6 ms·

I doubted that these ASIC rigs would ship any time soon. Wouldn't it be more profitable for the vendors to simply to delay/cancel orders and run the rigs 24/7 t

I doubted that these ASIC rigs would ship any time soon. Wouldn't it be more profitable for the vendors to simply to delay/cancel orders and run the rigs 24/7 themselves?

gesman 14y ago
Totally agree. Why would anyone wants to sell the goose who lays golden eggs while gold cost more than the goose? They'll pile up cash from "preorders", mine bitcoins and when time is right - will dump outdated devices to customers.
- BaconJuice 14y ago
  are there any alternatives to this? and some thing that's already selling them and not pre-orders?
- starpilot 14y ago
  I see it as a futures contract on the value of the BTC. Selling a mining ASIC locks in profit for the seller, betting that this will exceed the time-value generated from the rig itself. Buying a rig locks in a loss, betting that it will pay for itself. We can't be certain whether the BTC will be at US$1,000 or US$1 a year from now. You could make a case for either side, that's why the contract exists.
  - sliverstorm 14y ago
    Which, by the way, doesn't mean they are betting against BTC. They just elected to take sure profit up front, over less certain profit of potentially greater value long-term.
    - rbanffy 14y ago
      I don't think so. They probably needed the preorder money to fully develop the device and to be able to manufacture it.
- sachingulaya 14y ago
  The profitability of ASICs is going to decrease at a rapid rate once they start shipping to consumers. Additionally, in a few months the market is going to be flooded with cheap ASICs. From BFL's perspective if they don't release first they're dead in the water. They don't know where their competitors are compared to them but they recognize it's a winner take all situation. The natural thing to do would be to take pre-orders to fund the manufacturing and start realizing profits now. Also, if your competitors are offering pre-orders you should be too.
  - laurenia 14y ago
    Did they collect the money in advance? If not, it seems to me that the shipping time is almost irrelevant.
    - unreal37 14y ago
      Yes, you pay at time of order, and wait a few months for the unit.
      - thereallurch 14y ago
        few months - year...
  - ihsw 14y ago
    This waxing and waning of mining devices is certainly going to become the norm. * Buy up $10K worth of devices * Make your money while flooding the market with fast and easy BTC * Sell off all your hardware after the profit margins have cratered * Wait for new hardware and rinse and repeat Personally I will be extremely glad when the first wave hits as the hoarders will start feeling the pinch of inflation.
    - nazgulnarsil 14y ago
      bitcoin does not work that way. Inflation decreases at a set rate.
rscale 14y ago
This seems like it would be begging for a class-action lawsuit. That said, I've half-joked that probability of receiving my miner is probably about 0.98^(USDBTC).
- sjtgraham 14y ago
  How can one litigate against an entity beyond the jurisdiction of the US court system, e.g. say the rig manufacturer was the crook and not in the United States? What are the options there?
  - funtober 14y ago
    The options are to sue them in their foreign country or sue them in the United States. If you sue them in the US, you face jurisdictional issues (do they have sufficient contacts in the US to make a lawsuit here fair?) as well as judgment recognition issues (you would probably have to attach the damage award to a contract they have with someone in the US to collect if the foreign country court system doesn't recognize the US judgment).
    - sjtgraham 14y ago
      Thanks for your answer. I have two questions if you don't mind: - Are reciprocal judgements possible in a lawsuit such as this hypothetical example? - What is to stop the defendent from liquidating and reappearing as a new legal entity?
      - funtober 14y ago
        Reciprocal judgments: I'm not perfectly clear what you mean by reciprocal judgment. I think that you'll find this helpful on the matter, though: http://travel.state.gov/law/judicial/judicial_691.html http://travel.state.gov/law/judicial/judicial_691.html Liquidation: Corporate governance issues are a matter of the country where the defendant is organized. So if the law there allows them to do it, they can. I'm less familiar with the process of chasing the money. Trying to remember back to law school here: In the US, the debt doesn't just disappear. It would either attach to the old entity (which would have to be paid a fair price for the acquisition of its assets) or the new entity (which acquired its assets and liabilities per the acquisition agreement). So if it has no assets to begin with, it's possible. If it has real assets, it's more difficult to do. Not impossible, just more difficult.
