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You might think that, having never been a customer of BFL, but I can tell you I bought BFL hardware on pre-order at a point when they were telling their custome

by yebyen 12y ago

You might think that, having never been a customer of BFL, but I can tell you I bought BFL hardware on pre-order at a point when they were telling their customers they would never be a mining company, but only a hardware company, and they were not ever going to mine bitcoins with customer equipment. It's not a service to the customer. The most valuable time spent mining with new mining hardware is the first week to two weeks. The next two weeks are going to be at an average of 10-20% reduced efficiency as the difficulty increases every two weeks or less. The next two weeks after that will have reduced efficiency by a similar amount again, until you reach the "break-even point" where each watt-hour of electricity you buy and pump through the mining equipment is going to yield an amount of bitcoins equivalent in value to the energy you put in. And then, you hope, the price of the coins increases or at least remains stable, and the difficulty levels off. (Protip[0]: it doesn't seem to be leveling off yet, and my first-gen ASIC hardware is already well underwater.) [0] https://bitcoinwisdom.com/bitcoin/difficulty https://bitcoinwisdom.com/bitcoin/difficulty

sixothree 12y ago
Additionally the FTC argues there is a specific network for testing that does not incentivise prolonged "burn-in".
- yebyen 12y ago
  Yes. I can confirm they did tell us customers they would use the testnet and not the live net. There is no excuse for this. For anyone who is not "in-the-know" of Bitcoin, that testnet is absolutely a thing and reversing their position on that promise is absolutely a violation of trust. As a customer of a company that sells mining equipment, you don't ever want your supplier to be in the mining game. When you own 1st-gen equipment, you'd like it if the 2nd-gen equipment is delayed as long as possible because when it comes out, your equipment is almost immediately going to be made irrelevant as new investors have 10x equipment with significantly reduced marginal (electricity) cost. Some manufacturers I'm sure are forthright about their conflict of interest because they do mine (openly, like I believe KnC does), so their customers shouldn't be shocked to find out. If they tell you they won't, that's a benefit to you because you, the fulfilled customer, are usually incentivized to give up some of your profits to get the next generation of hardware, to protect yourself from irrelevancy in the coming years. You are trusting that your order will be delivered in the order of purchase and that the company does not have incentives to delay your shipment. Owning 2nd-gen hardware, I always knew that the arrival of the 3rd-gen (28nm Monarch) would signal the end of my operation if I couldn't secure one. After the horrible experience of waiting for my 2nd-gen hardware to arrive, I was not biting again. It's been clear to anyone with a stake in the game that there has been something fishy at BFL and that most people were getting screwed, even when their equipment was finally delivered. When I heard that Vleisides was involved in a "multi-million dollar lottery scam" pyramid scheme before, pled guilty to mail fraud, and was barred by court-imposed restrictions from any business that "solicited funds through pre-order"[1], I knew it was time to start getting the popcorn ready. [1]: http://arstechnica.com/tech-policy/2014/04/digging-for-answers-the-strong-smell-of-fraud-from-one-bitcoin-miner-maker/ http://arstechnica.com/tech-policy/2014/04/digging-for-answe...
mtmail 12y ago
You're right. I forgot how unbelievable up-to-date one must be with the latest hardware.
andrewflnr 12y ago
For the whole article I couldn't figure out what the actual harm done to the customer was. Thanks for explaining.
yebyen 12y ago
Interestingly enough, the graph I linked (and didn't look closely at before posting) shows this week that hashes and possibly also difficulty seem to have begun to take the first slight nose-dive in a long time. It looks like the difficulty might even go down this time, in about 10 days when it's recalculated. Some people (more than the opposing numbers) are apparently turning off their machines now (ostensibly it's not profitable to start/continue mining at this time.) For a long time, people "in-the-know" have been honestly telling folks that it's much cheaper and less risky to go out and buy bitcoins directly than it is to try and get involved in mining. I'll leave it for you to sort out all the additional potential conflicts of interest added there.

by yebyen 12y ago

sixothree 12y ago

Additionally the FTC argues there is a specific network for testing that does not incentivise prolonged "burn-in".

yebyen 12y ago
Yes. I can confirm they did tell us customers they would use the testnet and not the live net. There is no excuse for this. For anyone who is not "in-the-know" of Bitcoin, that testnet is absolutely a thing and reversing their position on that promise is absolutely a violation of trust. As a customer of a company that sells mining equipment, you don't ever want your supplier to be in the mining game. When you own 1st-gen equipment, you'd like it if the 2nd-gen equipment is delayed as long as possible because when it comes out, your equipment is almost immediately going to be made irrelevant as new investors have 10x equipment with significantly reduced marginal (electricity) cost. Some manufacturers I'm sure are forthright about their conflict of interest because they do mine (openly, like I believe KnC does), so their customers shouldn't be shocked to find out. If they tell you they won't, that's a benefit to you because you, the fulfilled customer, are usually incentivized to give up some of your profits to get the next generation of hardware, to protect yourself from irrelevancy in the coming years. You are trusting that your order will be delivered in the order of purchase and that the company does not have incentives to delay your shipment. Owning 2nd-gen hardware, I always knew that the arrival of the 3rd-gen (28nm Monarch) would signal the end of my operation if I couldn't secure one. After the horrible experience of waiting for my 2nd-gen hardware to arrive, I was not biting again. It's been clear to anyone with a stake in the game that there has been something fishy at BFL and that most people were getting screwed, even when their equipment was finally delivered. When I heard that Vleisides was involved in a "multi-million dollar lottery scam" pyramid scheme before, pled guilty to mail fraud, and was barred by court-imposed restrictions from any business that "solicited funds through pre-order"[1], I knew it was time to start getting the popcorn ready. [1]: http://arstechnica.com/tech-policy/2014/04/digging-for-answers-the-strong-smell-of-fraud-from-one-bitcoin-miner-maker/ http://arstechnica.com/tech-policy/2014/04/digging-for-answe...

mtmail 12y ago

You're right. I forgot how unbelievable up-to-date one must be with the latest hardware.

andrewflnr 12y ago

For the whole article I couldn't figure out what the actual harm done to the customer was. Thanks for explaining.

yebyen 12y ago

Interestingly enough, the graph I linked (and didn't look closely at before posting) shows this week that hashes and possibly also difficulty seem to have begun to take the first slight nose-dive in a long time. It looks like the difficulty might even go down this time, in about 10 days when it's recalculated. Some people (more than the opposing numbers) are apparently turning off their machines now (ostensibly it's not profitable to start/continue mining at this time.) For a long time, people "in-the-know" have been honestly telling folks that it's much cheaper and less risky to go out and buy bitcoins directly than it is to try and get involved in mining. I'll leave it for you to sort out all the additional potential conflicts of interest added there.