4 ms·

The economics of this makes 0 sense. Why wouldn't the company that built these just plug them in and keep the money for themselves?

mikeash 13y ago
Because people paid them for the product, and if they don't deliver, they could get sued. As for why they sold them at all, I'd assume they didn't have the capital to build them on their own.
- grimtrigger 13y ago
  Makes a little more sense then, didn't realize it was a crowdfunded project.
simcop2387 13y ago
Likely not worth it actually. In 6 months they'll be obsolete or barely make as much money. The entire premise of the protocol is that the difficulty keeps going up basically. As so many of the machines enter the workforce things even back out to where there's no distinct advantage. If they can keep R&D going to make better ones they can keep selling them regardless of how the bitcoin market is doing as far as difficulty goes.
- glomph 13y ago
  Plus if they mined all the coins themselves it would lower confidence in the currency (especially if it meant they aproached 51% of the mining capacity) which would entail that the price of bitcoin would go down. Possibly before they got their moneys worth. It is a lot safer to make money selling them to lots of people.
runn1ng 13y ago
Only the first few miners will be profitable - if there will be tens of thousands of them already running, the costs will be higher than the returns. (Probably - nobody knows for sure.)
pr0zac 13y ago
In a gold rush don't dig for gold, sell shovels.
- adventured 13y ago
  Not always the right way to go. The truth is, you can do either and make a lot of money. Depends on what kind of risk you want to take on, what kind of capital you have etc. Ask Barrick Gold or Newmont etc. It's very context dependent. Barrick is worth $20 billion, and have made $8.5 billion in profit the last three years (the gold market tends to produce wild swings of prosperity and poverty years). If you have little startup capital and can't buy a great mine and can't afford to prospect for one (or don't want to roll that dice)... then maybe sell shovels.
- fnordfnordfnord 13y ago
  After this thread, I'm down-voting commenters that repeat this comment. Enough is enough already.
fnordfnordfnord 13y ago
1. They didn't have the money to do it without taking pre-orders. 2. Other miners would reject their blocks if they "51%-attacked" the network. (Nobody would trust Bitcoin if one entity could control the blockchain.)
AnthonBerg 13y ago
I'm NOT saying they did, but someone in their position could take the preorder money, build the boxes, start running them en masse, tell customers that orders are delayed in manufacturing, have them wait, and finally deliver once they have extracted a bit of value.

mikeash 13y ago

Because people paid them for the product, and if they don't deliver, they could get sued. As for why they sold them at all, I'd assume they didn't have the capital to build them on their own.

grimtrigger 13y ago
Makes a little more sense then, didn't realize it was a crowdfunded project.

simcop2387 13y ago

Likely not worth it actually. In 6 months they'll be obsolete or barely make as much money. The entire premise of the protocol is that the difficulty keeps going up basically. As so many of the machines enter the workforce things even back out to where there's no distinct advantage. If they can keep R&D going to make better ones they can keep selling them regardless of how the bitcoin market is doing as far as difficulty goes.

glomph 13y ago
Plus if they mined all the coins themselves it would lower confidence in the currency (especially if it meant they aproached 51% of the mining capacity) which would entail that the price of bitcoin would go down. Possibly before they got their moneys worth. It is a lot safer to make money selling them to lots of people.

runn1ng 13y ago

Only the first few miners will be profitable - if there will be tens of thousands of them already running, the costs will be higher than the returns. (Probably - nobody knows for sure.)

pr0zac 13y ago

In a gold rush don't dig for gold, sell shovels.

adventured 13y ago
Not always the right way to go. The truth is, you can do either and make a lot of money. Depends on what kind of risk you want to take on, what kind of capital you have etc. Ask Barrick Gold or Newmont etc. It's very context dependent. Barrick is worth $20 billion, and have made $8.5 billion in profit the last three years (the gold market tends to produce wild swings of prosperity and poverty years). If you have little startup capital and can't buy a great mine and can't afford to prospect for one (or don't want to roll that dice)... then maybe sell shovels.
fnordfnordfnord 13y ago
After this thread, I'm down-voting commenters that repeat this comment. Enough is enough already.

fnordfnordfnord 13y ago

1. They didn't have the money to do it without taking pre-orders. 2. Other miners would reject their blocks if they "51%-attacked" the network. (Nobody would trust Bitcoin if one entity could control the blockchain.)

AnthonBerg 13y ago

I'm NOT saying they did, but someone in their position could take the preorder money, build the boxes, start running them en masse, tell customers that orders are delayed in manufacturing, have them wait, and finally deliver once they have extracted a bit of value.