

Inside the Race to Build the World’s Fastest Bitcoin Miner - esalazar
http://www.wired.com/wiredenterprise/2013/04/bitcoin-mining-rigs/

======
ck2
15 bitcoins in 20 hours. Whoa.

You could make a fortune at the factory just doing the burn-in test for 24
hours.

In fact I am curious why they would even ship them from China, you'd lose
money the weeks on the boat, just plug them in at the factory...

~~~
gwern
In a recent interview (the one that photo is drawn from), that CEO guy
acknowledges that from a purely selfish standpoint, shipping the ASICs at all
has a high opportunity cost, but
[http://motherboard.vice.com/blog/engineering-the-bitcoin-
gol...](http://motherboard.vice.com/blog/engineering-the-bitcoin-gold-rush-an-
interview-with-yifu-guo-creator-of-the-first-asic-based-miner) it was more
honest to ship:

> This is an obvious question, but why aren’t you mining your own chips?

> Like I said, the current reality is vastly different from what we originally
> had planned. We always figured we would be late to the party. Butterfly Labs
> and bASIC (another ASIC developer that ultimately failed to launch) were
> supposed to launch in succession. But due to various complications and
> delays, it didn’t work out that way. > . If they had delivered on their
> promises, they would have shipped months before our first batch. We wanted
> to start selling chips so people could make their own units, providing a
> hedge from a single entity becoming too powerful, and then move onto a new
> project. That was our main goal. We wanted to prevent this potential
> monopoly. As it turned out, we became the monopoly we tried to prevent.

> You aren’t doing any mining at all?

> Nope. Fun fact: none of the Avalon team have their own mining units (outside
> of test units)... We’ve had plenty of opportunities, such as keeping the
> technology to ourselves and simply mining, but that was never our intention.
> So how much is that trust worth? We think it’s worth $5000 by itself. Beyond
> that, the calculation is based on the current difficulty rate so that break-
> even point occurs in a month. Which, by the way, as an investment vehicle is
> a fairly unique proposition. It should be mentioned also that the cost of
> the batch two was also 75 bitcoins. That the exchange rate has moved is out
> of our control. And in the end, this was never what we wanted. If we wanted
> to maximize our profit, we could charge much more. For us, this has always
> been an ideal-oriented problem, not a business-oriented one. This is one of
> the primary reasons we aren’t clearly in the black. We’re lucky that we held
> onto the second batch of bitcoins because if it weren’t for the
> appreciation, we would be very, very deep in the red, which ultimately still
> isn’t that big of a deal.

(And presumably, they're airmailing the components. Why risk a boat?)

------
sgpl
At the current exchange-rate, it seems counterproductive for Avalon to sell
their units instead of running them in-house to recoup the cost of production
(in a couple of days), and then continue to generate profits.

Also, since they are the only game in town (plus BFL & private players
probably), they could take advantage of their position in the short term,
before the difficulty increases by another order of magnitude.

~~~
smackfu
I'm not sure if they're actually selling new ones, or just shipping preorders
from 6 months ago. And the reason they took preorders was to get the capital
to fund the production in the first place.

It does seem like it would be awfully tempting to delay those preorder
deliveries a little bit and use the machines first.

------
mrb
I am surprised the article does not mention that Avalon, in addition to ready-
to-use devices, just started selling bare mining chips to OEM manufacturers
last week. And they already sold $5M worth of them (500 thousand chips) _in
the past 8 days alone_! This equates to 140 Thash/s (twice more power than the
current network). Lead time is 9-10 weeks. Manufactured on-demand at TSMC.

<https://bitcointalk.org/index.php?topic=181982.0>

[http://store.avalon-asics.com/?product=avalon-asic-
chips-100...](http://store.avalon-asics.com/?product=avalon-asic-chips-10000)

~~~
Nursie
Unless I've interpreted BTC wrong - this means that as soon as they go live,
the current miners are going to see their returns drop by 2/3? And if many are
already at the edge of profitability in terms of electricity/BTC, they'll drop
off the network?

The BTC network may be utterly dominated by ASIC players within a few weeks.

Are they any more energy efficient than racks of GPUs?

~~~
mrb
A decent GPU would still be plenty profitable even after a 3x difficulty
increase. For example the HD 7970 (about $400) currently mines $130/month,
with electrical costs around $15/month assuming a worldwide average rate of
$0.10/kWh, making a $115/month profit. After a 3x diff increase, this would
turn to $45/mo revenues and $30/mo profits.

