ASICMINER: Entering the Future of ASIC Mining by Inventing It

[ninjarobot]

The whole mining industry is plummeting, not just AM. 25% hashing rate increase/cycle means the mining co must pay 25% more to keep up with the trend. The profit margin goes to zero!!!

Nature abhors a vacuum so mining will quickly become a 0-sum or very low margin business. At least when it comes to mining. There appears to be a constant supply of fools to sell hardware to. So I'm not worried about low AM mining hashrates - Selling hardware is the name of the game now.

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[VolanicEruptor]

lol I love how the trading on BF has come to a complete standstill since the FC update.  Obviously nobody knows how they should be trading this right now..

I guess we're all just sitting tight until something happens lol

[BitThink]

lol I love how the trading on BF has come to a complete standstill since the FC update.  Obviously nobody knows how they should be trading this right now..

I guess we're all just sitting tight until something happens lol

They are waiting for Ukyo to confirm shares can be converted to direct.

[BitThink]

The whole mining industry is plummeting, not just AM. 25% hashing rate increase/cycle means the mining co must pay 25% more to keep up with the trend. The profit margin goes to zero!!!

Nature abhors a vacuum so mining will quickly become a 0-sum or very low margin business. At least when it comes to mining. There appears to be a constant supply of fools to sell hardware to. So I'm not worried about low AM mining hashrates - Selling hardware is the name of the game now.

There are more choices to buy mining hardwares, and the price drops exponentially.

[VolanicEruptor]

lol I love how the trading on BF has come to a complete standstill since the FC update.  Obviously nobody knows how they should be trading this right now..

I guess we're all just sitting tight until something happens lol

They are waiting for Ukyo to confirm shares can be converted to direct.

Right, so if he says yes, then the price will likely come back up, as US investors won't be scared away from AM?

[BitThink]

There are more choices to buy mining hardwares

Unless it's non-exploding hardware.

The main problem of KnC is not exploding, but their production rate. People are not complaining about asking refund, but the long queue waiting for delivery. Currently the main advantage of AM is a reliable product line that can finish mass order in time. But sooner or later, the competitors will secure their product line too.

It seems the new data center in Hong Kong is ready, but the capacity is only 60TH (fully deployed after 20 days, with 2-3Th added daily), maybe due to the limit of power supply. So around 400TH needs to be sold as soon as possible, and friedcat has increased the Ad spending. So in short term, the profit of AM mostly depends on how hardware sale goes well. Moreover, with Bitfury and KnC as the competetors now, I think the price will decrease to around $16-$20/GH, around 1/4 of previous price.

In long term, gen2 chips cannot be postponed any more, or AM has to be converted to non-mining company totally. If currently the design and testing of gen2 has been finished, then there's no reason not to mass produce it. Even they are not sold well, self mining with them are still profitable. Suppose the watt/G reduce to 1/3 of gen-1, the self-mining capacity can increase to 300TH (from current 100TH), with the same power supply limit.

[VolanicEruptor]

We made an order of another brand of power chips which are about two weeks late. In October this will provide another 500TH/s (Gen1).

This was in his second last update (September 29th).. those power chips must still be late, as he didn't mention them in his last update..

[BitThink]

We made an order of another brand of power chips which are about two weeks late. In October this will provide another 500TH/s (Gen1).

This was in his second last update (September 29th).. those power chips must still be late, as he didn't mention them in his last update..

Self-mining hashing rate will increase 60TH (2-3TH daily), and I believe this is from the 500THs (Gen1).

[VolanicEruptor]

We made an order of another brand of power chips which are about two weeks late. In October this will provide another 500TH/s (Gen1).

This was in his second last update (September 29th).. those power chips must still be late, as he didn't mention them in his last update..

Self-mining hashing rate will increase 60TH (2-3TH daily), and I believe this is from the 500THs (Gen1).

Okay, so he was only planning on using 12% of that for his own mining?  The rest is to be sold?

[BitThink]

We made an order of another brand of power chips which are about two weeks late. In October this will provide another 500TH/s (Gen1).

This was in his second last update (September 29th).. those power chips must still be late, as he didn't mention them in his last update..