daniel-cussen 14y ago
Part of the value of Bitcoin (if any) is that it's decentralized. It should be more profitable to sell the miners out than to hoard them because if they're distributed the cryptographic safety of Bitcoin is greater.
- illuminate 14y ago
  "It should be more profitable to sell the miners out than to hoard them because if they're distributed the cryptographic safety of Bitcoin is greater" Can you explain this in more detail? I don't understand what decentralization has to do with miners' profit.
  - daniel-cussen 14y ago
    Decentralization boosts miners' profits by making bitcoin sounder, and therefore making its price higher. Miner's profits have to do with the stability of the network and the demand for bitcoins. At high bitcoin prices, their return is better than when the prices are low, other things (thing, mining difficulty) being equal. It's much like gold mining: it has become much more profitable of late because the difference between extraction price ($250 to $400 per ounce in most places) and sale price (roughly $1,500 per ounce) is how much the miner takes home. Decentralization increases this price because it makes bitcoin sound. If there's no one door to knock down, or one person to subpoena, the cyberpunk currency can robustly survive losses in its network and still have enough computing power trained on it to prevent attacks.
unreal37 14y ago
Their competitor Avalon sells the units for "the first 30 days profit of the device". So whatever the current price of Bitcoins and mining difficulty affects the price.
SG- 14y ago
I'm sure the same thing was said during the gold rush days and it was the store owners that sold prospecting equipment that made some very stable money.
- liveaxle 14y ago
  Those store owners couldn't use a thousand pickaxes simultaneously.
  - baddox 14y ago
    They could hire people to operate the pickaxes, like how BFL would have to pay for electricity to power their mining hardware.
deleted 14y ago
[deleted]
dualogy 14y ago
> I doubted that these ASIC rigs would ship any time soon. Wouldn't it be more profitable for the vendors to simply to delay/cancel orders and run the rigs 24/7 themselves? Only if they're "long BTC". What makes you think they are? They're just providing shovels & tools to "miners in a gold rush". Historically, such providers have always done phenominally well. At least they get the rigs at production cost to run them---selling them for good ol' USD may just be a hedge or sideshow, only time can tell.
- Too 14y ago
  The difference with shovels is you need to be there and shovel yourself. Here if you have tool, you just plug it in and it does all the work for you.
  - drawkbox 14y ago
    There is energy expended during the process though. I imagine if this continues 'banks' of the future will be data centers. Also might be a way to make money on idle servers at data centers. If anything this is an extremely interesting time in currency experimentation. Side effect of this is massive energy cost, another awesome side effect is hardware/supercomputer miniaturization and evolution. Great for really hard problems like verification (as in mining here) and maybe brain research/processing or other really hard data crunching problems.
    - MaysonL 14y ago
      I'm amazed that there hasn't been a scandal with some Googler or Microsofty or Appler or academic finding a way to use some fraction of their unused cycles for mining.
      - Too 14y ago
        http://en.wikipedia.org/wiki/Bitcoin#Botnet_mining http://en.wikipedia.org/wiki/Bitcoin#Botnet_mining http://thenextweb.com/au/2011/06/23/abc-employee-caught-mining-for-bitcoins-on-company-servers/ http://thenextweb.com/au/2011/06/23/abc-employee-caught-mini... Doesn't mention anything about the computing capability of those servers though.
MasterScrat 14y ago
From what I understand these devices started shipping right after the BitCoin peaked... Maybe the vendors kept "testing" them for just a bit longer than they expected?
uid 14y ago
what makes you think they aren't doing just that? they could start shipping them out and make a profit on the machines just as the difficulty rate picks up and there is more profit to be made in selling miners rather than mining.

