5 ms·

Why don't they plug them into their outlets themselves?

by jgeerts 13y ago

TsiCClawOfLight 13y ago
Because it isn't worth it.
jeffasinger 13y ago
They've probably plugged a few in, increasing the difficulty in the time that they're shipping them. That way they get most of the benefit of plugging them in, and also get the benefit of selling them.
astrodust 13y ago
That's not how a Ponzi scheme works, which is what Bitcoin is rapidly turning in to. If you don't double down, someone else will, and your hardware will be worthless. Therefore you need to keep spending to keep mining.
- icebraining 13y ago
  It's not a Ponzi scheme, because the mining rig builders aren't promising profits, they just promise to deliver the machine. It may very well be a bubble, though.
EwanToo 13y ago
I'd guess it's a calculation in the order of: We build 50, plug them in, make $500,000 in 3 months We build 50, sell them all, make $250,000 in 1 month But I'm sure they'll have a couple they keep for themselves, and plug in at the same time as the early deliveries arrive.
wcfields 13y ago
They probably are for awhile, then selling them. Hence the delay. Riding out some mining, then slowly releasing them. I'm thinking if someones smart enough to built a specialized piece of hardware like this, they are smart enough to write up an algorithm that tells when to sell the hardware once the commodity hits peak level. A mass dump of these would too quickly devalue the market since the increase in new Bitcoins would cause inflation. edit: Ha, obviously they know it by taking Bitcoins and charging €700 difference in the price of one chip between a July & October delivery.
- jedunnigan 13y ago
  There wouldn't be any more coins entering the market then there normally would. 1 new block every 10 minutes, doesn't matter how much hashing power there is. You are assuming people would dump them immediately, which I don't necessarily think is fair.
Tuna-Fish 13y ago
They probably will. This needs to be repeated every time btc ASICs are discussed: ASIC economics don't work like most physical products, and instead work more like software. For high-performance asics, the costs of design and masks completely overshadow the costs of actually making chips unless your volume is in the millions. To make the first chip costs many millions, to make the next chip costs $15. The most valuable assets they have are the masks. One of the least risky ways of bootstrapping an ASIC venture is to presell enough chips to pay off R&D, and when you can make them for cheap, keep the rest.
- sliverstorm 13y ago
  Oh shit, so what you are saying is once the R&D is paid for, they can just stop selling them and manufacture as many $15 400GHash units as they please. At that point they would have virtually zero worry about "breaking even", it's pretty much pure profit as soon as they plug in the device.
  - maxerickson 13y ago
    At the moment, those $15 (or so) units are 1.7 (or whatever it was) GHash/sec. They integrate a bunch of them to get to 400. In the long term, the mining rigs should barely be paying for the electricity required to operate them.
    - sliverstorm 13y ago
      Yup, and that is the great irony of Bitcoin in my eyes. In the long term, the value of Bitcoin will probably continue to stabilize around the price of electricity, which is of course defined in US dollars. In other words, Bitcoin will be anchored to the value of USD (with some factor comprised of average rig efficiency and prices per watt)
      - Tuna-Fish 13y ago
        > Yup, and that is the great irony of Bitcoin in my eyes. In the long term, the value of Bitcoin will probably continue to stabilize around the price of electricity, which is of course defined in US dollars. No, you have completely misunderstood how bitcoin mining works. The bitcoin value won't ever stabilize to electricity, the rewards of mining will. The effective reward per Ghash can go up or down independently of the bitcoin price, and tends towards costs (ie, electricity). Electricity costs have no bearing on the actual bitcoin value.
tomku 13y ago
Because they know that doing so would spike the difficulty and dramatically lower the expected value of bitcoins mined per unit. They can sell them for $20k a pop now, claiming that you can make that $20k back in a month of mining - but if they sell out and all their customers start mining back their $20k immediately, it'll take far longer. In the meantime, Bitfury already collected their money and are laughing on the way to the bank.
lifeformed 13y ago
Basically, there's an ideal balance of running it themselves and selling them, and I'm sure they've calculated out the maximum profit strategy and are executing it.
mrb 13y ago
None of the 8 persons who replied to you have the correct facts. They are planning to mine with the chips. The complete story is that the chips are developped in a 50/50 partnership between Leszek Rychlewski (aka "tytus"), and "bitfury" (a group of investors and engineers mostly from eastern europe): - Tytus set up a company to launch a project known as 100TH-Mine that will deploy a farm running 100 Thash/s of these chips in Wenatchee, WA: https://picostocks.com/businessplan/19 https://picostocks.com/businessplan/19 - Bitfury is very discrete and was, as far as we know, merely planning to mine for themselves. But over time, both entities realized they would be able to generate a lot more predictible revenues if they sold chips and/or fully assembled devices. So Tytus partnered with Megabigpower.com and BFSB as distributors is US and Europe. And the Bitfury group partenered with MetaBank to resell chips and devices in Russia.