Self-mining hashing rate will increase 60TH (2-3TH daily), and I believe this is from the 500THs (Gen1).

Okay, so he was only planning on using 12% of that for his own mining?  The rest is to be sold?

That's my guess. Most likely due to power supply limit. The Gen-1 chips consume 7watt/G, so 420KW for 60TH (the new data center), and 300KW for 43TH (the old data center). Moreover, if they have enough power supply and data center space, there's no need for Franchising.

BTW, Bitfury chip consumes 1w/G, so with the same 300KW power supply, they can hash at 300TH. Now we can see that even with free electricity, the watt per GH still makes a lot of sense.

[glendall]

There are more choices to buy mining hardwares

Unless it's non-exploding hardware.

In long term, gen2 chips cannot be postponed any more, or AM has to be converted to non-mining company totally. If currently the design and testing of gen2 has been finished, then there's no reason not to mass produce it. Even they are not sold well, self mining with them are still profitable. Suppose the watt/G reduce to 1/3 of gen-1, the self-mining capacity can increase to 300TH (from current 100TH), with the same power supply limit.

I think what you said makes a lot of sense and I agree with it.

But additionally, I would also consider another possibility that if the price per GH is right (or cheapest), for those who at least live in countries with very cheap power, then you could imagine a scenario where Asicminer's chips, even though older gen and using much more power, still may be the most attractive option for some long-scale and hobbyist miners.

Sure the watt/G is hugely important... but as well, price per gh is also paramount.  Maybe I'm confusing things, but just saying, it is conceivable to me to have a successful product of 130nm asic miners if the make up for their shortcomings in selling price. Finally, rushing to market with a gen 2 at this point  -- if you have a proven gen 1 product that you can economically produce and sell -- may not be the best plan. Instead, getting a lab set up, and hire some smart-folk, and making a great 2nd gen chip instead of late-coming average gen 2 chip would be a better alternative.

[wpgdeez]

The power logistics alone make it a pretty unattractive option for a farm considering what you need to be competitive.

[BitThink]

There are more choices to buy mining hardwares

Unless it's non-exploding hardware.

In long term, gen2 chips cannot be postponed any more, or AM has to be converted to non-mining company totally. If currently the design and testing of gen2 has been finished, then there's no reason not to mass produce it. Even they are not sold well, self mining with them are still profitable. Suppose the watt/G reduce to 1/3 of gen-1, the self-mining capacity can increase to 300TH (from current 100TH), with the same power supply limit.

I think what you said makes a lot of sense and I agree with it.

But additionally, I would also consider another possibility that if the price per GH is right (or cheapest), for those who at least live in countries with very cheap power, then you could imagine a scenario where Asicminer's chips, even though older gen and using much more power, still may be the most attractive option for some long-scale and hobbyist miners.

Sure the watt/G is hugely important... but as well, price per gh is also paramount.  Maybe I'm confusing things, but just saying, it is conceivable to me to have a successful product of 130nm asic miners if the make up for their shortcomings in selling price. Finally, rushing to market with a gen 2 at this point  -- if you have a proven gen 1 product that you can economically produce and sell -- may not be the best plan. Instead, getting a lab set up, and hire some smart-folk, and making a great 2nd gen chip instead of late-coming average gen 2 chip would be a better alternative.

Gen-3 chips are already under research, and a lab is already founded and the researcher candidates are decided already, all according to the second latest update. But that's far far away in the bitcoin time scale. Even everything goes smoothly and the gen-3 chips are successfully designed in time, it takes at least 2 months for design and testing and 2 months for producing testing chips and another 2 months for mass production. So we are very lucky if we can benefit from Gen-3 chips in March 2014.

Meanwhile, the Gen-1 chips can be sold $20/G on Oct, $10/G on Nov, $5/G on Dec. It will become not profitable at all in next year. So if the current 500TH are sold well, then at best there're another 500TH to be sold this year.  If not, then these 500TH is the last batch of Gen-1 Chips.

