ASICMINER: Entering the Future of ASIC Mining by Inventing It

[Juzzers]

Hi all, I've been trying to transfer my shares to ASICMINER-PT on btct.co and have sent a request to friedcat and burnside several times over the last 2 weeks and have received no reply.

Have I missed a message about some new process for transferring shares?

Any help much appreciated.

[velacreations]

Oh, right - that's electricity cost, not rent. Understand that Friedcat is on the hook for that too.

What makes you say that?  The line says "all-in except power consumption".  I would assume that to be a rental cost. Electricity cost is typically depicted in $/kWh

[Vycid]

Oh, right - that's electricity cost, not rent. Understand that Friedcat is on the hook for that too.

What makes you say that?  The line says "all-in except power consumption".  I would assume that to be a rental cost. Electricity cost is typically depicted in $/kWh

I see what you're saying. I think you're right, and I didn't read that PDF correctly. That would make this particular data center a poor prospect, since the ASICs are very heavy on power consumption. It's possible you could negotiate the price down, though, since you'd be using less floor space than they'd expect per square foot.

Still, the Integrate.Quincy datacenter is another example of what I'm talking about. That's a 52MW facility, easily big enough to accommodate a project like this, and they're leasing now. Power is $0.0225/kW-h.

The particular datacenter isn't the point here - just that this can be done, and done cheaper than AM has managed. Believe it or not, China (particularly Guangdong) is the wrong location. Big business mining will end up in Washington.

If I had the money, I would seriously consider doing this project myself. Shit, these IPOs have been so easy to pull off, maybe I can...

[lophie]

Hi all, I've been trying to transfer my shares to ASICMINER-PT on btct.co and have sent a request to friedcat and burnside several times over the last 2 weeks and have received no reply.

Have I missed a message about some new process for transferring shares?

Any help much appreciated.

planning on doing that as well. Any pointers guys?

[velacreations]

I see what you're saying. I think you're right, and I didn't read that PDF correctly. That would make this particular data center a poor prospect, since the ASICs are very heavy on power consumption. It's possible you could negotiate the price down, though, since you'd be using less floor space than they'd expect per square foot.

possibly, but I think this illustrates the point that it is neither cheap nor as easy as first expected to launch something of the size and power consumption that we are talking about.

None of the IPOs I have seen are taking this into serious consideration, or at least, they are not voicing how they are going to meet these obstacles.  Everyone seems to be focused on getting chips/hardware, which is a major obstacle in and of itself, but meanwhile, they are ignoring the real feat of housing/powering that hardware for a reasonable cost. 

These kinds of obstacles are not fixed overnight.  Even if you have the data center lined up, have your hardware in hand, everything ready to go, getting 100 TH/s online is going to take weeks, at best.

Still, the Integrate.Quincy datacenter is another example of what I'm talking about. That's a 52MW facility, easily big enough to accommodate a project like this, and they're leasing now. Power is $0.0225/kW-h.

yeah, that's a nice datacenter, but what does it cost?  As we saw above, the power cost is miniscule, renting the actual datacenter is several orders of magnitude more expensive.  I think you might be underestimating what top of the line datacenters like this lease for.  I do agree that there are cheaper datacenters out there.

In any case, the rent is going to be a much larger cost than power, and may even make it cost prohibitive to rent a datacenter like that.

Of course, all of this assumes no additional cost for govt permits, licensing, bribing, etc in the US.  I imagine administrative costs like that are going to be a lot more than in countries like China.

The particular datacenter isn't the point here - just that this can be done, and done cheaper than AM has managed.

that MAY be true, but it doesn't look like it will happen in 2013.  

The reality is that to get something of this magnitude up and running is going to take months (at best).  We are going to see a lot of attempts fail to accomplish this goal, that's the nature of the beast.

[velacreations]

Hi all, I've been trying to transfer my shares to ASICMINER-PT on btct.co and have sent a request to friedcat and burnside several times over the last 2 weeks and have received no reply.

Have I missed a message about some new process for transferring shares?

Any help much appreciated.

I would suggest that you send another message to burnside, they probably overlooked your message.  I don't know for sure, but he may be on one of the IRC channels at certain times.  I have always just PMed him from this forum, but he typically responded in a day or 2.

As far as I know, the rules are the same as always, just message them both, and FC does the transfer manually.  Maybe contact TAT, he might know if something has changed.

