ASICMINER: Entering the Future of ASIC Mining by Inventing It

[SebastianJu]

You have it backwards. AM simply needs to lower the price and waves of buyers will come. They are just timing things.

Lowering the price means giving away income you would have earned over time by mining yourself. If that wouldnt be true you would have to admit that the buyer makes a bad trade so that you have more from selling the hardware than mining yourself.
But even when you lower the price 50%, the amount of bitcoins that can be invested into these miners is still limited. And if they are invested it will take months to get it back with mining. So that isnt an endless market even when you drop the price.

In my eyes the best performance would be mining <50% and selling hardware for a price of mining income of some months at least (at least now only some months when it looks like difficulty will rise fast). This way income could be optimized. But selling only to sell, even dropping the price to give away more units doesnt sound to me like the best plan. I might be wrong of course.

[Lohoris]

Lowering the price means giving away income you would have earned over time by mining yourself. If that wouldnt be true you would have to admit that the buyer makes a bad trade so that you have more from selling the hardware than mining yourself.

exactly.

In my eyes the best performance would be mining <50% and selling hardware for a price of mining income of some months at least (at least now only some months when it looks like difficulty will rise fast). This way income could be optimized. But selling only to sell, even dropping the price to give away more units doesnt sound to me like the best plan. I might be wrong of course.

Point is: after producing one chip, it is much cheaper for AM to just put into one of his servers, than packing and sending it somewere, to someone who will have to setup his mining server... plus AM likely has cheaper electricity anyway.
So the "total amount of work", irregardless of who is doing that work and paying, is much lower if AM uses his own chips, as opposite to selling them.
This implies that buying a chip is much expensive than buying a share and getting the dividends.

[thx1164]

Anywhere below 50 is fine.

Actually even at just over 30% of the network there is a decent chance to get six blocks in a row (the criteria for a 100% successful double spend attack). So we do not want to get anywhere near 50% or risk being seen as a danger to the network. Having 51% simply guarantees a successful attack. Someone correct me if I am wrong.

[Caesium]

Anywhere below 50 is fine.

Actually even at just over 30% of the network there is a decent chance to get six blocks in a row (the criteria for a 100% successful double spend attack). So we do not want to get anywhere near 50% or risk being seen as a danger to the network. Having 51% simply guarantees a successful attack. Someone correct me if I am wrong.

BTC Guild have indeed already done it multiple times through luck.

[freedomno1]

The only time I would say ASIC/BTC guild should go for over 50% of the network is if there was a coordinated plot to destroy bitcoin and it's infrastructure for whatever reason and they went for its destruction with pure hashing power. Seize all the hardware then use it to take over the blockchain etc.
Of course that's a pure doomsday scenario but if someone could take control of all that hardware with malicious intent it could create a lot of havok.
That said Bitcoin has developed pretty far and I would say that it becomes increasingly difficult to do such an attack as more time passes by.

I agree that while theirs an incentive to grow the network for more rewards the biggest rewards are in the hardware itself not the mining for the long run and lowering those costs by making more efficient modules with high spreads when reselling them will result in greater profits.
As a near monopoly the prices can be set a fair bit higher.
That said if the userbase trusts ASIC and factors in the increasing difficulty of the network with over 50% of the chain then that's an interesting conversation.

[pidge]

More than 50% is a problem if it is all on one pool or solo miner.  If the hashing power is distributed across pools, then you need only consider the individual pools share of the hashing power (i.e. who "controls" the work directed to the miners).  If AM is using Solo, BTC Guild and Bit Minter, the community worry should be directed at whoever of those three breaks 50% of the total, not who is contributing to that total.

And then there is the possible 340TH due to come on line from BFL ASIC sales (68,000 5GH chips being packaged) in the next, what, three months?  The Erupter blades (50BTC) are match two of the 5GH BFL miners, which are about 6BTC total.  Best sell the Erupter baldes hardware to those willing to pay for it now, since it will be worth less in 3 months time. (Or have I just uttered a heresy?)

[Lohoris]

More than 50% is a problem if it is all on one pool or solo miner.  If the hashing power is distributed across pools, then you need only consider the individual pools share of the hashing power (i.e. who "controls" the work directed to the miners).  If AM is using Solo, BTC Guild and Bit Minter, the community worry should be directed at whoever of those three breaks 50% of the total, not who is contributing to that total.

Patently wrong, since who is "contributing the total" could easily change it to solo mining.

[kano]

Opposite of what I have once said ...

The issue with a source having 50% is basically however you'd like to interpret this joke (and the other obviously related issues)
Only you need to interpret it seriously ...
http://xkcd.com/538/

This subject has been brought up before, but the current discussion seems to have totally missed it ...

[Rant2112]

IMO, at the prices they are currently selling, sales are much better than ASICMiner keeping the blades to mine with.

They should do enough mining to have very healthy consistant cash flow and then sell the rest.

[arklan]

Opposite of what I have once said ...

The issue with a source having 50% is basically however you'd like to interpret this joke (and the other obviously related issues)
Only you need to interpret it seriously ...
http://xkcd.com/538/

This subject has been brought up before, but the current discussion seems to have totally missed it ...

VERY good point. (and i love xkcd.)

[Rodyland]

Anywhere below 50 is fine.

Actually even at just over 30% of the network there is a decent chance to get six blocks in a row (the criteria for a 100% successful double spend attack). So we do not want to get anywhere near 50% or risk being seen as a danger to the network. Having 51% simply guarantees a successful attack. Someone correct me if I am wrong.

STOP IT! Blocks in a row is necessary but not sufficient for a 50% attack.  You need more than just 6 blocks in a row to successfully 51% the network.

Stop with the FUD. 

