ASICMINER: Entering the Future of ASIC Mining by Inventing It

[velacreations]

I just saw that Wired received a BFL unit.  Are they shipping?  And if so, how does that affect plans and profit?

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[furuknap]

I just saw that Wired received a BFL unit.  Are they shipping?  And if so, how does that affect plans and profit?

I'm a current investor, so keep that in mind as a disclaimer.

I don't see BFL shipping as any immediate threats to profit. The plans were laid out a long time ago, and friedcat has been keeping everyone updated on the progress in a very commendable way.

For profit, the only aspect where I 'fear' an impact is in sales of units.

AM had just proven that they can deliver in less than four days from sale, which is about as amazing as finding a herd of unicorns (where finding a single unicorn is quite common). This is awesome, _however_ the price their recent auction attracted was largely because of timing. AM could deliver, BFL could not (and Avalon was sold out). Now, BFL evidently can deliver (albeit slowly) and Avalon wants to sell a batch #4.

This will probably impact sales prices of AM units, maybe drastically. This is bad news because selling a unit is essentially realizing its entire lifetime of revenue at once, avoiding the whole arms race thing completely. This greatly reduces risk and allows AM to put money into research to create new and improved chips. Without those sales, they will have to wait for 'regular' revenue to catch up or drop prices. If prices drop due to BFL and Avalon being more available, maybe the train for high-priced ASICs from AM has left, and they will get much less profit for the next batch than they anticipate.

This is all just random babble, though. Don't take anything I say as financial advice because I really have no idea what will happen.

.b

[velacreations]

I don't see BFL shipping as any immediate threats to profit. The plans were laid out a long time ago, and friedcat has been keeping everyone updated on the progress in a very commendable way.

For profit, the only aspect where I 'fear' an impact is in sales of units.

AM had just proven that they can deliver in less than four days from sale, which is about as amazing as finding a herd of unicorns (where finding a single unicorn is quite common). This is awesome, _however_ the price their recent auction attracted was largely because of timing. AM could deliver, BFL could not (and Avalon was sold out). Now, BFL evidently can deliver (albeit slowly) and Avalon wants to sell a batch #4.

This will probably impact sales prices of AM units, maybe drastically. This is bad news because selling a unit is essentially realizing its entire lifetime of revenue at once, avoiding the whole arms race thing completely. This greatly reduces risk and allows AM to put money into research to create new and improved chips. Without those sales, they will have to wait for 'regular' revenue to catch up or drop prices. If prices drop due to BFL and Avalon being more available, maybe the train for high-priced ASICs from AM has left, and they will get much less profit for the next batch than they anticipate.

ok, maybe what I meant to say was how will this affect the short-term deployment plan?  I assume friedcat is getting things online ASAP, so there's probably not much he can do on that front, but if this does affect sales, will we be changing the strategy a bit to mine more, sell less?

And will any of this affect my weekly dividend?

Maybe friedcat can talk about this in the weekly update today or tomorrow, I am interested to see how we address this change in the market.

[ineededausername]

Imagine if overnight, asicminer went to 10 TH/s

[furuknap]

ok, maybe what I meant to say was how will this affect the short-term deployment plan?  I assume friedcat is getting things online ASAP, so there's probably not much he can do on that front, but if this does affect sales, will we be changing the strategy a bit to mine more, sell less?

And will any of this affect my weekly dividend?

Maybe friedcat can talk about this in the weekly update today or tomorrow, I am interested to see how we address this change in the market.

To be blunt, I think that if you're in this for the short term to turn a quick buck, you may be going about this the wrong way. AM and friedcat know far more about this game than most of us and I'm confident that they will manage to put together a strategy that puts the long-term viability first, gladly at the expense of short-term dividend goals.

Even at current rates, we're looking at a dividend rate of around 25% at curren BTCT prices or around ฿1.08, which is close to insane in any market but Bitcoin. To compare that, Apple's latest dividend increase to $3.XX represents something like a 3% annual dividend. Microsoft currently stands at just shy of 3%.

