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ASICMiner Blade Prices Reduced 65% After Shares Crash (thegenesisblock.com)
38 points by CrunchyJams 1370 days ago | hide | past | web | 47 comments | favorite



3.5 bitcoin is roughly $450. If you bought one now and started it running in September, you will likely never break-even or make a profit:

http://mining.thegenesisblock.com/a/a65c154190


Someone with a better understanding of Bitcoins please correct me here if I'm wrong. But if I understand things correctly, mining is one way (the only way?) to get untraceable Bitcoins because they're created out of thin air by the network. By paying your electricity bill to run a miner, you're effectively converting your local currency into Bitcoins.

As as long as you credit the mining reward to a wallet that has no connection to your real-world finances, and take other safety precautions, those coins would not be traceable to you. So this could be used to launder money through the Bitcoin network. The only evidence that you were doing something would be an abnormally large electricity bill.

Mind you, without this turning into Office Space, I'm sure there's more effective ways to launder money...

But if that's true, then I would expect the supply of mining capacity to settle above the point where it's profitable, because some fraction of miners don't really care about being profitable as long it's a reasonable loss.


It's my impression that obtaining BTC isn't the interesting problem for most would-be launderers. After all, you just have to sell some CC #s or provide custom DDOS services or do whatever nefarious shit you do that makes laundering a good idea, and presto you have BTC. The real problem is trading those fat stacks of BTC for fast cars, palatial mansions, the intimate attentions of beautiful people, etc. without the fuzz connecting those riches back to the nefarious shit that earned them. That is, as for regular money laundering, the trick is make dirty funds clean. It's actually straightforward to obtain dirty funds in the first place, for a criminal.

See here for more on this topic: https://news.ycombinator.com/item?id=6291546


That's one way of looking at it. Keep in mind that it's not uncommon for electric companies to report huge jumps in electricity usage to the police, as high bills are considered evidence of marijuana growth, and have led to serious busts.


I think that's the point though right? Its an arms race with a nearly perfectly efficient market that will (in the future) not be a get-rich-quick scheme for miners. If there's profit to be made easily, the some people will react by mining more and then it 'fixes' the market. Assume that some people will act irrationally and mine inefficiently, or with the hope that the market will skyrocket- these people will bring the profit yield down to unprofitable levels by at least a few %.

I liked mining with a GPU a while back, because I figured at least I could use the GPU for gaming as well and it just helped to keep me on the newer GPU cards with less guilt (since I want fancy GPUs, but almost never game so rarely use them).


Not really. If you're trying to sell a bitcoin miner, you want at least the chance for the operators to make money.

If you can take the specs of the box and calculate that you won't make a profit even if it was running right now, why would you buy it? The company selling them is going to do badly.

It's like trying to sell shovels to gold prospectors, but for more money than the price of the gold that they'll dig up.


"It's like trying to sell shovels to gold prospectors, but for more money than the price of the gold that they'll dig up."

I'm sure that has happened quite a bit in actual gold rushes.

People aren't always rational, and no one really knows exactly how fast the mining difficulty will increase.


I don't know anything about BitCoin mining, but is there a way to get lucky mining BitCoins where you stumble upon some BitCoins using less computing resources than you should have? In other words, is mining a process open to probabilities or is it a process where you churn through a finite and predictable number of calculations before you dig up a coin?

I'd have to think one of the things that would lead someone to buy a shovel is that they could get lucky and dig up some gold. If luck isn't a factor in BitCoin mining, then you're not even giving yourself a chance to overcome a negative expected value situation. It's like better a dollar on BlackJack and instead of dealing cards, they just give you back 99 cents. Nobody would play that game.


Yes, mining is probabilistic. The more hashing power you have the more quickly you're likely to mine a block, but it could take more or less time depending on luck.

Most miners now participate in pools, which smooths out your returns by working together to mine blocks more regularly, which are then distributed based on the amount of work each miner contributed.

If you "solo mine" it might take, say, 1000 days to mine a block, but if you pool mine with 1000 other miners it might only take 1 day, giving you 1/1000 of a block reward each day (minus pool fees), vs 1 whole block reward every 1000 days (on average).


There is luck involved, but it's pretty small. http://bitcoinchain.com/pools


> It's like trying to sell shovels to gold prospectors, but for more money than the price of the gold that they'll dig up.

So, IOW, exactly like selling shovels to gold prospectors during a gold rush. Which is why the people selling shovels, or assaying services, or everything else that supports prospectors always, on average, do far better than prospectors during a gold rush.

That changes when the rush starts to end and become more of a rational market.


...you want at least the chance for the operators to make money.

If one is familiar with the apparatus of neoclassical economic theory, one might expect producers to want to maximize producer surplus at the expense of consumer surplus. That's possible to the extent that demand is fairly inelastic, and there are barriers (could be short-term!) to other producers entering the market.