However this 140 Thash/s of Avalon chips is just a fraction of what is about
to hit the network. All ASIC vendors combined, plus future Avalon deliveries
will push the difficulty far more than 3x higher in the next 4-6 months.

Current ASICs do 150-200 Mhash/Joule (at 12V). Much better than GPUs topping
out at 3-4 Mhash/Joule (at 12V).

------
zwieback
This is really perverse. Some of the best talent got sucked into making people
click on ads and now this.

~~~
jacquesm
'this' is in many ways a harbinger of the future. Maybe (probably, though it
has lasted longer than many predictions, including mine) it will be bitcoin
probably it won't be but the future is definitely going to include something
like bitcoin.

Imagine the same about newspapers: This is really perverse, some of our best
writing talent got pulled into writing news articles in order to get people to
read the ads.

Advertising is a means, not an end and as such it is a pity that so much
talent gets devoted to getting people to click on it but that will burn itself
out somehow and then we're left with the byproducts.

~~~
fatjokes
> Imagine the same about newspapers: This is really perverse, some of our best
> writing talent got pulled into writing news articles in order to get people
> to read the ads.

This isn't an apt analogy. Ads may bring in the revenue but people are doing
something useful. Same could be said for Google---ads bring in the revenue but
the product (i.e., search) is still highly useful.

The computational power used to mine bitcoins are doing absolutely nothing of
useful value to society. I believe there was an HN discussion earlier about
tying this in with Folding@Home or SETI@Home and make the mining process a bit
more productive.

------
gesman
Yifu Guo also was the first supporter to donate toward development of Bitcoin
Payments plugin for wordpress: [http://wordpress.org/extend/plugins/bitcoin-
payments-for-woo...](http://wordpress.org/extend/plugins/bitcoin-payments-for-
woocommerce/)

------
rootedbox
Because they are literally selling you a machine that just sits around and
'makes' money.

If the amount of profit from using these machines was greater than the profit
from selling the machines.. then the company selling the machines wouldn't
sell them to you..

~~~
Anderkent
>If the amount of profit from using these machines was greater than the profit
from selling the machines.. then the company selling the machines wouldn't
sell them to you

Unless they couldn't make the machine without you paying for it first. Or they
don't want to break the system by reaching >51% of the network (after which
the value of btc plummets down immediately, thus making the machines
worthless).

~~~
gknoy
Why would the value of BTC plummet if you reach 51% of the network?

~~~
ufo
If a single group controls more than 51% of the mining power they can cheat
the system (double spending, things like that). If such a monopoly was created
people might lose their trust on Bitcoin and try to leave the system.

------
rrowland
Keep in mind that your return is based on the current net hash rate of all
mining computers, everywhere. Combined with the 6+ month wait time, you can
buy a $20,000 rig that would mine you $500/day today but by the time you get
it the hash rate will have risen so high that you'll be lucky to out-mine the
cost of your power consumption.

I wouldn't be surprised if these companies were using each rig for a couple
months in their prime before shipping them out.

~~~
wmf
_...using each rig for a couple months before shipping them out._

Looking at the global hash rate it's clear that this is not happening. (Before
anyone asks, you cannot hide mining.) <http://bitcoin.sipa.be/>

------
andrewcooke
are there checks based on electricity consumption to detect cannabis growers
in the usa (or elsewhere)? if so, how long before a miner is raided?

~~~
ChuckMcM
Except that miners aren't actually breaking any laws. But more importantly
will be to see what how quickly the market floods with new coins and the
impact that has on collectors.

~~~
maxerickson
I think the point was that they are (potentially) using lots of electricity.

~~~
rozap
I imagine they use a decent amount, but not nearly as much as would be
required to run a cluster of computers to mine a comparable quantity. I think
with an ASIC, electricity costs are negligible compared to the output.

------
snake_plissken
So how many did they setup for themselves in the 6 month delay period?

~~~
jacquesm
Either very little (easy enough to check for) or none at all if you believe
them.

~~~
maxerickson
How would you rule it out?

I would think they are sophisticated enough that they could have a parameter
for their client specifying a target hash rate and slowly ramp it up (over
weeks/months), looking more or less just like other sorts of hardware coming
online. It would take some work to hide in a pool or whatever, but I don't
think it would be a big problem.

~~~
jacquesm
You can't hide it to the point where you'll be able to mine at a rate high
enough to make back the investment on the hardware development unless you do
it openly. It's an economic argument, not a technical one.

