Butterfly Labs ASIC Gear Potential

[davidspitzer]

looks like I picked a "fun time" to jump into bitcoins. The next 6-12 months will be highly interesting

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[cmg5461]

You missed the fun time last summer

[Brunic]

Satoshi would not want it to come to this.

How do you know? Are you channeling him now?

I just think he would have wanted "the people" to have the coins, not the millionaires who can afford these special mining machines.  So what if the Federal Reserve bought a bunch?  If they are only $40k for a 1 TH/s unit, what is stopping them from dropping $10 million on 250 of these units and having 250 TH/s?  And what's stopping them from doing that over and over again until they control the supply of bitcoins?  Now, that would increase the value of the bitcoins that are already out in the wild, but we have to be aware of the fact that it allows the upper 1% TOO much control.

I'm not a millionaire, and I can afford a Jalapeno device for $150. I'm sure lots of others can too.

Yeah good point, I guess it depends on the volume they are able to make those...  If we can get them in stacks, I guess the whole world is going to mine with Jalapeno's this winter..  So much for heating my house this winter with my rigs!  The difficulty/trading price/network hashrate is going to go bonkers for awhile but I suppose it will correct itself...

The thing is, the only customer for these Jalapeno's are miners. And the miners don't have any alternative at the current moment.

BFL can, at any moment, take the difficulty index, calculate what's the ROI on their product, and adjust the prices depending of the ROI. If the ROI is shitty, they can lower their prices, so the ROI gets better. Seeing that, miners will buy new ASIC, shoot the difficulty up again, and make the ROI worse. So BFL can again adjust their prices, miners buy again with the better ROI, and the difficulty goes up again.

And if miners quit after a while? Nothing prevents BFL to prices their ASIC a little higher. Miners will calculate their ROI, they'll see an opportunity, and when everybody buys, the difficulty goes up, and the ROI goes down.

The price of GPU or FPGA was not determined by the difficulty of Bitcoin. AMD is going to sell its card 400$, whatever the difficulty is. Same thing for Xilinx or other FPGA manufacturers. Those ASIC have no value outside Bitcoin mining and since the mining market is completely public (with the difficulty index), they know exactly how to price their products for buyers.

[DILLIGAF]

Satoshi would not want it to come to this.

How do you know? Are you channeling him now?

I just think he would have wanted "the people" to have the coins, not the millionaires who can afford these special mining machines.  So what if the Federal Reserve bought a bunch?  If they are only $40k for a 1 TH/s unit, what is stopping them from dropping $10 million on 250 of these units and having 250 TH/s?  And what's stopping them from doing that over and over again until they control the supply of bitcoins?  Now, that would increase the value of the bitcoins that are already out in the wild, but we have to be aware of the fact that it allows the upper 1% TOO much control.

I'm not a millionaire, and I can afford a Jalapeno device for $150. I'm sure lots of others can too.

Yeah good point, I guess it depends on the volume they are able to make those...  If we can get them in stacks, I guess the whole world is going to mine with Jalapeno's this winter..  So much for heating my house this winter with my rigs!  The difficulty/trading price/network hashrate is going to go bonkers for awhile but I suppose it will correct itself...

The thing is, the only customer for these Jalapeno's are miners. And the miners don't have any alternative at the current moment.

BFL can, at any moment, take the difficulty index, calculate what's the ROI on their product, and adjust the prices depending of the ROI. If the ROI is shitty, they can lower their prices, so the ROI gets better. Seeing that, miners will buy new ASIC, shoot the difficulty up again, and make the ROI worse. So BFL can again adjust their prices, miners buy again with the better ROI, and the difficulty goes up again.

And if miners quit after a while? Nothing prevents BFL to prices their ASIC a little higher. Miners will calculate their ROI, they'll see an opportunity, and when everybody buys, the difficulty goes up, and the ROI goes down.

The price of GPU or FPGA was not determined by the difficulty of Bitcoin. AMD is going to sell its card 400$, whatever the difficulty is. Same thing for Xilinx or other FPGA manufacturers. Those ASIC have no value outside Bitcoin mining and since the mining market is completely public (with the difficulty index), they know exactly how to price their products for buyers.

Well they could do that but not with the th/s boxes shipping that is just too massive an increase potential if any amount of them ship now one way it can work thinking about it some more is if they ship the smaller capacity ones first they can literally ship thousands of the 3.5 gh/s machines and not have that bad an increase of the diff or hundreds of the 40gh/s boxes keeping with this idea. Now whether they plan to do that is a guess as if past history is any indication you would have better luck finding out who really killed JFK than getting any real info out of BFL.