[tkone]

even if asic had 70% of network, why in the world do you think they will double spend?
it makes no sense if asic had so much power they would want bitcoin to be secure, because so much is invested in bitcoin, so they wouldnt double spend at all, that would make bitcoin price drop as ppl will not have faith in it.

anybody actually controlling a high amout of hashrate percentage, is like having a centralized currency, but even then, anyone else can just plug in more power and take over control, but still it wouldnt be as easy for anyone...

anyways why would asic fail if it has more then 51%? it would only help secure the system more, as we know asicminer is a honest working company, they would not double spend there bitcoins it makes no sense for them to do that...

it makes better sense for them to have high amount of power to stop ANYONE ELSEfrom double spend attack the system...

ELAZAR

[gsmline]

how the issue of shares in the company. distributions from the company. Unless action is released.

[🏰 TradeFortress 🏰]

how the issue of shares in the company. distributions from the company. Unless action is released.

ASICMINER will not issue more shares, if any more are to be sold it would be from bitfountain's stake.

[organofcorti]

even if asic had 70% of network, why in the world do you think they will double spend?
[ ... ]

The owner doesn't have to. Let me quote kano's source: http://xkcd.com/538/

If someone wants to hurt bitcoin, and someone else has control of a large portion of the hashrate, then the first someone just has to put pressure on the second someone.

I hope friedcat has thought about his own personal security and that of his family.

[gsmline]

which is the possibility of redemption from other users.
what is the profit of the company's shares. A month a year?

[ffssixtynine]

Tkone, you're very naive if you think you can trust any one entity ever for a whole host of reasons.

Others saying 'we know AM will behave' are being similarly naive. Nothing against AM here of course.

Even outside of that, a third party could use AM to construct an attack through an exploit (technical, human) or force (government, other agency).

As others have pointed out, other areas of the network could get taken out for a host of reasons so even 30% for any pool or party is too high in my opinion.

A cleverly co-ordinate physical and virtual attack on a very small number of organisations could severely compromise bitcoin, and that goes against the whole peer to peer nature of the security. This attack would probably not be financially motivated, although it could be done to massively drop the price in the short to medium term. It wouldn't be easy to pull off but it is a problem with the set up at present.

Bitcoin tech is design to be trust less, but now we're trusting a very few entities and that's not good (if you get your blind folds off).

AM is doing the right thing in general. Fighting for a higher mining percentage will only damage the in the long term as they need to balance what they're doing with what others are doing, or they knacker their own buyers. Hardware is the way to go for them. They have first mover advantage and can effectively control the market through their mining and hardware pricing. A steady approach with prices starting high and then shortly dropping before the competition arrives is probably the best way to do it, then follow up with more hardware priced in similar fashion - first adopter but profitable, and then competitively going for higher unit counts priced to maximise overall medium to long term profit.

[binaryFate]

Tkone, you're very naive if you think you can trust any one entity ever for a whole host of reasons.

Others saying 'we know AM will behave' are being similarly naive. Nothing against AM here of course.

Even outside of that, a third party could use AM to construct an attack through an exploit (technical, human) or force (government, other agency).

As others have pointed out, other areas of the network could get taken out for a host of reasons so even 30% for any pool or party is too high in my opinion.

A cleverly co-ordinate physical and virtual attack on a very small number of organisations could severely compromise bitcoin, and that goes against the whole peer to peer nature of the security. This attack would probably not be financially motivated, although it could be done to massively drop the price in the short to medium term. It wouldn't be easy to pull off but it is a problem with the set up at present.

Bitcoin tech is design to be trust less, but now we're trusting a very few entities and that's not good (if you get your blind folds off).

+10

I'll add that something many don't seem to grasp here (all those claiming for going near 50%), this is also in the interest of the AM share holders and anyone who owns BTC or BTC-related shares! BTC will be way more valuable if its network can be looked at as fully resilient against potential major events.

[ning]

ASICMiner market cap =
BTC 864,000   (@ btc 2.16/share)
$105,408,000   (@ $122 btc/usd)

Yet bitcoin's market cap =
11,175,575 (bitcoins mined)
$1,363,420,150 (@ $122 btc/usd)

and ASICMiner =
33% of total hash rate

yet ASICMiner currently trades at =
12% of of bitcoin market cap

without issuing dividends ASICMiner should trade at =
33% of bitcoin market cap

this puts the share price at =
BTC 5.94

and this represents a =
275% price increase from today's prices

ASICMiner does issue dividends making the shares more attractive than holding bitcoins and would logically trade at a premium to its network value (the % it contributes to the bitcoin network)

ASICMiner shares are very cheap.

Disclaimer: stslimited is long ASICMiner.

feel free to repost, and discuss this pricing analysis.

Ok, I will do the heavy math for you
21.000.000 btc - 11.000.000 btc = 10 more millions to mine. (total coins minus already mined coins).
10.000.000 btc / 400.000 pcs  = 25 BTC per share (if we mine 100% of it).

So, number of coins yet to be mined per share is:
2.5 btc if we maintain 10%
6.25 btc if we maintain 25%
12.50 btc if we hit 50%
25 btc if we somehow hit 100%

+ profit from hardware and technology
+ transaction fees
+ namecoin sales

I also believe that data center with cheap power will be worth something eventually.

yeah friedcat is never going near 50% though, I think 40-45% will be his cutoff

What if friedcat distributes his hashing power into multiple mining pools? In that case, he can go over 50%.

[hammurabi]

OMG! 50% issue over and over again.

If anybody approaches 50% it means network isn't secure as it was promised to be.
Value goes drastically down and even if you mine twice as much coins you will get 100x less in fiat out of that.

If there is any sign that somebody has such power (even unpowered hidden in a garage) that is a bad news for the coin.
Friedcat or noFriedcat. That won't make a difference.