Without Gen-2 Chips, AM can do nothing for at least 3 months (Jan 2014 - March 2014) except mining with the current 200TH (less than 0.5% then). That's the reason I said AM has to turn into a non-mining company (providing board producing, cooling solution, and deploy service as friedcat said in his post before) if they don't order Gen2 Chips immediately.

[chriswilmer]

Hey I just had a thought. Would it be reasonable for ASICMiner to share a projected dividends outlook for two to three months? Just a ballpark estimate of course, and with the understanding that no one can predict the future, etc.

I think there's some unnecessary shareholder anxiety caused merely by ASICMiner's strategy/financing being unclear. For example, Jutarul mentioned that ASICMiner paid no dividends for the first 7 months. That is a great example of a period of time where having 0 dividends was not a problem, because shareholders more-or-less expected it. Similarly, if Friedcat and co. think that over the next three months the dividends are going to:

a) steadily decrease
b) hover at around 0.005/share
c) stay at zero

that's all perfectly fine with me... if that's more-or-less the plan. I don't think it would be giving away any secrets to the competition to share dividend projections would it? What do you guys think?

[helixone]

Hey I just had a thought. Would it be reasonable for ASICMiner to share a projected dividends outlook for two to three months? Just a ballpark estimate of course, and with the understanding that no one can predict the future, etc.

I think there's some unnecessary shareholder anxiety caused merely by ASICMiner's strategy/financing being unclear. For example, Jutural mentioned that ASICMiner paid no dividends for the first 7 months. That is a great example of a period of time where having 0 dividends was not a problem, because shareholders more-or-less expected it. Similarly, if Friedcat and co. think that over the next three months the dividends are going to:

a) steadily decrease
b) hover at around 0.005/share
c) stay at zero

that's all perfectly fine with me... if that's more-or-less the plan. I don't think it would be giving away any secrets to the competition to share dividend projections would it? What do you guys think?

I like your line of thinking, however, no miner has the ability to predict mining proceeds three months out, as mining profitability has four main inputs:

1) One's own effective hashrate
2) Hashrate of the network
3) Price of bitcoin
4) Price of overhead/electricity

Arguably #2 and #3 have historically been very pretty difficult to predict, so any predictions would be nothing better than guesses.

Friedcat could share their own predicted hashrate over the next three months, and their costs, but my sense is that information would be too valuable to the competition to make public, and wouldn't really help shareholders as much as you might hope.

-helixone

[BitThink]

The mining income is relatively easier to calculate since the only uncertain factor is the difficulty. Most likely we can assume the hashing rate is 120TH - 150TH for the next 3 months, depends on how well franchising is accepted.

The main part of the income, however, comes from the sales of hardware. This is relatively harder to predict. Best scenario, we can hope 400TH sold by mid Nov (at around $15/G) and another 500TH sold by Dec (at around $8/G). Worse scenario: 200TH sold by mid Nov (at around $15/G) and another 200TH sold by Dec (at around $8/G).

That's the income. How much of it can be paid as dividend depends on the cost and the holding back by AM, but we at least know the upper limit.

According to the above analysis, and assume 70% of income can be paid as dividend, I have a very rough guess of the dividend of the following 3 months: average 0.004 - 0.008 per week, in total 0.05 - 0.1 for 3 months.

Not too bad for the following 3 months, but what will happen after 3 months is a big question mark. It's possible we will see near-zero dividend.  

[chriswilmer]

Hey I just had a thought. Would it be reasonable for ASICMiner to share a projected dividends outlook for two to three months? Just a ballpark estimate of course, and with the understanding that no one can predict the future, etc.

I think there's some unnecessary shareholder anxiety caused merely by ASICMiner's strategy/financing being unclear. For example, Jutural mentioned that ASICMiner paid no dividends for the first 7 months. That is a great example of a period of time where having 0 dividends was not a problem, because shareholders more-or-less expected it. Similarly, if Friedcat and co. think that over the next three months the dividends are going to:

a) steadily decrease
b) hover at around 0.005/share
c) stay at zero

that's all perfectly fine with me... if that's more-or-less the plan. I don't think it would be giving away any secrets to the competition to share dividend projections would it? What do you guys think?

