Hacker News Reader

Comment by icelancer | Hacker News Reader

>> If there’s profit to be made, more miners would open up shop to capture the marginal benefit.

>> So I guess China thinks that bitcoin will ultimately be worth half what it is now.

The best BTC ASIC miners on the open market are all sold out and backordered for months, and better ones keep being developed every six months. This means that, no, literally it's not possible to bring more miners online at a faster rate since they aren't openly available for purchase, and miners are still running older hardware since those miners are not yet -$EV(power) but they don't yet have enough money to purchase the new miners (which aren't readily available anyway).

It's not a perfectly competitive market. It's supply constrained.

View on HN

> The best BTC ASIC miners on the open market are all sold out and backordered for months [...]

But in that case, why don't ASIC manufacturers sell to the highest bidder and let mining companies bid up prices?

If the barrier to entry is in ASIC manufacturing, why don't the manufacturers capture the excess profit, instead of the miners?

In the previous bubble, there was a manufacturer that would 'test' or 'burn in' the miner until it became unprofitable to run and then they'd ship it to you. They'd get paid twice.

https://bitcoinmagazine.com/articles/bitcoin-mining-company-...

They do. The ASIC miners are placed on pre-order about two months in advance at a price reflective of the current expected mining output. With a healthy secondary market.

Selling pickaxes vs gold mining. One is quite a bit less risky than the other.

Right, but there was never a time during the Gold Rush where there was a shortage of pickaxes.

A modern goldmine needs more sophisticated equipment to extract what gold is there. It’s not a perfect analogy but I think it is very close

The question was, why don't the pickaxe manufacturers charge more, since there's an axe shortage. Maybe they will, when they finally get around to filling all those orders. Or maybe they're just trying not to alienate their core market?

They would not have to set extortionate prices. They simply could auction off whatever supply they produce to the highest bidder. With a market as rife with… optimists as cryptocurrencies are, there's a good chance they could capture more than 100% of the profits.

It seems to me that bitcoin mining should be about as purely economic a business as there is. It's not like their clients would not abolish the ASIC manufacturers as soon as their hardware is no longer cost effective.

Yeah, it does look bad if the price is so high that it's literally impossible for miners to profit.

Imagine that bitcoin is a bubble, and then I don’t think humanity would have had ever spent such a huge amount of energy and resources for such a « useless » purpose.

Nuclear weapons? Their existence is a blight on humanity. MAD hasn’t prevented wars, only caused them to be outsourced to countries no one cared about like Vietnam and Afghanistan. It is only through dumb luck that a superpower has not destroyed the world by accident

The military-industrial complex:

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.

>MAD hasn’t prevented wars

I disagree. While yes there were still proxy wars for the last 50 years, there has been no all out world war. Considering that for the 500 years before WW2 there was wars nearly every 20 years between major powers, this is an improvement.

That’s because Europe realized it could not sustain another war of that destructiveness. So there have been no wars in Europe, but I don’t think it’s impossible that another WW1 like crisis could occur again, especially with tensions high between China, The US and Russia.

> That’s because Europe realized it could not sustain another war of that destructiveness.

That's what people in Europe thought after WW1, yet WW2 happened. I hope this time you're right.

Tensions aren't really high between China, US, and Russia. We are all huge trading partners, and no one wants to see the money stop flowing. In any time besides modern history they would be considered friendly.

>> MAD hasn’t prevented wars,

If North Korea didn't have nukes, you bet we would have invaded them by now.

Between the close of the Korean war in 1953 (though no peace treaty was ever signed) and 2006, when North Korea's first tested an atomic bomb, the US did not invade North Korea for the same reason it has not invaded today, which is not due to DPRK's nuclear capability.

Seoul, the capital of South Korea, is a scant 35 miles from the North Korean border, and North Korea has an unknown amount of conventional artillery pointed at South Korea, enough to kill millions of South Koreans.

If the US were to invade North Korea, Seoul, and the surrounding areas would be obliterated.

That North Korea now has nuclear weapons changes things a bit, but the nukes weren't previously the thing holding the US back from invading North Korea.

I'm not so sure.

The Korean war was an absolute disaster for all involved. Three years and a million dead people for nothing (or less than nothing if you consider the amount of sheer destruction). I think that has been the main rationale for avoiding another war in Korea since then.

The "perfect" time to do it would have been in the 90s when China was still poor enough to ignore and Russia was still self-combusting. Things are different now. Compare Russia's non-response to the destruction of Yugoslavia to their direct role in Syria, both diplomatically (red line etc) and militarily.

