[Chugalug] ButterFly ASIC Single arrived -- My review

Dan Lyke danlyke at flutterby.com
Tue Sep 3 17:24:01 UTC 2013


On Tue, Sep 3, 2013 at 10:09 AM, Eric Wolf <ebwolf at gmail.com> wrote:
> To the point, the USB miners do a pretty good job churning out BTC. They
> aren't fast enough to actually make money at going rates and difficulty
> increases. But nothing you can buy today will do that.

Help me out on my economics here, but, barring short-term bubble
effects, bitcoins are the very definition of a commodity. They're very
easily transferred, tremendously fungible, and any bubble effects are
quickly ironed out by increased production to meet the additional
demand.

The only economic friction here from which one could make money is the
delay in building faster mining hardware or other people otherwise
optimizing the coin discovery process. If you can buy the hardware
off-the-shelf to do this, then you're betting that... well... other
people aren't going to buy the hardware off the shelf to compete with
you?

Since there's a waiting list for hardware, amortize it with what
you've got, because as soon as that next batch of ASICs drops you're
going to be out-competed. At least until the space is mined out and
you have scarcity of some sort.

In other words, if you're in the production business, you get the lead
time for new hardware as your opportunity to amortize your existing
hardware. 3 months or so.

And since people aren't generally thinking rationally about bitcoin
mining, you likely don't even have that time.

Good luck, and all, and I haven't wanted to get involved in the
bitcoin debates here as they go on way too long, but basic economics
says that unless you can participate in some bubble timing, your
returns are gonna be negative.

Dan


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