[fatigue]

Good thing nobody has considered the drop in price of Bitcoins that will happen almost immediately after the ASICs arrive... Remember that this economy is based solely on the supply demand aspect, and bringing so many coins in at once is going to plummet prices. It's like what would happen to let's say the US dollar if the government sent every household $5,000... The price massively deflates as the supply increases.

[MrTeal]

Good thing nobody has considered the drop in price of Bitcoins that will happen almost immediately after the ASICs arrive... Remember that this economy is based solely on the supply demand aspect, and bringing so many coins in at once is going to plummet prices. It's like what would happen to let's say the US dollar if the government sent every household $5,000... The price massively deflates as the supply increases.

Supply is 50BTC/10minutes now, and 25BTC/10minutes sometime around December, regardless of hashrate.

[MXRider]

Good thing nobody has considered the drop in price of Bitcoins that will happen almost immediately after the ASICs arrive... Remember that this economy is based solely on the supply demand aspect, and bringing so many coins in at once is going to plummet prices. It's like what would happen to let's say the US dollar if the government sent every household $5,000... The price massively deflates as the supply increases.

Supply is 50BTC/10minutes now, and 25BTC/10minutes sometime around December, regardless of hashrate.

He might mean that miners have to sell their coins. If they pay BFL with BTC then BFL has to sell coins to get some cold hard cash.

[fatigue]

Good thing nobody has considered the drop in price of Bitcoins that will happen almost immediately after the ASICs arrive... Remember that this economy is based solely on the supply demand aspect, and bringing so many coins in at once is going to plummet prices. It's like what would happen to let's say the US dollar if the government sent every household $5,000... The price massively deflates as the supply increases.

Supply is 50BTC/10minutes now, and 25BTC/10minutes sometime around December, regardless of hashrate.

He might mean that miners have to sell their coins. If they pay BFL with BTC then BFL has to sell coins to get some cold hard cash.

Yes indeed. That and the fact that this whole thread has been about how more coins will be produced in a short amount of time than ever before. The difficulty will rise with the bashing power, yes, but that doesn't change the fact that there will be a time in there where BTC flood into the market. Keep in mind that the difficulty is rising to keep up with the hashing power. Not the other way around.

[Entropy-uc]

They will make a lot of money back during that short window, but no where near the cost of the device. I believe, by buying this equipment, we're all just shooting each other in the foot.

Why do you think people will not make their money back. If you are one of the first to the table (timing is crucial here I think) mining at 1TH/s should recoup your $30,000 pretty quick even if the reward is halved to 25 and the difficulty starts to ramp up. Like I said calculations may be wrong but it does seem like their is an opportunity here

Considering they will release more then one at once.  Global hashrate doubles, you'll make half your guess with 1TH/s.  1 week goes by (2016 blocks found) and difficulty increases astronomically.  Goodluck!

When I plug the numbers, at Double the Difficulty and Half the reward the gear would still be repaid ($30,000) in 30 days

Did you account for the difficulty rising twice (possibly 3 or even 4 times) during that period?

When companies order chips like these, they arrive all at once..  If BFL has any common sense, they will flood the market with these things so everyone has a 'chance' at getting the first 1TH/s machine.  Then everyone will complain that their ROI has risen back to 2 years.

1 month gross rates for 1TH/s at $6.38 exchange rate

At present difficulty and 25 reward  - $62850.86 USD
Double the Difficulty 25 reward - $31425.43 USD
Triple the Difficulty 25 reward - $20950.29 USD
Quadruple the Difficulty 25 reward - $15712.71 USD

It still seems to me that even as the difficulty ramps up if you are one of the first to market that you will enjoy a good rate of return until the field equalizes. So your actual return over the first 6 months would probably be a sliding scale of upward difficulty but your initial investment seems like it should be paid off rather quickly

Imagine you had access to this miracle product. Why would you sell it?

[bulanula]

They will make a lot of money back during that short window, but no where near the cost of the device. I believe, by buying this equipment, we're all just shooting each other in the foot.

Why do you think people will not make their money back. If you are one of the first to the table (timing is crucial here I think) mining at 1TH/s should recoup your $30,000 pretty quick even if the reward is halved to 25 and the difficulty starts to ramp up. Like I said calculations may be wrong but it does seem like their is an opportunity here

Considering they will release more then one at once.  Global hashrate doubles, you'll make half your guess with 1TH/s.  1 week goes by (2016 blocks found) and difficulty increases astronomically.  Goodluck!

When I plug the numbers, at Double the Difficulty and Half the reward the gear would still be repaid ($30,000) in 30 days

Did you account for the difficulty rising twice (possibly 3 or even 4 times) during that period?

When companies order chips like these, they arrive all at once..  If BFL has any common sense, they will flood the market with these things so everyone has a 'chance' at getting the first 1TH/s machine.  Then everyone will complain that their ROI has risen back to 2 years.

