product begins to drop, because the ROI starts taking much longer. What do you do? Simple, you slash prices, cut them in half if you must, its not like your margins wont allow it. And so you sell a few more thousand units at $150 per GH. Until difficulty catches up again and demand slows.... rince, repeat.   until you reach $3 per GH and the bitcoin network is 100x faster than it is now. And early asic customers are making 100x less than they were when they invested.

Now BFL may say they dont want to rip off their customers, and Im inclined to believe them its not what they want to do, but even absent a competitor it will be very hard to avoid doing just that without resorting to a non profit business plan. Factor in a competitor in the above scenario and a price war is a certainty and therefore difficulty will explode even faster and render all those early ASIC miners expensive paperweights that will never earn their investment back.

Unless BFL comes up with some sort of guarantee or promise to limit their sales (!) AND they retain a monopoly,  Id like to short all mining corporations that invest in those early asics. Or later asics for that matter.

I won't disagree with your thoughts. It makes sense. And I hope they make lots of profit to reward their work...though I'm pretty sure they will. But my question regarded the cost of the ASIC based models to each other. Mainly to get a feel for what kind of investment to look forward to. For example, if I had X thousand dollars to invest in the new equipment, would I be a little better or a far better deal to buy the next best model? Consider the mini-rig versus singles... if you had say $8000 to spend, then going singles would be acceptable if it would be difficult to collect another $8000 for a mini-rig. But if the performance of the minirig was double or triple that of a single, then it would be an easy decision to push for the extra cash and get a mini-rig. Make sense? And of course if you have $16k to drop, then you would of course likely go for a mini over a bunch of singles.

[||bit]

Just a guess, but I'd bet that the ASICs will hash at 1GH to 1.2GH each. I know they could be designed larger or smaller, but pound for pound I gathered that ASIC's perform about 3 to 4 times faster than FPGA's. But I'm no expert on the topic.

[P4man]

Maybe it cost them less than a "few" million to develop.

Even if it cost them $0 to develop the asic, the problem remains. Unless you would expect them to give it away for free.

That's not even taking in to account that ASICs will be profitable miners for a LONG time.  If they could get it down to say, 25w for 1 GH/s, then difficulty would have to increase 49 times what it is now, with NO increase in price, for them to start being unprofitable in many areas.  Granted, the payback period would be far extended if difficulty were to increase that much, but 49 times is 588 TH/s.  Even if BFL only had a fraction of those sales, they would still payback far more than their initial investment.

Forget about electricity costs, Im not even factoring that in. That makes the problem for miners worse, not better. I used some numbers to illustrate my point, but the underlying cause remains true regardless of the actual numbers, as long as you assume a trivial marginal cost compared to market value, which is a fair assumption for a bitcoin asic.

The real problem is that BFL or any early asic provider will price their product at a level the market will currently bear. You can argue what that is, but I would say 6-12 months before you earn back your investment seems like a sensible investment, they will sell at that price. But that 12 months ROI, will become 12 years and 120 years as more and more asics flood the market at ever lower prices. How can you know how long it will take before it gets there? As a miner, you cant. You could write a check for 1TH asic miner expecting it to break even in 6 months but never actually get there.

The only way I can see this going wrong for BFL

Oh, but Im not worried about BFL. If they are indeed first to market, Im sure they will make a nice pile of money, and they should, they deserve it. Its the miners that will get in to trouble.

[P4man]

Just a guess, but I'd bet that the ASICs will hash at 1GH to 1.2GH each. I know they could be designed larger or smaller, but pound for pound I gathered that ASIC's perform about 3 to 4 times faster than FPGA's. But I'm no expert on the topic.

If by pound you mean mm2 die size, you are probably off by more than an order of magnitude. Think 50x faster on a old process and >200x faster at an equal process.

[SgtSpike]

Maybe it cost them less than a "few" million to develop.

Even if it cost them $0 to develop the asic, the problem remains. Unless you would expect them to give it away for free.

That's not even taking in to account that ASICs will be profitable miners for a LONG time.  If they could get it down to say, 25w for 1 GH/s, then difficulty would have to increase 49 times what it is now, with NO increase in price, for them to start being unprofitable in many areas.  Granted, the payback period would be far extended if difficulty were to increase that much, but 49 times is 588 TH/s.  Even if BFL only had a fraction of those sales, they would still payback far more than their initial investment.

Forget about electricity costs, Im not even factoring that in. That makes the problem for miners worse, not better. I used some numbers to illustrate my point, but the underlying cause remains true regardless of the actual numbers, as long as you assume a trivial marginal cost compared to market value, which is a fair assumption for a bitcoin asic.