[Vycid]

The reality is that to get something of this magnitude up and running is going to take months (at best).  We are going to see a lot of attempts fail to accomplish this goal, that's the nature of the beast.

This is all absolutely true. However:

1) It's entirely possible there are privately-funded projects that have been working on all of this for several months already, meaning they may be coming online shortly. In fact, I think it is more likely than unlikely that this is the case.

2) Even if new projects do not come online until early next year (almost certainly making use of new Gen 2 chips like KnC/Bitfury/Cointerra rather than the old, inefficient BFL/Avalon chips), the AM stock price assumes that Friedcat will manage to maintain current dividends for many years. We're talking about months until those dividends might take a serious beating.

And regardless of how it happens, mining costs are going to become closely tied to the cost of electricity in the near future. That means Friedcat is in trouble, as his electricity is not particularly cheap (being several times more expensive than Siberia and Washington).

[velacreations]

The reality is that to get something of this magnitude up and running is going to take months (at best).  We are going to see a lot of attempts fail to accomplish this goal, that's the nature of the beast.

This is all absolutely true. However:

1) It's entirely possible there are privately-funded projects that have been working on all of this for several months now, meaning they will be coming online shortly. In fact, I think it is more likely than unlikely that this is the case.

2) Even if new projects do not come online until early next year, AM stock is assuming it will manage to maintain its current dividends for many years. We're talking about months until those dividends take a serious beating.

1 is possible, but I doubt it is probable.  We would have heard some sort of news/info from chip manufacturers/VCs or other partners by now.  But, what we are both saying is that the BTC funded IPOs that currently exist probably don't have a chance in hell.

2. There is a great possibility that dividends increase over the next months, especially if AM continues to hold its lead in the market and delivers more hardware.  Every single day that AM makes profits fills their war chest to battle future competitors and adapt to changing market conditions. Why do you assume that they won't continue to expand and profit?

And regardless of how it happens, mining costs are going to become closely tied to the cost of electricity in the near future. That means Friedcat is in trouble, as his electricity is not particularly cheap (being several times more expensive than Siberia and Washington).

well, based on the cost of a few of those datacenters, renting space may be the most significant cost, not electricity.  Unless, of course, you have $35M to build a datacenter from scratch in WA or Siberia. 

I don't know the exact cost of FC's power, as I am not familiar with bulk electricity costs in China.  Here in Mexico, however, published prices are what citizens pay, but companies/bulk purchasers typically enjoy prices 1/2 to 1/3 of retail rates.

[DeathAndTaxes]

I'm honestly a little surprised that people think this can't be done. Do you think Friedcat is a magician or something? I'm sure he had to rent space.

I never said it can't be done just that datacenter space is expensive, probably more than you think.  A datacenter has so much power, cooling capacity, and rack space.  They want to sell all three "commodities" in equal amounts so they don't run out of one before the other.  If they give you a higher electrical load per sq/ft that means either they need to sell underpowered racks to someone else OR they run out of power or cooling before they run out of space.  No datacenter operator (who just spent tens of millions building the thing) is going to do that.  It traps them into an underutilized capacity scenario which upsets all the bean counters. The fact that miners are energy dense doesn't really help.  They are going to want you to rent an equivalent amount of space for the power/cooling you need and then distribute your power/heat load across it.  That likely means a lot of expensive empty space.

The rate the datacenter pays for power isn't the whole story.  That class I building cost a fortune to build you are buying power, cooling, floor space, security, connectivity, redundancy, fire suppression, natural disaster resistance, etc.  It doesn't come cheap.  It is some of the most expensive real estate in the world (any data center).  I doubt it is going to be cheaper than space in China.  Maybe it is but I remain unconvinced it is so massively cheaper that giant PH/s operations will be operating at a tiny fraction of the operating cost.  


I didn't think Freidcat was renting space in a datacenter, I always thought (maybe incorrectly) it was just industrial/warehouse space.  Also I don't think ASICMiner is using as much power as the 900KW in the scenario we are responding to.

[Vycid]

The reality is that to get something of this magnitude up and running is going to take months (at best).  We are going to see a lot of attempts fail to accomplish this goal, that's the nature of the beast.

This is all absolutely true. However:

1) It's entirely possible there are privately-funded projects that have been working on all of this for several months now, meaning they will be coming online shortly. In fact, I think it is more likely than unlikely that this is the case.