It's actually selling the shovel and the mining grounds, you just have to invest the time to use the shovel. A good question is: if the miner is so good, why don't they just use it and profit? This actually happens, as many bitcoin miner sellers only deliver them after a waiting time.


ASICMiner actually started as a company that would make their own ASIC to mine on their own.

What they are doing, is profiting for a market that pay crazy rates on mining machines, by having profits on short term, but I think as soon selling them become less profitable than mining, they will switch back to purely mining.


Yeah, no kidding.

I got an opportunity to buy (10) USB BE's at 0.11BTC per and even had enough coin purchased at well under $100, and I'm still worried about break-even. Even if I make my money back, I know in the back of my mind the opportunity cost of selling the miners now makes mining with them a theoretical loss. They'll make great mementos of the early ASIC's anyway.

People are getting rich quick (not a good thing) off of selling hardware to quick-to-decide geeks that like the idea of btc, and making money from a terminal line. I'll be the first to admit that I'm one of those geeks.


That assumes a certain growth in mining rate. This is predictable, but wrong. ASIC is the last wave of advancements. After this it will probably grow linearly until network becomes the bottleneck.


> After reaching an all-time high of 5.15 BTC per share on July 3rd they have dropped 48% to 2.71 BTC per share as of today.

Pardon? Is there a stock market that trades in BTC?


Yes of course:

https://btct.co/

https://bitfunder.com/

http://mpex.co/

https://www.havelockinvestments.com/

It's all risky and low volume, as you might expect. Then there's also OTC with people doing auctions on forums, etc.


> * This is a virtual stock exchange using virtual currency. Virtual goods utilized on this site are for entertainment and educational purposes only.

So the favorable interpretation would be that this is a toy exchange... The other possibility being a conveyor of unregistered securities.


> The other possibility being a conveyor of unregistered securities.

ding ding ding

BTCTC also announced they were considering blocking all U.S. users to avoid confronting the SEC, even though I believe they run in another country.


A few days after they posted they were considering it, they said they decided not to and will be continuing operations to US citizens with an added disclaimer.



It looks like Bitcoin has risen in value about 30% during that time period compared to stable currencies, so the share drop is not really that dramatic.


Who buys this crap?

If I a company builds hardware that can profitably mine bitcoins, it will keep the hardware and do the mining itself rather than selling it into the market.


ASICMiner does run its own mine: http://asicminercharts.com/


I don't know that this automatically follows: lots of companies produce equipment for other companies to use on making profit in markets they themselves don't work in.

It's entirely possible for a company to want to manufacture ASICs/boards and not want to run a server farm and deal with that level of IT for bitcoin mining.


I think the intersection between such hardware companies and companies with enough domain knowledge of Bitcoin to make a bitcoin ASIC, is zero.

The most plausible explanation I've heard is that these hardware companies need deposits to pay the development costs, then plan to run the chips themselves. Anyone who doesn't use such a strategy, is not expecting their customers to break even on their investment.


Generally they are selling pre-orders in order to fund the development and production costs. In theory, they could use investors instead, but maybe they couldn't find one.


For example, Butterfly Labs built their first big batch of miners using money from pre-orders. By the time the devices existed, they already owed them to customers.


Kinda like how nobody sells mining drills because "if using that drill were profitable, they would use it themselves"?


> Kinda like how nobody sells mining drills because "if using that drill were profitable, they would use it themselves"?

Which is a really awful comparison as real world mining requires things like:

- mining rights

- land title

- skilled workers

- processing plants that will take your ore

- government connections

Mining bitcoin requires only a computer or specialized gear.

Or in other terms, its an awful comparison as anyone can mine bitcoin, while only a very few select folks can mine in the real world.


There's a different degree of specialization, but it's still there. And just because you can do something doesn't mean it's in your comparative advantage to do so.

In his case, someone who mines the bitcoins is implicitly making a bet on the future return, whose desired risk profile may be different from the hardware maker.


Funny how even bitcoin hardware producers can get caught out by the volatility of everything associated with bitcoin. Tip: Don't price your stock and inventory in btc.


It's not the bitcoin volatility that has triggered this price drop (BC has been relatively stable recently), it's the fact that they were overpriced.


Oh, I'd call them correctly priced.

During the gold rush, eggs were selling for the modern equivalent of $83 each. Cheese was $700 per pound. And this was paid by miners who were making the equivalent of a few hundred bucks per day.

When crazy people want to give you a lot of money, you raise your prices. When they get over their madness, you can always lower them again.


But the price is still too much. High prices, great. Higher prices than the potential reward, not great. It is like trying to sell those same eggs for more than the miners' daily wage. You need extra-crazy customers, not just plain crazy :)


That's what happens in bubbles. Prices get higher than the rationally expected reward. Now that the bubble is popping a little, they are correctly dropping their prices. But I think it's fair to say that bubbles make crazy people extra-crazy, so maybe that's exactly what's going on.


