12

If ASICs are able to mine BC so fast, why are the creators of these machines even selling them? If they just created them to mine with them themselves, they could get so many BC and in turn make BC worth so much (as BC for the rest of us would be so few in comparison) that they'd theoretically make a hell of a lot more money that way than by actually selling these machines.

What's the hidden agenda with sharing these machines? Do the creators of ASICs think/know that BC is a bubble/fraud and just want to make as much money as possible before people realize that their machines were BS?

9

I can't really answer this without speculation, since I'm not an ASIC developer myself. Please keep that in mind when you're reading this!

There are a two paths that ASIC miner manufacturers have to make a profit.

  • Expend fiat to produce mining equipment
    • Use mining equipment to mine bitcoin
      • Sell bitcoin for profit
        • Profit
    • Accept fiat or bitcoin in exchange for ASIC mining equipment
      • Profit

The shortest path to profit is to sell the device. Existing bitcoin is worth more than non-existing bitcoin right now, especially when that existing bitcoin can be turned into more mining equipment.

Keep in mind that they can also do some of both. While it may not actually be so, it's fair to believe that employees of an ASIC manufacturer are likely to invest in their own product by purchasing one.

9

Similarly, what's the incentive for millers to sell flour? They could just keep the flour, bake bread, and sell the bread themselves. Or why does the farmer sell wheat to the mill? He could just mill it himself, bake bread, and sell that!

The answer is that different people have different abilities and specialities.

The ASIC manufacturers are good at making ASICs. Also, they might be averse to the risk in waiting for the generated bitcoins to be worth as much as the revenue on the devices.

4

When an entity owns 51% of mining power, it is possible to control the network. This is bad for two reasons:

  • People who own bitcoin say, "Those guys might control the network! We should sell our bitcoins!"
  • The government of wherever you do business says, "Finally, a way to control that Bitcoin network! Issue them a court order to keep all transactions from confirming until we draft legislation to prevent Bitcoin payments to terrorist groups."

Obviously, you don't want either of those.

  • How can that be possible (to control the network) if mining tend asintotticaly to 21M ( alias the end of mining ) ? The only control is on early production of coins, not on the allover crypto-economy IMO. – BBJ3 Apr 6 '13 at 19:47
  • Blocks do give miners coins, but that's not their purpose. Their purpose is to keep an ordered list of transactions. By using 51% of the mining power, they can prevent transactions from getting on that list indefinitely. – Nick ODell Apr 6 '13 at 19:54
  • possible but not probable ..., let me ask extensively. See my new Q bit.ly/ZGdfSF – BBJ3 Apr 6 '13 at 20:28
2

every business is composition of CAPEXes and OPEXes vs profit. There are certain places in the world, where electricity and cooling and network access and basic security (main opexes) will be more expensive than profit. The topic of electricity price had been discussed already on BitcoinTalk, since than bitcoin price vs utility price ratio could change. In other words, if it is profitable in your place, it might be complete money loss in another place.

1

Producing an ASIC isn't exactly free. If you think investing $1000 in one of their designs is a risky proposition. Imagine doing the same risk assessment with a few more zeros on that figure.

0

Governments aren't much fond of bitcoins. Taking all of these machines and turning the output into bitcoins, and then turning all those bitcoins into cash, will almost certainly draw looks in your direction.

That, and the boxes probably have non-bitcoin applications.

  • 3
    I'm pretty sure that the ASIC hardware designed for bitcoin does not have any other use (yet). – Highly Irregular Apr 6 '13 at 11:29
  • It's pretty good in converting electricity into heat – Mchl May 19 '13 at 11:57

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