2) Even if new projects do not come online until early next year, AM stock is assuming it will manage to maintain its current dividends for many years. We're talking about months until those dividends take a serious beating.

2. There is a great possibility that dividends increase over the next months, especially if AM continues to hold its lead in the market and delivers more hardware.  Every single day that AM makes profits fills their war chest to battle future competitors and adapt to changing market conditions. Why do you assume that they won't continue to expand and profit?

Margins. Before, AM was selling each blade at 50 BTC a pop (and making a proportionally higher amount of profit off the ones they kept for mining). You can see they're selling them at 10 each now. That's 40 BTC in profit per unit gone, because the total hashrate has soared along with the competition. The gold rush days are ending.

AM could very well have 40% of the hashrate this time next year and be making less profit than they are today.

I'm honestly a little surprised that people think this can't be done. Do you think Friedcat is a magician or something? I'm sure he had to rent space.

I never said it can't be done just that datacenter space is expensive, probably more than you think.  A datacenter has so much power, cooling capacity, and rack space.  They want to sell all three "commodities" in equal amounts so they don't run out of one before the other.  If they give you a higher electrical load per sq/ft that means either they need to sell underpowered racks to someone else OR they run out of power or cooling before they run out of space.  No datacenter operator (who just spent tens of millions building the thing) is going to do that.  It traps them into an underutilized capacity scenario which upsets all the bean counters. The fact that miners are energy dense doesn't really help.  They are going to want you to rent an equivalent amount of space for the power/cooling you need and then distribute your power/heat load across it.  That likely means a lot of expensive empty space.

The rate the datacenter pays for power isn't the whole story.  That class I building cost a fortune to build you are buying power, cooling, floor space, security, connectivity, redundancy, fire suppression, natural disaster resistance, etc.  It doesn't come cheap.  It is some of the most expensive real estate in the world (any data center).  I doubt it is going to be cheaper than space in China.  Maybe it is but I remain unconvinced it is so massively cheaper that giant PH/s operations will be operating at a tiny fraction of the operating cost.  


I didn't think Freidcat isn't renting space in a datacenter, I always thought (maybe incorrectly) it was just industrial/warehouse space.  Also I don't think ASICMiner is using 900KW as was indicated in the scenario we are responding to.  

Perhaps you're right and I'm underestimating the ease of getting cheap datacenter space, a problem Friedcat sidestepped by renting industrial space.

So... rent as many industrial units in North Central Washington as is necessary? If Friedcat originally got this done on a short time scale and a shoestring budget, then that business model can be repeated.

[velacreations]

Also I don't think ASICMiner is using 900KW as was indicated in the scenario we are responding to. 

In the hypothetical example we have been discussing, the 900 kW was to have 10% of the network in September, or about 100 TH/s, based on energy consumption of Avalon chips (9w/ GH/s)

AM had around 50 TH/s this week, and I don't know how efficient their chips are, but I would assume their electricity use is actually probably in the same range as that 900 kW.

[101111]

FC has already said he would be distributing operations in order to minimise geopolitical and other risks. Franchising further reduces those risks. FC is two steps ahead. Vycid is two steps behind.

[Vycid]

FC has already said he would be distributing operations in order to minimise geopolitical and other risks. Franchising further reduces those risks. FC is two steps ahead. Vycid is two steps behind.

Friedcat is planning to restructure his business (always risky) in order to remain competitive with a business model that his competitors will ostensibly have right off the bat.

Franchising is a good idea to go beyond 20% of the hashrate without appearing to threaten to the stability of the network. Since he's nowhere near 20% right now, it's just a good way to cut into profit margins.

[deltanine]

FC has already said he would be distributing operations in order to minimise geopolitical and other risks. Franchising further reduces those risks. FC is two steps ahead. Vycid is two steps behind.

Friedcat is planning to restructure his business (always risky) in order to remain competitive with a business model that his competitors will ostensibly have right off the bat.

Franchising is a good idea to go beyond 20% of the hashrate without appearing to threaten to the stability of the network. Since he's nowhere near 20% right now, it's just a good way to cut into profit margins.

Damned if you do, damned if you don't.

Keep on truckin', Friedcat!

[101111]

FC has already said he would be distributing operations in order to minimise geopolitical and other risks. Franchising further reduces those risks. FC is two steps ahead. Vycid is two steps behind.