Exactly, except that overnight the population of miners doubles so everyone is getting half the gold that they were just yesterday and they can no longer afford the $83 eggs, and the prices drop.

The same thing is happening with mining hardware. Over the last two months, the difficulty has from 21m to 65m. My ASICs are generating 0.6 BTC per day versus 2 BTC / day in early July.


Look at this sad, sad graph. It will get better when I rewrite my business plan to have something other than "Mine bitcoins" in it.

https://www.beeminder.com/yebyenw/goals/christmas-bitcoins

I cashed in 22BTC in January to buy two BFL Jalapenos. I paid an extra $100 each just last week to get the 2GH/s bonuses added, because I knew they'd be shipping soon. They just arrived with one bad power cord, I'm starting to recoup my losses now.

It's going to take some mental anguish to get myself over the idea that "I'll never have that much disposable money again, at least not in five more years of saving."

The calculator says I can still mine $512 in 43 days, but I'm skeptical it will be more like 75 or 120 days, given the pace of the various difficulty graphs that I've seen.


That is why you put a hard percentage cap of assets on any speculative ventures.


You don't understand at all. I've never invested more than $50USD in any bitcoin schemes, and I've cashed out of them all without loss. That 22BTC was what I generated and earned myself mining. At the time it was worth no more than $12/BTC. I spent it on more mining equipment.

It's really true what they say, sell shovels.


You said "I'll never have that much disposable money again, at least not in five more years of saving." I thought you poured a lot of your money into buying miners, and the return you though you would get was different the return you'll be actually getting.


Yep. I'll lay down the timeline for you since it's hard to imagine how badly I've played these hands of poker. The mining calculators all (most) account for a future decline in the profitability of mining, but "0.61 per year" apparently can't accurately characterize how quickly the difficulty has ballooned and how much you need to upgrade your hardware to keep up the pace.

I started with nothing but the computer on my back. I learned about bitcoin, started CPU mining when they were worth pennies. Accumulated 220 bitcoins through solo mining when blocks were worth 50 coins and learned to trade them at exchanges.

I bought and sold enough times that I was willing to add $50 to the mix. I made some bad trades and cashed out my $50 anyway in spite of the bad trades as $300, then bought in for $50 again.

Eventually I had 22BTC and the price was about $12.50. BFL was making their announcements about "shipping soon" again and I decided to take a risk and lay out $300 worth of bitcoins in mining equipment. I never paid $312. In fact I had already walked away with $300 separately.

Time passes. The price of a bitcoin approaches $300. I kick myself; I could have paid off all my student loans.

Time passes. The price of bitcoin is back around $115. It's getting harder to mine. I can't get back my 22BTC (or even close) with the GPU miner I'm using now. The community started to express doubt that BFL customers will get what they bargained for, as shipping deadlines continue to slip.

I keep my eye on the build queue and realize I'm next. I pay $200 (USD) to get 30% faster miners. At this point my GPU output is next to nothing. I'm making $6 twice a month... once a month.

Jalapenos arrive a few days ago. I plug them in (eventually) and I'm now mining 0.12 per day. I should have my $512 in about 43 days at the current difficulty. Next difficulty is estimated to be x1.32 on September 4, much sooner than that. I may never make back my $512 if this pace keeps up. Hopefully the exchange rates can keep pace with the difficulty.

At a minimum I should have made back my BTC investment in USD if the whole market does not go bust before then. Maybe it's 80 days. I still started with nothing and never risked more than $50, except for "play money."

It's all shoulda coulda "would have been" but you can see that 220 or even 22BTC is again well out of my reach.


Ah I see, it's missed possible returns, like RIAA 'losses' because of piracy ;). In investing you learn not to kick yourself about that kind of stuff. A guy a met at a conference told a story how he could of been a millionaire with GPU BTC mining if he kept the BTC vs selling. Instead he just got about the equivalent of $30k because he was justifiably paranoid. He is definitely kicking himself there. Told him he should of done the %25 speculation / %75 cash out ratio to ease his fears but still get a potential upside.


Yeah, I'm not one of those wankers who blames BFL because they said "two months or more" and then "or more" turned out to be quite a bit more. I'm really quite impressed with the pace of ASIC development, even if my own product shipped so late I may never make a return, there were people who ordered their items 7 months ahead of me who spent more and aren't getting it yet.

I'll be happy for BFL when they release the Monarch line. It's still pretty easy for me to be not bitter when I'm at least breaking even.


Or maybe you understand in spite of the fact that there aren't any USD involved.

Buying a new miner is a risky venture. Even in the face of the coming obsolescence of my existing (working) mining rig. Whether you use bitcoins or USD to do it.


Bitcoin is definitely still too volatile to be a reliable store of wealth, but this is related to the exponential growth of the bitcoin network, not the volatility of the currency itself.




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