I doubted that these ASIC rigs would ship any time soon. Wouldn't it be more profitable for the vendors to simply to delay/cancel orders and run the rigs 24/7 themselves?

gesman 14y ago

Totally agree. Why would anyone wants to sell the goose who lays golden eggs while gold cost more than the goose? They'll pile up cash from "preorders", mine bitcoins and when time is right - will dump outdated devices to customers.

BaconJuice 14y ago
are there any alternatives to this? and some thing that's already selling them and not pre-orders?
starpilot 14y ago
I see it as a futures contract on the value of the BTC. Selling a mining ASIC locks in profit for the seller, betting that this will exceed the time-value generated from the rig itself. Buying a rig locks in a loss, betting that it will pay for itself. We can't be certain whether the BTC will be at US$1,000 or US$1 a year from now. You could make a case for either side, that's why the contract exists.
- sliverstorm 14y ago
  Which, by the way, doesn't mean they are betting against BTC. They just elected to take sure profit up front, over less certain profit of potentially greater value long-term.
  - rbanffy 14y ago
    I don't think so. They probably needed the preorder money to fully develop the device and to be able to manufacture it.
sachingulaya 14y ago
The profitability of ASICs is going to decrease at a rapid rate once they start shipping to consumers. Additionally, in a few months the market is going to be flooded with cheap ASICs. From BFL's perspective if they don't release first they're dead in the water. They don't know where their competitors are compared to them but they recognize it's a winner take all situation. The natural thing to do would be to take pre-orders to fund the manufacturing and start realizing profits now. Also, if your competitors are offering pre-orders you should be too.
- laurenia 14y ago
  Did they collect the money in advance? If not, it seems to me that the shipping time is almost irrelevant.
  - unreal37 14y ago
    Yes, you pay at time of order, and wait a few months for the unit.
    - thereallurch 14y ago
      few months - year...
- ihsw 14y ago
  This waxing and waning of mining devices is certainly going to become the norm. * Buy up $10K worth of devices * Make your money while flooding the market with fast and easy BTC * Sell off all your hardware after the profit margins have cratered * Wait for new hardware and rinse and repeat Personally I will be extremely glad when the first wave hits as the hoarders will start feeling the pinch of inflation.
  - nazgulnarsil 14y ago
    bitcoin does not work that way. Inflation decreases at a set rate.

rscale 14y ago

This seems like it would be begging for a class-action lawsuit. That said, I've half-joked that probability of receiving my miner is probably about 0.98^(USDBTC).

sjtgraham 14y ago
How can one litigate against an entity beyond the jurisdiction of the US court system, e.g. say the rig manufacturer was the crook and not in the United States? What are the options there?
- funtober 14y ago
  The options are to sue them in their foreign country or sue them in the United States. If you sue them in the US, you face jurisdictional issues (do they have sufficient contacts in the US to make a lawsuit here fair?) as well as judgment recognition issues (you would probably have to attach the damage award to a contract they have with someone in the US to collect if the foreign country court system doesn't recognize the US judgment).
  - sjtgraham 14y ago
    Thanks for your answer. I have two questions if you don't mind: - Are reciprocal judgements possible in a lawsuit such as this hypothetical example? - What is to stop the defendent from liquidating and reappearing as a new legal entity?
    - funtober 14y ago
      Reciprocal judgments: I'm not perfectly clear what you mean by reciprocal judgment. I think that you'll find this helpful on the matter, though: http://travel.state.gov/law/judicial/judicial_691.html http://travel.state.gov/law/judicial/judicial_691.html Liquidation: Corporate governance issues are a matter of the country where the defendant is organized. So if the law there allows them to do it, they can. I'm less familiar with the process of chasing the money. Trying to remember back to law school here: In the US, the debt doesn't just disappear. It would either attach to the old entity (which would have to be paid a fair price for the acquisition of its assets) or the new entity (which acquired its assets and liabilities per the acquisition agreement). So if it has no assets to begin with, it's possible. If it has real assets, it's more difficult to do. Not impossible, just more difficult.