1 month gross rates for 1TH/s at $6.38 exchange rate

At present difficulty and 25 reward  - $62850.86 USD
Double the Difficulty 25 reward - $31425.43 USD
Triple the Difficulty 25 reward - $20950.29 USD
Quadruple the Difficulty 25 reward - $15712.71 USD

It still seems to me that even as the difficulty ramps up if you are one of the first to market that you will enjoy a good rate of return until the field equalizes. So your actual return over the first 6 months would probably be a sliding scale of upward difficulty but your initial investment seems like it should be paid off rather quickly

Imagine you had access to this miracle product. Why would you sell it?

Because BFL knows there is not enough money to be made in mining.

The depth / market is simply not enough / ready.

Imagine dumping $3 million USD now to recoup ASIC costs = price will surely tank to like below $1 SURELY.

Selling miners instead of mining passes that risk to the miners.

Miners are betting on price increase and diff staying same. BFL does not need to bet on anything as they are providing the tools to mine !

[Dalkore]

Satoshi would not want it to come to this.

How do you know? Are you channeling him now?

I just think he would have wanted "the people" to have the coins, not the millionaires who can afford these special mining machines.  So what if the Federal Reserve bought a bunch?  If they are only $40k for a 1 TH/s unit, what is stopping them from dropping $10 million on 250 of these units and having 250 TH/s?  And what's stopping them from doing that over and over again until they control the supply of bitcoins?  Now, that would increase the value of the bitcoins that are already out in the wild, but we have to be aware of the fact that it allows the upper 1% TOO much control.

I'm not a millionaire, and I can afford a Jalapeno device for $150. I'm sure lots of others can too.

Well if you not a millionaire, then I guess he isn't talk about you.   The issue of centralization can become a problem if all the incentive (ie: profit) to mine is taken from the many and put into the deepest pockets.   It comes down to what people feel the most important aspects of the Bitcoin Project are?    I would thinking decentralization and the use of cryptography are near the top of my list.  So if we are doing things that counteract these items, then we are potentially undermining the currency or at least creating more vulnerabilities because it will have more central points of attack.   This is why I believe if BFL is coming to market this strong, they should develop a policy that addresses there feelings on this and stick to it.  I have no problem supporting them and purchasing their products, we just need to understand that "we are all in this together" so we need to play nice to a point.  If not, then we will cut each others throats and implode from within.  If you don't believe me or don't care.  Then do nothing and support anything you like.  I hope other like-minded people will support at least a productive dialog about this issue.   What I think we need to do, is get Gavin and other senior developers involved so they can weigh in on the long-term affects and if this can be a problem, that would help me a lot to hear it from someone who knows more than me about Bitcoin and issues like these.

Thoughts?
Dalkore

[hardpick]

Good thing nobody has considered the drop in price of Bitcoins that will happen almost immediately after the ASICs arrive... Remember that this economy is based solely on the supply demand aspect, and bringing so many coins in at once is going to plummet prices. It's like what would happen to let's say the US dollar if the government sent every household $5,000... The price massively deflates as the supply increases.

Supply is 50BTC/10minutes now, and 25BTC/10minutes sometime around December, regardless of hashrate.

He might mean that miners have to sell their coins. If they pay BFL with BTC then BFL has to sell coins to get some cold hard cash.

If miners start selling a lot of btc -- the price bitcoins will drop from $6.41  to maybe a $1

[hardpick]

looks like I picked a "fun time" to jump into bitcoins. The next 6-12 months will be highly interesting

I am also looking at buying the current 25 GH/s rig from BFL

You may want to caluclate the numbers using this link
http://bitcoinx.com/profit/index.php


change the BTC/block to 25 (default is 50 -- by the time they deliver I think that where it will be)

I takes 1 year and 165 to get back your $15000 (0.20 c /kwh in australia) 
hopefully by then they will have shipped the asic bitForce SC Mini Rig

[bitlane]

I've already got my money set aside for my first 1 TH SC Mini-Rig and can't wait to be able to place orders.

[DILLIGAF]

Good thing nobody has considered the drop in price of Bitcoins that will happen almost immediately after the ASICs arrive... Remember that this economy is based solely on the supply demand aspect, and bringing so many coins in at once is going to plummet prices. It's like what would happen to let's say the US dollar if the government sent every household $5,000... The price massively deflates as the supply increases.

Supply is 50BTC/10minutes now, and 25BTC/10minutes sometime around December, regardless of hashrate.

You don't have clue one when the hash rate increases so does the supply of BTC, if the blocks are being solved every six minutes then you have 500BTC an hour being produced rather than the normal targeted 300BTC. The reverse is also true when you have a diff drop you have less than the 300 per hour being produced.