Friedcat is planning to restructure his business (always risky) in order to remain competitive with a business model that his competitors will ostensibly have right off the bat.

Franchising is a good idea to go beyond 20% of the hashrate without appearing to threaten to the stability of the network. Since he's nowhere near 20% right now, it's just a good way to cut into profit margins.

Being in this business is risky; AM is evolving to stay ahead. Ostensibly has no basis in fact.

Franchising is an additional revenue stream. Hash rate fluctuates so 'right now' is irrelevant.

If you can come up with something worthwhile that doesn't equally apply to any upcoming potential competition then great, but otherwise all the red herrings, heavily biased opinion, and conjecture but no substance is getting very tiresome.

[astutiumRob]

your pdf said $125/kW per month:
Based on the math I quoted from, 10% of the network would require 900 kW, so $1,125,000 per month

900*125 = 112,500 not 1,125,000 - you've multiplied it by 10
and the norm for a real datacentre would 1KW per sq-foot not 175w

[Vycid]

FC has already said he would be distributing operations in order to minimise geopolitical and other risks. Franchising further reduces those risks. FC is two steps ahead. Vycid is two steps behind.

Friedcat is planning to restructure his business (always risky) in order to remain competitive with a business model that his competitors will ostensibly have right off the bat.

Franchising is a good idea to go beyond 20% of the hashrate without appearing to threaten to the stability of the network. Since he's nowhere near 20% right now, it's just a good way to cut into profit margins.

Being in this business is risky; AM is evolving to stay ahead. Ostensibly has no basis in fact.

Franchising is an additional revenue stream. Hash rate fluctuates so 'right now' is irrelevant.

If you can come up with something worthwhile that doesn't equally apply to any upcoming potential competition then great, but otherwise all the red herrings, heavily biased opinion, and conjecture but no substance is getting very tiresome.

That's funny, because it seems to me that AM's current valuation is based primarily on red herrings, heavily biased opinion, and conjecture.

AM as a company is extremely high-risk. Its revenue stream is demonstrably unstable (whatever happened to the 20% FC was going to maintain?). It is beset by competition with extremely low barriers to entry. It is publicly traded but does not release detailed financial documents. Its profit margins are shrinking even as its revenue decreases. Management is competent but barely transparent.

Most importantly, the share price does not appear to appreciate the risk, and from a simple perspective:

1) There is no ability to short-sell the stock, enabling overvaluation

2) There are enormous dividends and few alternatives for diversification, resulting in a lot of dividend reinvestment and therefore overvaluation

As a reasonably successful value investor in the traditional exchanges, this is a textbook case of a company I'd continually buy put options on until adjustment.

If detracting opinions are tiresome to you, that's unfortunate, but I think it's healthy to have someone around here to disrupt the group-think. I assure you I am open to ideas I have not yet considered and my investment thesis is based on math and logic (or at least my version of those). If you disagree with me, and you can articulate why, I am happy to have that discussion.

[romerun]

well, most cryptocoin investments are either scam or high risk. The most conservative thing to do is to sit tight with bitcoin itself.

[Vycid]

well, most cryptocoin investments are either scam or high risk. The most conservative thing to do is to sit tight with bitcoin itself.

Which is a high-risk proposition in itself.

I see a lot of "damn, 25% annual return from AM?! A real world-company would never have that!"

Well, first off - yeah, it would, if it was as risky as AM is. But the other thing is that it's bitcoin-denominated. 25% APR is the going rate for bitcoin investment:

https://www.coinlenders.com/feerebate

Now, that could be a ponzi scheme. So could AM, theoretically. But 25% is actually not impressive in bitcoin-land, because the risk involved in the whole deal has got a risk profile that would make gambling addicts reconsider.

I own bitcoins, but AM stopped being a good prospect for me a while ago.

Aside: real world mid-cap company with 12% annual div yield. http://finance.yahoo.com/q?s=PSEC

[velacreations]

your pdf said $125/kW per month:
Based on the math I quoted from, 10% of the network would require 900 kW, so $1,125,000 per month

900*125 = 112,500 not 1,125,000 - you've multiplied it by 10
and the norm for a real datacentre would 1KW per sq-foot not 175w

thanks for that.  I did that calculation several times and read it wrong every time.  I appreciate the correction.

that data center pdf said 175w a sf, I was just quoting what I saw on that.