Why don't they plug them into their outlets themselves?

by jgeerts 13y ago

Why don't they plug them into their outlets themselves?

TsiCClawOfLight 13y ago

Because it isn't worth it.

jeffasinger 13y ago

They've probably plugged a few in, increasing the difficulty in the time that they're shipping them. That way they get most of the benefit of plugging them in, and also get the benefit of selling them.

astrodust 13y ago

That's not how a Ponzi scheme works, which is what Bitcoin is rapidly turning in to. If you don't double down, someone else will, and your hardware will be worthless. Therefore you need to keep spending to keep mining.

icebraining 13y ago
It's not a Ponzi scheme, because the mining rig builders aren't promising profits, they just promise to deliver the machine. It may very well be a bubble, though.

EwanToo 13y ago

I'd guess it's a calculation in the order of: We build 50, plug them in, make $500,000 in 3 months We build 50, sell them all, make $250,000 in 1 month But I'm sure they'll have a couple they keep for themselves, and plug in at the same time as the early deliveries arrive.

wcfields 13y ago

They probably are for awhile, then selling them. Hence the delay. Riding out some mining, then slowly releasing them. I'm thinking if someones smart enough to built a specialized piece of hardware like this, they are smart enough to write up an algorithm that tells when to sell the hardware once the commodity hits peak level. A mass dump of these would too quickly devalue the market since the increase in new Bitcoins would cause inflation. edit: Ha, obviously they know it by taking Bitcoins and charging €700 difference in the price of one chip between a July & October delivery.

jedunnigan 13y ago
There wouldn't be any more coins entering the market then there normally would. 1 new block every 10 minutes, doesn't matter how much hashing power there is. You are assuming people would dump them immediately, which I don't necessarily think is fair.

Tuna-Fish 13y ago

They probably will. This needs to be repeated every time btc ASICs are discussed: ASIC economics don't work like most physical products, and instead work more like software. For high-performance asics, the costs of design and masks completely overshadow the costs of actually making chips unless your volume is in the millions. To make the first chip costs many millions, to make the next chip costs $15. The most valuable assets they have are the masks. One of the least risky ways of bootstrapping an ASIC venture is to presell enough chips to pay off R&D, and when you can make them for cheap, keep the rest.

sliverstorm 13y ago
Oh shit, so what you are saying is once the R&D is paid for, they can just stop selling them and manufacture as many $15 400GHash units as they please. At that point they would have virtually zero worry about "breaking even", it's pretty much pure profit as soon as they plug in the device.
- maxerickson 13y ago
  At the moment, those $15 (or so) units are 1.7 (or whatever it was) GHash/sec. They integrate a bunch of them to get to 400. In the long term, the mining rigs should barely be paying for the electricity required to operate them.
  - sliverstorm 13y ago
    Yup, and that is the great irony of Bitcoin in my eyes. In the long term, the value of Bitcoin will probably continue to stabilize around the price of electricity, which is of course defined in US dollars. In other words, Bitcoin will be anchored to the value of USD (with some factor comprised of average rig efficiency and prices per watt)
    - Tuna-Fish 13y ago
      > Yup, and that is the great irony of Bitcoin in my eyes. In the long term, the value of Bitcoin will probably continue to stabilize around the price of electricity, which is of course defined in US dollars. No, you have completely misunderstood how bitcoin mining works. The bitcoin value won't ever stabilize to electricity, the rewards of mining will. The effective reward per Ghash can go up or down independently of the bitcoin price, and tends towards costs (ie, electricity). Electricity costs have no bearing on the actual bitcoin value.

tomku 13y ago

Because they know that doing so would spike the difficulty and dramatically lower the expected value of bitcoins mined per unit. They can sell them for $20k a pop now, claiming that you can make that $20k back in a month of mining - but if they sell out and all their customers start mining back their $20k immediately, it'll take far longer. In the meantime, Bitfury already collected their money and are laughing on the way to the bank.

lifeformed 13y ago

Basically, there's an ideal balance of running it themselves and selling them, and I'm sure they've calculated out the maximum profit strategy and are executing it.

mrb 13y ago

None of the 8 persons who replied to you have the correct facts. They are planning to mine with the chips. The complete story is that the chips are developped in a 50/50 partnership between Leszek Rychlewski (aka "tytus"), and "bitfury" (a group of investors and engineers mostly from eastern europe): - Tytus set up a company to launch a project known as 100TH-Mine that will deploy a farm running 100 Thash/s of these chips in Wenatchee, WA: https://picostocks.com/businessplan/19 https://picostocks.com/businessplan/19 - Bitfury is very discrete and was, as far as we know, merely planning to mine for themselves. But over time, both entities realized they would be able to generate a lot more predictible revenues if they sold chips and/or fully assembled devices. So Tytus partnered with Megabigpower.com and BFSB as distributors is US and Europe. And the Bitfury group partenered with MetaBank to resell chips and devices in Russia.