daniel-cussen 14y ago

Part of the value of Bitcoin (if any) is that it's decentralized. It should be more profitable to sell the miners out than to hoard them because if they're distributed the cryptographic safety of Bitcoin is greater.

illuminate 14y ago
"It should be more profitable to sell the miners out than to hoard them because if they're distributed the cryptographic safety of Bitcoin is greater" Can you explain this in more detail? I don't understand what decentralization has to do with miners' profit.
- daniel-cussen 14y ago
  Decentralization boosts miners' profits by making bitcoin sounder, and therefore making its price higher. Miner's profits have to do with the stability of the network and the demand for bitcoins. At high bitcoin prices, their return is better than when the prices are low, other things (thing, mining difficulty) being equal. It's much like gold mining: it has become much more profitable of late because the difference between extraction price ($250 to $400 per ounce in most places) and sale price (roughly $1,500 per ounce) is how much the miner takes home. Decentralization increases this price because it makes bitcoin sound. If there's no one door to knock down, or one person to subpoena, the cyberpunk currency can robustly survive losses in its network and still have enough computing power trained on it to prevent attacks.

unreal37 14y ago

Their competitor Avalon sells the units for "the first 30 days profit of the device". So whatever the current price of Bitcoins and mining difficulty affects the price.

SG- 14y ago

I'm sure the same thing was said during the gold rush days and it was the store owners that sold prospecting equipment that made some very stable money.

liveaxle 14y ago
Those store owners couldn't use a thousand pickaxes simultaneously.
- baddox 14y ago
  They could hire people to operate the pickaxes, like how BFL would have to pay for electricity to power their mining hardware.

deleted 14y ago

[deleted]

dualogy 14y ago

> I doubted that these ASIC rigs would ship any time soon. Wouldn't it be more profitable for the vendors to simply to delay/cancel orders and run the rigs 24/7 themselves? Only if they're "long BTC". What makes you think they are? They're just providing shovels & tools to "miners in a gold rush". Historically, such providers have always done phenominally well. At least they get the rigs at production cost to run them---selling them for good ol' USD may just be a hedge or sideshow, only time can tell.

Too 14y ago
The difference with shovels is you need to be there and shovel yourself. Here if you have tool, you just plug it in and it does all the work for you.
- drawkbox 14y ago
  There is energy expended during the process though. I imagine if this continues 'banks' of the future will be data centers. Also might be a way to make money on idle servers at data centers. If anything this is an extremely interesting time in currency experimentation. Side effect of this is massive energy cost, another awesome side effect is hardware/supercomputer miniaturization and evolution. Great for really hard problems like verification (as in mining here) and maybe brain research/processing or other really hard data crunching problems.
  - MaysonL 14y ago
    I'm amazed that there hasn't been a scandal with some Googler or Microsofty or Appler or academic finding a way to use some fraction of their unused cycles for mining.
    - Too 14y ago
      http://en.wikipedia.org/wiki/Bitcoin#Botnet_mining http://en.wikipedia.org/wiki/Bitcoin#Botnet_mining http://thenextweb.com/au/2011/06/23/abc-employee-caught-mining-for-bitcoins-on-company-servers/ http://thenextweb.com/au/2011/06/23/abc-employee-caught-mini... Doesn't mention anything about the computing capability of those servers though.

MasterScrat 14y ago

From what I understand these devices started shipping right after the BitCoin peaked... Maybe the vendors kept "testing" them for just a bit longer than they expected?

uid 14y ago

what makes you think they aren't doing just that? they could start shipping them out and make a profit on the machines just as the difficulty rate picks up and there is more profit to be made in selling miners rather than mining.