[Chugalug] ButterFly ASIC Single arrived -- My review

Lynn Dixon boodaddy at gmail.com
Tue Sep 3 17:46:11 UTC 2013


Dan,
The supply of bitcoins is controlled by the network to maintain 6 blocks
per hour. This is why we have the diffiuclty changes.  After 2000 (I think,
could be 1500) blocks are produced, the network evaluates the time on
average to produce those blocks.  If its more than 6 per hour, the
difficulty is increased to account for this new hashing capacity. Ideally
it adjusts just enough to produce 6 blocks an hour for the next cycle.

So, there is no possible way production can increase to meet demand.
Productions is strictly controlled by all peers on the network to 6 blocks
per hour.    This is a reason why price is so sensitve to spikes.  Demand
highly drives price since there is no way to manipulate supply.

The "gamble" of mining comes in securing the hardware first.  If you wait
to long to secure the mining hardware, and end up waiting in a que, those
folks that procured first will take advantage of the lower difficulty while
the others are waiting on their hardware.  Currently, this generation of
ASICS running 60 GHash, has a payoff period of about 3 weeks, after that,
its nearly pure profit. They consume about 350 watts at .09 per KWH.  They
only generate a small amount of heat, so cooling is pretty neglible.

Most miners realized that the first generation of ASICs would soon be
replaced, as they were built on very ineffecient 110nm and 65nm chips.  We
all knew that these would soon be replaced with smaller dies, and BFL's
Monarch is a 25nm chip.  I seriously don't think ASIC's will be produced on
any more effecient media, but I do think there will be more entrants in the
manufcaturing sphere dropping the price of ASIC's considerably.   But, as a
miner, I am not going to wait.  I have pre-ordered my Monarchs as I plan on
mining them before difficulty gets to insane.  This will let me recover the
investment costs early, and the rig can mine super effeciently after that.

Its pretty simple, when it comes to mining, if you plan to be succesful you
have to be on the front of the technology curve to take full advantage of
it.  I'd imagine this same scenario plays out in any business.


On Tue, Sep 3, 2013 at 1:24 PM, Dan Lyke <danlyke at flutterby.com> wrote:

> 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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