[fatigue]

Good thing nobody has considered the drop in price of Bitcoins that will happen almost immediately after the ASICs arrive... Remember that this economy is based solely on the supply demand aspect, and bringing so many coins in at once is going to plummet prices. It's like what would happen to let's say the US dollar if the government sent every household $5,000... The price massively deflates as the supply increases.

Supply is 50BTC/10minutes now, and 25BTC/10minutes sometime around December, regardless of hashrate.

You don't have clue one when the hash rate increases so does the supply of BTC, if the blocks are being solved every six minutes then you have 500BTC an hour being produced rather than the normal targeted 300BTC. The reverse is also true when you have a diff drop you have less than the 300 per hour being produced.

Hey, finally someone gets the idea here...

[Dalkore]

Good thing nobody has considered the drop in price of Bitcoins that will happen almost immediately after the ASICs arrive... Remember that this economy is based solely on the supply demand aspect, and bringing so many coins in at once is going to plummet prices. It's like what would happen to let's say the US dollar if the government sent every household $5,000... The price massively deflates as the supply increases.

Supply is 50BTC/10minutes now, and 25BTC/10minutes sometime around December, regardless of hashrate.

You don't have clue one when the hash rate increases so does the supply of BTC, if the blocks are being solved every six minutes then you have 500BTC an hour being produced rather than the normal targeted 300BTC. The reverse is also true when you have a diff drop you have less than the 300 per hour being produced.

And this means all things being even, difficulty would increase or drop by whatever percentage beyond the intended 300 BTC per hour (6 blocks).   You have to keep this in mind when we try and build this conceptual model of "what the world is going to be like with ASIC (like going from 286's to Pentium II).     I have spent so many hours playing out different scenarios in my head.

[DILLIGAF]

Good thing nobody has considered the drop in price of Bitcoins that will happen almost immediately after the ASICs arrive... Remember that this economy is based solely on the supply demand aspect, and bringing so many coins in at once is going to plummet prices. It's like what would happen to let's say the US dollar if the government sent every household $5,000... The price massively deflates as the supply increases.

Supply is 50BTC/10minutes now, and 25BTC/10minutes sometime around December, regardless of hashrate.

You don't have clue one when the hash rate increases so does the supply of BTC, if the blocks are being solved every six minutes then you have 500BTC an hour being produced rather than the normal targeted 300BTC. The reverse is also true when you have a diff drop you have less than the 300 per hour being produced.

And this means all things being even, difficulty would increase or drop by whatever percentage beyond the intended 300 BTC per hour (6 blocks).   You have to keep this in mind when we try and build this conceptual model of "what the world is going to be like with ASIC (like going from 286's to Pentium II).     I have spent so many hours playing out different scenarios in my head.

Well the scenario is this in massive diff increase of 4x in the ~3.5 days it takes to happen you have 28,800 coins a day being produced for that time period if that massive increase is actually an 8x times in disguise as the diff cannot rise that much, then 57,600 coins a day in the first 1.75 and 14,400 in the remaining time until next diff change is being produced as that second 4x is in actuality a 2x new diff so 7 days for that.

[SgtSpike]

Satoshi would not want it to come to this.

How do you know? Are you channeling him now?

I just think he would have wanted "the people" to have the coins, not the millionaires who can afford these special mining machines.  So what if the Federal Reserve bought a bunch?  If they are only $40k for a 1 TH/s unit, what is stopping them from dropping $10 million on 250 of these units and having 250 TH/s?  And what's stopping them from doing that over and over again until they control the supply of bitcoins?  Now, that would increase the value of the bitcoins that are already out in the wild, but we have to be aware of the fact that it allows the upper 1% TOO much control.

What's stopping the FR from utilizing supercomputers for the task?  Or from building their own ASIC?  Or from buying 100,000 video cards?

Nothing.

The best thing we can do is exactly what is happening - get as many ASICs into the hands of everyone who is a proponent of Bitcoin to defend against everyone who isn't.  To say that publicly available ASICs are against the core idea of Bitcoin is to say that you want Bitcoin to be attacked by people with lots of money.

[imsaguy]

Well the scenario is this in massive diff increase of 4x in the ~3.5 days it takes to happen you have 28,800 coins a day being produced for that time period if that massive increase is actually an 8x times in disguise as the diff cannot rise that much, then 57,600 coins a day in the first 3.5 and 14,400 in the remaining time until next diff change is being produced as that second 4x is in actuality a 2x new diff so 7 days for that.

Quit talking about the number of days for it to go up.. if the amount of hash goes up by an 8 fold and blocks are being found 8x as fast, diff will rise at a rate of 4x per 2016 blocks until it is caught up.  So if normal diff is 14 days, then 8x is just under 2 days.  Not 7.  You lack certain understandings of the fundamentals and its affecting any sort of estimation or predictions you make.