Even if AM manages to keep their current dividends, though, we're still looking at a 4-5 year span before you 'get your money back' as some people have wanted in other threads. I still think that's rather insane and would prefer it if AM retained more of its earnings to invest in better, newer, more competitive hardware. This might reduce dividend rate, but will also increase the chance that there is sufficient funding for long-term goals. A 10% dividend would still be incredibly high, but owuld reduce risk by quite a lot, in my opinion.

The current arms race is just that; a race. However, this isn't a 100m sprint where you get your full price if you finish first, it is a marathon.

.b

[matt4054]

To compare that, Apple's latest dividend increase to $3.XX represents something like a 3% annual dividend. Microsoft currently stands at just shy of 3%.

Just one important thing to keep in mind here: Apple and Microsoft's business models do not have their revenues halving by design every four years. Otherwise, I agree with the comparison, and I hold some shares

[420]

I just saw that Wired received a BFL unit.  Are they shipping?  And if so, how does that affect plans and profit?

link please?

[Franktank]

Apart from friedcat saying it himself, there is no definitive way to determine AM deployment.

However, one could visit websites likes:

http://bitcoincharts.com/

http://bitcoin.sipa.be/

From this, you could see that total network hash rate had jumped by 20 TH/s in the last couple days. Now, this leads to the following possibilities:

1) BFL had shipped en masse

2) Avalom Batch 2 shipment is completed

3) One man farm, hashing with over 1 million GPU cards

4) ASICMiner starting their deployment

You tell me

[organofcorti]

Apart from friedcat saying it himself, there is no definitive way to determine AM deployment.

However, one could visit websites likes:

http://bitcoincharts.com/

http://bitcoin.sipa.be/

From this, you could see that total network hash rate had jumped by 20 TH/s in the last couple days. Now, this leads to the following possibilities:

1) BFL had shipped en masse

2) Avalom Batch 2 shipment is completed

3) One man farm, hashing with over 1 million GPU cards

4) ASICMiner starting their deployment

You tell me

OK - I tell you: You're misinterpreting the hashrate estimate.

Use bitcoin.sipa.be on the 7 or 14 day windows. Do not use the bitcoincharts estimates. If you see the hashrate swinging wildly it's nearly alway luck rather than massive jumps and drops in hashrate. I do my own analysis of the hashrate and as of 12 hours ago the network hashrate estimate stood at ~ 74 Thps. There has been no increases or fluctuations in the past few days.

[Franktank]

Apart from friedcat saying it himself, there is no definitive way to determine AM deployment.

However, one could visit websites likes:

http://bitcoincharts.com/

http://bitcoin.sipa.be/

From this, you could see that total network hash rate had jumped by 20 TH/s in the last couple days. Now, this leads to the following possibilities:

1) BFL had shipped en masse

2) Avalom Batch 2 shipment is completed

3) One man farm, hashing with over 1 million GPU cards

4) ASICMiner starting their deployment

You tell me

OK - I tell you: You're misinterpreting the hashrate estimate.

Use bitcoin.sipa.be on the 7 or 14 day windows. Do not use the bitcoincharts estimates. If you see the hashrate swining wildly it's nearly alway luck rather than massive jumps and drops in hashrate. I do my own analysis of the hashrate and as of 12 hours ago the network hashrate estimate stood at ~ 74 Thps. There has been no increases or fluctuations in the past few days.

Ok fair enough and thanks for clarifying. I was hoping for option 3 though...

[SebastianJu]

Great summary, SebastianJu. Just wanted to add:

Asicminer-Shares to Asicminer-Passthrough-Shares Comparison:

Asicminer-Shares:
Pro:
* No delayed dividends compared to passthrough shares

Asicminer-Passthrough-Shares:
Con:
* Delayed dividends compared to non-passthrough shares

Asicminer-Passthroughs Comparison:

Burnsides AM-PT on btct.co
Pro:
* AM-PT: Usually dividends less delayed than AM-PT on bitfunder.com

DeadTerras AM-PT on bitfunder.com
Con:
* AM-PT: Usually dividends more delayed than AM-PT on btct.co

Thank you. Thats valid. Something has to be missed.