The real problem is that BFL or any early asic provider will price their product at a level the market will currently bear. You can argue what that is, but I would say 6-12 months before you earn back your investment seems like a sensible investment, they will sell at that price. But that 12 months ROI, will become 12 years and 120 years as more and more asics flood the market at ever lower prices. How can you know how long it will take before it gets there? As a miner, you cant. You could write a check for 1TH asic miner expecting it to break even in 6 months but never actually get there.

The only way I can see this going wrong for BFL

Oh, but Im not worried about BFL. If they are indeed first to market, Im sure they will make a nice pile of money, and they should, they deserve it. Its the miners that will get in to trouble.

I think you're worrying a whole lot about nothing.  The potential for future price breaks should already be considered by anyone purchasing new mining equipment.  And even if you're buying equipment that takes a year to pay off, the price/difficulty isn't going to increase 4900% in that year.  Heck, even if the price/difficulty drops in half, you'd still have most of it paid off in one year.

Sorry P4man, I just don't see your doomsday scenario happening.  Most miner's aren't going to waste time with something that'll take > 1 year to pay off, and that'll keep prices and difficulty in check.  And 12 TH/s is a LOT of hashing power to double.

[P4man]

I think you're worrying a whole lot about nothing.  The potential for future price breaks should already be considered by anyone purchasing new mining equipment.  And even if you're buying equipment that takes a year to pay off, the price/difficulty isn't going to increase 4900% in that year.

Oh yes it can. Easily.
http://bitcoin.sipa.be/speed-lin-ever.png

Sorry P4man, I just don't see your doomsday scenario happening.  Most miner's aren't going to waste time with something that'll take > 1 year to pay off, and that'll keep prices and difficulty in check.  And 12 TH/s is a LOT of hashing power to double.

By my estimate, it takes all of 10 8" wafers on 130nm. That will cost you less than $10K for the chips. You cant even order so few wafers, typically a run will be 25 wafers.

I dont think you fully realize how disruptive asics are.

[ice_chill]

You forgot to account that the more difficulty increases/less profitable mining becomes the more people will exit it dropping the difficulty and increasing profitability.
And ASIC is not disruptive, it's just the next stage in evolution.

We went from kilohash to megahash to gigahash and survided

So why won't we survive going from gigahash to terahash to petahash ?

[LordMord]

I could see ASIC being disruptive if they get onto the market to early and in big numbers. But unless there are more information about them (Release-date, price , efficeny, production capacity) and even then i wouldn't know how they would/will affect the 'market'.

[SgtSpike]

I think you're worrying a whole lot about nothing.  The potential for future price breaks should already be considered by anyone purchasing new mining equipment.  And even if you're buying equipment that takes a year to pay off, the price/difficulty isn't going to increase 4900% in that year.

Oh yes it can. Easily.
http://bitcoin.sipa.be/speed-lin-ever.png

Sorry P4man, I just don't see your doomsday scenario happening.  Most miner's aren't going to waste time with something that'll take > 1 year to pay off, and that'll keep prices and difficulty in check.  And 12 TH/s is a LOT of hashing power to double.

By my estimate, it takes all of 10 8" wafers on 130nm. That will cost you less than $10K for the chips. You cant even order so few wafers, typically a run will be 25 wafers.

I dont think you fully realize how disruptive asics are.

Time will tell.  I'll just say that I still disagree with you that miners won't be able to pay off their ASICs.

[P4man]

You forgot to account that the more difficulty increases/less profitable mining becomes the more people will exit it dropping the difficulty and increasing profitability.

True, but that will quickly seem like a drop on a hot plate, like cpu miners exiting 6 months ago.

We went from kilohash to megahash to gigahash and survided
So why won't we survive going from gigahash to terahash to petahash ?

Im not saying bitcoin wont survive it, Im saying mining profits most likely wont. I already explained my reasoning, Im not going to repeat it.

[P4man]

Time will tell.  I'll just say that I still disagree with you that miners won't be able to pay off their ASICs.

And how would you know that? The only way to be able to make even an educated guess of your payback time is knowing how many terrahash BFL will sell over that time. Are you saying you have an educated guess for that? Cause I certainly dont.

But I do know the potential is almost limitless, if BFL have a full wafer maskset, they will have a GH printing press with a capacity that far exceeds what you considered possible just a few posts above. You will be utterly at their (and/or their competitors) mercy for you ROI.