Comment by SlipperySlope | Hacker News Reader

Comment by SlipperySlope | Hacker News Reader

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Bottom line ...

"By the way, whoever user 67117 is they will be generating about 122.83 bitcoins a day at the rate of 800 GH/s, or $3,000 US Dollars at today’s rates."

Using the bitcoin mining hardware info at: https://en.bitcoin.it/wiki/Mining_hardware_comparison ,

... assuming that the miner is using the Avalon ASIC batch #1 device, the reported hash rate per device is 68,000 mega hashes per second - which is 500 times faster than an example AMD 5770 graphics card. The Avalon box uses 400 watts. 800 giga hash per second could be supplied by 11 Avalon ASIC devices. Total they would cost $14000 plus shipping from China.

Plugging this data into the bitcoin mining profitability calculator at: http://www.bitcoinx.com/profit/ , we get 122 bitcoins mined from the pool each day, at this moment valued at $26, for a total daily revenue of $3193. Only $15 worth of electricity is consumed at $0.15 kWh.

The mining hardware for this lucky miner pays for itself within a week.

More info about Avalon at: http://launch.avalon-asics.com/

As the owner of the BTCGuild mining pool said on his IRC channel, "welcome to the future"! Its obvious that graphic card based mining will not be profitable when ASIC mining rigs become common.

Lucky miners are those who invest first in disruptive technology rigs. Most miners are gambling that they can pay off their rigs before the technology changes.

Serious question: why would Avalon sell these things, rather than just mine Bitcoins themselves? at the very least, the cost of the device seems far too low at current Bitcoin conversation rates.

The opportunity to make huge profits is closing (very fast). In fact, if you were to buy an ASIC miner now it wouldn't arrive until May and by then the bubble will have (mostly) popped.

The Avalon ASIC miners were pre-ordered which gave them enough cash to R&D and then produce them - but even if they had found cash somewhere else and made lots of miners for themselves it wouldn't be long until other people were selling ASIC miners and they were not so profitable. It's better for Avalon to make a name for themselves as a good place to get ASIC miners so they get all the business in the future.

I wouldn't be surprised if this user mining at 1.2 Thash/s is Avalon or one of the other ASIC manufacturers.

Ha! I can see Avalon or Butterfly testing their boxes for a week or so before shipping each one.

Besides the reasons discussed elsewhere, I see many reasons:

- The device in itself disrupts the mining hardware market. Should they mine by themselves, others would take notice and make their own ASIC hardware. They're in a much better place if they position themselves as the standard supplier for mining hardware, at least in the long run.

- I would see this ROI collapse as soon as this catches on. The market will be flooded with bitcoins, their individual value will diminish, and the bounty will likely decrease compounding the decrease. History says that the return will eventually (and soon) decrease to match the cost. Assuming the hardware is fairly priced (which it seems, given the current low volume), I would say the money value of those 122.83 bitcoins will come down to the same money value you would get out of $14k invested elsewhere.

- Whoever is operating the rig for user 67117, he's doing a hell of a marketing job for Avalon, just by being there. Is there any other offer in the world that can deliver on the promise "Give me $14k and you get $3k a day"? Sounds like a short-term proposition, but there's surely a good amount of money to make while it lasts.

Note, it's not 14k but 'only' 1.4k

It's actually closer to $15k, assuming he needed 11 ASICs to reach 800GH/s.

They are about $1.4k/unit.

Discussed extensively two weeks ago: http://news.ycombinator.com/item?id=5142021

Summary: They probably didn't have the money to build anything, so they funded it using Kickstarter-like preorders.

Asic economics dictate that the cost of making the masks needed for prodution is hundreds of thousands. Once you have the masks, the cost of making chips is ~$10k per wafer. Depending on the size of their chips (I don't know), you can build high tens to hundreds of chips per wafer.

They gathered the money for masks by selling the first batch. Now they own the masks, and they can make more of them relatively cheaply. I suspect that they are building their very own mining pool as we speak.

http://news.ycombinator.com/item?id=5142274

Looks like the "shovel & pickaxe trade" during any gold rush. There is some money to be made by the early adopters, little or no by the late comers and then a steady and good source for those offering services to the miners.

P.S. One problem these ASIC manufacturers have is not being able to shift a lot of BTC, the kind of which they would be hypothetically making by just mining themselves. Leave that matter to the miners to work out.

In practice Avalon draws 620 Watts and runs at 66 GH/s [1].

And let me introduce a few points to consider for an inspired by your calculation soon-to-be miner :)

1. BFL [2] and whoever else is able to produce an ASIC system start shipping very soon. All this hash power will skyrocket the difficulty, eventually decreasing the profits to today's GPU levels.

2. Volatility of BTC varies greatly and can be anything in a few months term. As I recall, the first gold rush happened in 2011, when GPU miners appeared. BTC peaked at over $30 in June and was less than $5 by November.

3. If you order your system now, you will likely get it in May if not later. Pre-orders started last summer and they're still waiting.

Happy mining :)

[1] http://garzikrants.blogspot.com.es/2013/02/avalon-miner-powe... [2] http://www.butterflylabs.com/

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