Fixed?

Great summary, SebastianJu. Just wanted to add:

Asicminer-Shares to Asicminer-Passthrough-Shares Comparison:

Asicminer-Shares:
Pro:
* No delayed dividends compared to passthrough shares

Con:
* Harder to liquidate the asset

Asicminer-Passthrough-Shares:
Pro:
* Easier to liquidate and buy backs

Con:
* Delayed dividends compared to non-passthrough shares

Asicminer-Passthroughs Comparison:

Burnsides AM-PT on btct.co
Pro:
* AM-PT: Usually dividends less delayed than AM-PT on bitfunder.com

DeadTerras AM-PT on bitfunder.com
Con:
* AM-PT: Usually dividends more delayed than AM-PT on btct.co

I had it in the list as harder/easier to trade. But i added now that one can get faster/slower access to bitcoins/Shares to make it more detailed.

[Rant2112]

At the price the Block Erupter Blades sold for I'd MUCH prefer that they sell the new ASICs rather than mining with them.

[🏰 TradeFortress 🏰]

At the price the Block Erupter Blades sold for I'd MUCH prefer that they sell the new ASICs rather than mining with them.

The key thing is that ASICMINER won't be able to sell at that price again.

[iCEBREAKER]

The key thing is that ASICMINER won't be able to sell at that price again.

We won't know that until the next auction.

AM's proven record of rapid order satisfaction (which has now removed any uncertainty about their ability to deliver) and the resulting publicity may increase the final bids for future offerings beyond the initial results.

[asnonmous]

The key thing is that ASICMINER won't be able to sell at that price again.

We won't know that until the next auction.

AM's proven record of rapid order satisfaction (which has now removed any uncertainty about their ability to deliver) and the resulting publicity may increase the final bids for future offerings beyond the initial results.

Exactly.  A 4 day delivery time is insane compared to our competition.  Each day of delay is worth, currently, ~0.6btc.  The delays of Avalon are largely unpredictable.  BFL flat out can't be trusted.  AM delivers, and they deliver ridiculously fast.

Moreover,

At the price the Block Erupter Blades sold for I'd MUCH prefer that they sell the new ASICs rather than mining with them.

That is only true if you assume that the miners buying these are making a mistake.  If they are overpaying it is better for us to sell them.  If they are underpaying it is better for us to mine with them.  I trust that they have worked out the math before making a bid for several thousand dollars.  If they are paying just the right amount, it makes no difference whether we sell or mine.

[nebulus]

The key thing is that ASICMINER won't be able to sell at that price again.

We won't know that until the next auction.

AM's proven record of rapid order satisfaction (which has now removed any uncertainty about their ability to deliver) and the resulting publicity may increase the final bids for future offerings beyond the initial results.

I think the point he is trying to make is that eventually price on the boards is going to decline.
Wanted to post a similar comment but he beat me to it.

[imsaguy]

If they are paying just the right amount, it makes no difference whether we sell or mine.

Except that if you sell, its coin in hand right away vs mining which takes a while to collect the coin.

[iCEBREAKER]

If they are paying just the right amount, it makes no difference whether we sell or mine.

Except that if you sell, its coin in hand right away vs mining which takes a while to collect the coin.

A coin in the blockchain is worth two in the mainframe.

IOW, it's better to get the money now because of the risks associated with mining (difficulty, hosting, hardware failure) and invest it in the next gen of 28nm chips.

[imsaguy]

A coin in the blockchain is worth two in the mainframe.

IOW, it's better to get the money now because of the risks associated with mining (difficulty, hosting, hardware failure) and invest it in the next gen of 28nm chips.

Exactly.

[organofcorti]

If they are paying just the right amount, it makes no difference whether we sell or mine.

People are not going to pay the right amount though. So far it's clear they are are willing to far pay more for a Blade than it's likely to earn over the device life time - even if they get it within a few days of ordering.