I think killing Gaddafi was NATO's biggest disaster in a long time (if not the worst so far). It was a clear example to DPRK that they must have a capable ICBM. It was also the last straw for Putin which spurred him onto more aggressive actions like taking Crimea and using "fake news" farms.

Without question, atomic weapons summarily ended the bloodiest war in all of human history.

Since then, they have limited war to insurgencies, rebel groups, and other mostly internal conflicts.

You think North Korea (or China for that matter) would've stayed within their borders without nuclear powers following their every move?

>Without question, atomic weapons summarily ended the bloodiest war in all of human history.

There are many questions about that, many people hold the opinion that the nuclear weapons did not in fact end the war.

Whether or not that is true, I do not pretend to have the expertise to say, however saying there is no question is flat out wrong and ignoring the debate.

http://foreignpolicy.com/2013/05/30/the-bomb-didnt-beat-japa...

This stretches the imagination. Surrender came mere days after the A-bomb was used, but this timing was purely coincidental?

The Empire of Japan was willing to die fighting a dominant superpower for every blade of grass, but a second superpower (one hurt far worse in the European theatre) suddenly tipped the imaginary balance?

There's an argument for the A-bomb being effective but unnecessary to the end the war; but this article's view that it had nothing to do with it is seriously by no honest historian.

What's also pretty clear is that nuclear weapons had nothing to do with ending WW2 in Europe.

Nor WWI, the Hundreds Days War, etc.

Because the atomic bomb had not yet been invented.

"We buy things we don’t need, with money we don’t have, to impress people we don’t like." - Fight Club

I'd venture to say that the majority of human effort today is spent on useless things. Consumerism is the base of our entire economic system, Bitcoin mining doesn't seem all that different to me.

Except people don’t buy anything with bitcoin ( and i’ve read about potential millionaires, but never about people having actually made millions of usd, since nobody sells).

For the moment it’s only the most gigantic and cpu intensive distributed number increment algorithm.

There are absolutely people who have cashed out significant non-crypto money from BTC. In fact crypto has allowed multiple people I know to retire.

Bitcoin also offers the very real value of enabling monetary transactions without government involvement. That’s a huge deal to some of us who value individual liberty and/or live under corrupt regimes.

I transact in BTC all the time. And while I haven't made millions of USD, it's a considerable sum. My friends have cashed out plenty of BTC into USD/EUR; well into the millions.

You haven't read enough then. There is, quite literally, an app for that. People are getting real bank transfers of "real" money all the time out of bitcoin & co.

We are talking about and learning a lot from Bitcoin. A lot. this is a valuable experiment. Especially if you consider what could have been, but isn’t, which we couldn’t know in advance. [edit: and still could be—who knows? Only one way to find out :)]

We could do worse than Bitcoin. Diamonds, for example…

[edit 2: disclosure: I have no stake in either :p ]

It seems well past the experiment stage. The question I have is if the ideas presented in Hashgraph have already rendered the whole Blockchain approach obsolete. I think Bitcoin may be dead already and not know it yet.

We have spent a lot of money, energy, and lives in order to give glory to and protect the importance of an imaginary being in the sky....

Plenty of wars fit that description far better than mining cryptocurrency.

I still don't see why we aren't seeing new ASIC suppliers set up shop. Is there a significant amount of R&D that goes into creating these chips?

They're application-specific integrated circuits (ASIC) made specifically for generating money out of thin air (well, electricity).

So yeah, there's a huge amount of R&D and competition to get the best stuff out there. And Bitmain dominates.

>So yeah, there's a huge amount of R&D and competition to get the best stuff out there. And Bitmain dominates.

You're right that Bitmain dominates ASIC Bitcoin miners, but why? Surely there are more than enough capable engineers to design ASIC miners in the US and some VC's willing to fund them, or is there something I'm missing? Manufacturing costs would be high in the US, but it's not like foreign manufacturing is an unknown concept to US based companies.

Just a hunch: No-one in the industry with the means to do anything about it thinks the trend is sustainable enough to invest in a 6mo-1yr setup followed by another year before profit?

Peter Thiel is throwing his weight into Bitcoin. Surely there are more people out there like him, albeit less vocal about BTC/cryptocurrency.

Aren't ASICs extremely expensive to develp? The one StackExchange article I found on ASIC pricing (https://electronics.stackexchange.com/questions/7042/how-muc...) seems to confirm that.

My impression is there's a significant amount in the investing class who see Bitcoin as a hyped bubble. Sure, there's Peter Thiels, but there's also people like Warren Buffett who won't touch it with a ten foot pole at the moment. (https://www.theguardian.com/technology/2018/jan/10/bitcoin-a...).

