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Comment by mrb | Hacker News Reader

Very simple: they did NOT have the funds to develop these ASICs by themselves. They HAD to pre-sell them via pre-orders to bootstrap their business.

Avalon is literally the work of 2 chinese guys (ngzhang and yifu). They are not a big company with lots of money.

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If they had enough to build one, they could bootstrap themselves up from that. (It takes about 6 days for an ASIC to generate enough money to make a new one.)

You can't build one ASIC; you have to order a batch of thousands and you have to pay over $100K for the masks weeks before you receive the chips.

$100K is nothing for the kinds of profit numbers I'm seeing here.

Firstly, their true NRE costs are closer to $200-300k IMHO.

Secondly, $200-300k is not "nothing". I bet they tried to raise investor money, but didn't find any. $210/day/unit is a lot, but Bitcoin still remains relatively a risky investment.

If these things can print money, then they're worth $200-300k.

If they can't, then they're not worth $1.k/ea.

The problem is that they can print money if they are released before their competition, but we don't know when the competition will ship. (In retrospect we can see that Avalon batch 1 shipped before BFL, but there was no way to know that ahead of time and batch 2 is still unknown.) So I can understand why outside investors would refuse to touch it and why the Avalon developers might have decided to reduce their risk.

Still, I don't understand why they don't delay/cancel the shipments? eEven if it's unethical.

No need to sell any of these machines before somebody else hits the market.

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