I like your line of thinking, however, no miner has the ability to predict mining proceeds three months out, as mining profitability has four main inputs:

1) One's own effective hashrate
2) Hashrate of the network
3) Price of bitcoin
4) Price of overhead/electricity

Arguably #2 and #3 have historically been very pretty difficult to predict, so any predictions would be nothing better than guesses.

Friedcat could share their own predicted hashrate over the next three months, and their costs, but my sense is that information would be too valuable to the competition to make public, and wouldn't really help shareholders as much as you might hope.

-helixone

I was afraid you (or someone) would say that.

Look, the point is not to accurately predict the future. No one can do that. Furthermore, I don't want Friedcat to share hashrate predictions or other details such as cost, etc. A ballpark dividend projection is essentially a restatement of the expected business plan under nominal conditions - of course the real conditions might be different.

Let's not over think this. There's nothing complicated about knowing that the dividends were going to be zero for the first 4-8 months after the company formed. Similarly, if ASICMiner is planning to heavily reinvest in infrastructure over the next few months, there may be negligible dividends in that period independent of unpredictable competition. Conversely, if ASICMiner is planning a major hardware sales push (or ramping up of self-mining), I would just tell shareholders that dividends are expected to be stable (and hope to pleasantly surprise them).

I don't know if what I am saying is at all reasonable. I've started a tech company before, but it was privately held and we never paid dividends

[VeeMiner]

Quick Update

We are still on track of accumulating reinvestment funds, continuing from last month, so please expect less-than-raw-income dividends in the next few weeks. The financials will be given out in October 20s, as mentioned in the last update.

Self-retained (not sold) Hashrate distribution:

Air cooling datacenter - 47TH/s
Under franchising - 19TH/s
Immersion cooling - 5TH/s with 3-5TH/s per day towards 60TH/s in total.

These will be tough times to endure even for us hardcore friedcat believers, but I see light at the end of the tunnel

Anyway, so we will have around 107 Thash locally, then some 19 Thash under franchising now.

Then the 500 Thash will come in a few weeks so that will be sold/put to franchising. I will point out now that the franchising is all located in China which means cheap electricity.

Then the Gen 2 should come I guess no one really knows any dates on this one and then we're all set. I saw someone writing about Gen 3 here but I don't see where friedcat is talking about gen 3 anywhere....

[JimiQ84]

Quick Update

We are still on track of accumulating reinvestment funds, continuing from last month, so please expect less-than-raw-income dividends in the next few weeks. The financials will be given out in October 20s, as mentioned in the last update.

Self-retained (not sold) Hashrate distribution:

Air cooling datacenter - 47TH/s
Under franchising - 19TH/s
Immersion cooling - 5TH/s with 3-5TH/s per day towards 60TH/s in total.

These will be tough times to endure even for us hardcore friedcat believers, but I see light at the end of the tunnel

Anyway, so we will have around 107 Thash locally, then some 19 Thash under franchising now.

Then the 500 Thash will come in a few weeks so that will be sold/put to franchising. I will point out now that the franchising is all located in China which means cheap electricity.

Then the Gen 2 should come I guess no one really knows any dates on this one and then we're all set. I saw someone writing about Gen 3 here but I don't see where friedcat is talking about gen 3 anywhere....

friedcat was talking about gen2 as 55/65 nm at first and then few weeks ago about 40nm. We don't know if 2nd gen got changed to 40nm or if 40nm is 3rd gen

[BitThink]

Gen 3 refers to the chip currently is under design. See friedcat's second last update. A lab is founded and several exceptional researchers are hired and multiple design plans are undergoing simultaneously. The objective, according to friedcat, is to keep competitive in 2014 and aims at a 1-digit revenue increase similar to traditional industry.

BTW, according to friedcat's update two weeks ago, the order size of Gen-2 chips hadn't be decided yet. If they are ordered now, the chips can be ready Dec 2013 and be deployed in Jan 2014, but there's nothing mentioned about it in latest updates. He only mentioned there're some potential collaboration with other two (40nm, 55nm) teams on Gen-2 chips. This actually made me more worried, since it almost implied that AM does not have satisfying Gen-2 chips themselves.