You don't need ASICs per se for general blockchain technology... the main advantage of ASICs are speed of mining, something that probably won't be needed as much once the general mania pops one way or another. So an ASIC mining chip seems to me fairly vulnerable. For instance, if you just spent a million making a lot of ASIC mining chips, news like China possibly starting to crack down on mining (https://www.ft.com/content/adfe7858-f4f9-11e7-88f7-5465a6ce1...) would probably not make you happy.

It sounds like he and many others are investing in BTC itself, not the Bitcoin ecosystem. If you can get a 10x return per year just by hodling, why bother to develop anything? Even selling shovels isn't that profitable. When people say a (hyper)deflationary currency discourages investment, this is what it looks like.

>It sounds like he and many others are investing in BTC itself, not the Bitcoin ecosystem. If you can get a 10x return per year just by hodling, why bother to develop anything?

I completely agree as of 2018, but Bitcoin has been around for almost 10 years now and has seen "real" returns for the past 4 or 5 years. I suppose my question should be restated as "Did Bitmain take a gamble and it paid off?" I still find it strange that not a single prominent US based BTC miner manufacturer has hit the scene.

Butterfly Labs, HashFast, and CoinTerra were all US-based. Then you had KnCMiner in Sweden, Spondoolies in Israel, etc.

I would say that Bitmain was a huge gamble in the early days since the ASICs depreciate very fast and thus any delay in developing them can be fatal. But after selling eight generations of hardware at very high margins they can probably coast now.

>Butterfly Labs, HashFast, and CoinTerra were all US-based. Then you had KnCMiner in Sweden, Spondoolies in Israel, etc.

None of them produced anything. CoinTerra was the only that didn't close as a result of charges related to fraudulent activity. Not to be a jerk, but that's not what I was asking. You provided supporting evidence to my claim.

>I would say that Bitmain was a huge gamble in the early days since the ASICs depreciate very fast and thus any delay in developing them can be fatal. But after selling eight generations of hardware at very high margins they can probably coast now.

That's more in line with what I asked. I'm not in disagreement, but rather looking for any research into why the mining market currently stands this way.

Risk tolerance.

With net worth of $2.6 billion Peter Thiel could lose $26 million and make it back with a 1% fluctuation of the market.

Other people less so.

I responded to the question what was asked.

>Just a hunch: No-one in the industry with the means to do anything about it thinks the trend is sustainable enough to invest in a 6mo-1yr setup followed by another year before profit?

The startup time is significant and VC money doesn't go into BTC mining. Furthermore, the engineers almost certainly have to live in China and have engineering / fabrication experience there. And you can virtually guarantee your first product will be terrible and obsoleted by Bitmain nearly immediately.

Manufacturing costs in the US wouldn't just be high, they would be impossible to actually get done. MOQ on something like this in American factories wouldn't be in the 100-500 range, probably not even 1,000. American factories are extremely non-agile, non-risk taking, and generally do not serve startups very well.

BTC being over $10k is a very new thing, too. The insane mining profits at a 1MB blocksize + $10k+ price may not last and is a new signal. It takes a lot of time, effort, luck, and perseverance - and Jihan is a formidable enemy. Sometimes it's best to just avoid a high-risk area where many, many others failed.

Volatility of returns and guaranteed increased complexity?

I think 21.co got AH financing on the idea of building a "miner for the masses" https://www.coindesk.com/21-intel-bitcoin-mining-strategy/ but they pivoted since then.

They could probably provide a more informed comment.

There have been a ton of mining ASIC companies but all but two of them went out of business. For some reason VCs have mostly refused to touch mining so the ASIC vendors had to use crowdfunding which went horribly wrong.

I think it has to do with what is essentially money laundering, they buy miners with their Chinese money to mine coins to move out of China or hide.

I'm surprised to hear there aren't more manufacturers in China that reverse engineer Bitmain's circuits, replicate, and sell them in the local market where US IP law doesn't apply.

Because:

-Chinese reverse engineering and lax IP laws aren't actually that lax; Westerners just pretend it is.

-Bitmain isn't a US corporation, it is Chinese.

-The owner of Bitmain is Jihan Wu.

Got it, makes sense.

Whoa, thanks for calling out my biases O_O

> lax IP laws aren't actually that lax

I thought one of the big initiatives for the TPP was to enforce US IP in Asia?

> enforce US IP

...

Even if it was, how is this relevant to Bitmain, run by Jihan Wu, who is not American?

Not relevant to Bitmain, but curious if Western perception is incorrect re: US IP law ignored in Asia

Huge amount of R&D, sure. But the mining ASIC market is largely dominated by Bitmain right now.

Reply on news.ycombinator.com