Why there are companies selling mining hardware?

Question

i'm not (yet) using bitcoins, and I'm approaching this world as of now..

I stumbled upon some merchants that sell mining hardware (with some GH/s).. but I've yet to understand what is they gain, apart from the upfront cash.

The reason one should buy mining hardware is, if i'm not mistake, to "generate bitcoins", i.e. "generate money"; so, one expects to be able to have a return of the investment sometime in the future (i was wondering, with a 4.5 GH/s at 180$, how much time is needed?), so I guess that in some way my claim is correct (about "generating money").

But then, why the companies don't simply.. use their own hardware?

Answer 1

It is not guaranteed that purchasing mining equipment will generate in its lifetime more than it cost to purchase. That depends on the future of BTC price and the difficulty, both of which are hard to predict.

Those who believe, for whatever reason, that it will indeed be profitable, will purchase devices. But most companies selling mining hardware are in the business of designing hardware, not of speculation and running datacenters - in terms of both risk profile and expertise. So long-term they should just sell the hardware.

It's worth noting that some companies do develop ASIC devices with the intention to use them themselves rather than sell them.

Answer 2

Companies that manufacture mining equipment don't just mine with their own hardware for a variety of reasons:

1. They may not be able to obtain low prices on electricity, making it more profitable for others to mine than for them to mine.

2. They may not be able to make use of the heat generated, making it more profitable for others to mine than for them to mine.

3. It's easier to get financing if you're going to make something you can sell.

4. They may prefer not to take the risk that mining will remain profitable.

5. The value of mining equipment depends on the value of bitcoins, which would be negatively affected by mining becoming too consolidated. So mining is more profitable if it's distributed.

6. It may be virtually impossible to mine profitably and they may be too smart to think otherwise.

Answer 3

In the gold rush the people who made the most safe/constant returns where not the miners but the people who sold them the shovels

i.e BFL AVALON bASIC

The mining process for Bitcoin is going through a large upheavl/transition to a new tech platform due to the ASIC mining equipment

Everybody has been promised a lot of things with large sums of $$ paid up front with many a missed delivery time ranging in 3-6+ months late on what was promised

ASIC chips are refered to as unicorn blood..having said that the next 4-6 weeks will reveal a lot.

You must understand that BTC mining calculators

http://www.alloscomp.com/bitcoin/calculator

are based on GPU (or current tech platform) difficulty factors. If you put ASIC chips specs into these calculators expect to divide that figure by a factor of 20-40 due to what i believe an over capitalization of the mining process (IMHO)

I would wait at least 3 months until the market settles and the big questions regarding these products have been at least partly answered (It would take at least this long until we see 2nd batch's coming through of these units :D )