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ASICMiner Starts Hashing

Today, ASICMiner, one of the three major developers of ASIC (application-specific integrated circuit)-based Bitcoin mining hardware, has announced that they have turned on their chips, and are outputting 1.7 TH/s of hashing power in a testing run. The event makes them the second company after Avalon to have working ASIC hardware, leaving the last remaining competitor, Butterfly Labs, behind. The 1.7 TH/s testing run represents only a small portion of the company’s full hashing power; ASICMiner has reported that their full first batch will have over 12 TH/s of hashing power, or slightly over half that shipped by Avalon, and intends to start the remaining batch running very soon; “the real update will be given in a few hours,” ASICMiner reports.

ASICMiner differs from its two competitors in one key way: it is not actually selling any mining rigs to consumers. Rather, the company is keeping all of its hardware in house, and financed its development through 2012 by issuing company shares. The shares were originally released in August on the (now-defunct) Global Bitcoin Stock Exchange, opening up 7.5% of the company’s future profits to investors at a valuation of 40,000 BTC for the entire company. The offering was a success, selling out within days. The setup proved to be problematic when the GLBSE unexpectedly shut down, causing the company to lose contact with many of its investors, but the company finally received the shareholder database from the GLBSE in December, and shares will once again start trading and paying dividends on a yet-unspecified alternate platform soon.

Network hash power is currently at around 25 TH/s, suggesting that many Avalon customers still have not received their rigs. Once most of Avalon’s customers turn their hardware on and ASICMiner starts hashing, network hash power is expected to increase to about 40-50 TH/s – with some old GPU miners dropping out because of the increased difficulty. February is proving to be a great month for Bitcoin miners so far; the sudden rise in price has allowed Jeff Garzik’s Avalon machine to pay for itself in nine days, and ensured that miners’ operating margins are now higher than they were before the mining reward drop in December. Butterfly Labs reports that their chips have been delivered to the bumping facility, suggesting that while they are not shipping just yet production is finally nearing completion; unfortunately, in a market where timing is everything, their customers will not be able to benefit from the same window of opportunity that Avalon and ASICMiner have. However, some Butterfly Labs consumers will be able to enjoy a 10-25% discount from their next purchase if they ordered early. Meanwhile, Avalon and ASICMiner are already working on second batches, with ASICMiner reporting that their next batch, which is “ordered and being produced in the fab already,” [will be 50 TH/s](https://bitcointalk.org/index.php?topic=99497.msg1529563#msg1529563). Although the ASIC mining market is unfolding much more slowly than many of us had predicted, it looks like the next two months will be the time that the new machines finally start to come online en masse.

BTC: 1FxkfJQLJTXpW6QmxGT6oF43ZH959ns8Cq

LTC: LaBhvWiAP7msku6w8QSQ5G7omVWMF3uxJC

By

Vitalik Buterin is a co-founder of Bitcoin Magazine who has been involved in the Bitcoin community since 2011, and has contributed to Bitcoin both as a writer and the developer of a fork of bitcoinjs-lib, pybitcointools and multisig.info, as well as one of the developers behind Egora. Now, Vitalik's primary job is as the main developer of Ethereum, a project which intends to create a next-generation smart contract and decentralized application platform that allows people to create any kind of decentralized application on top of a blockchain that can be imagined.

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  • atwas911

    These are essentially money presses.. Why would a company sell a money press in exchange for money?

    Im beginnging to think that all this ASIC hardware is just a big scam to steal a bunch of money and run.

    • Brian

      to fund the development of the chips in the first place.

      • blackzonesl

        and once developed, then what? Hand over a money press instead of keeping the money AND the money press?

        • http://www.facebook.com/seth.t.wilson.5 Seth T Wilson

          Whatever do you mean? Would anyone really cheat customers and lie to them about BS delivery schedules, to gain prepaid orders? *cough* butterflylabs *cough* *cough*

        • ozlanthos

          That is the challenge that some of us wanting to make the jump face. If you get in even with an ASIC box a month or two after their release, you will have lost potentially MILLIONS worth of production time! However, it is exactly that kind of thinking that will cause some to get scammed by people who never had any intention of delivering….

          -Oz

    • ozlanthos

      Let me put it to you this way. If a gold rush started. Who would you rather be, the guy digging for gold, or the guy selling him a shovel? There is no guarantee that the guy digging the gold will even scratch up enough gold dust to recover the cost of the shovel, and if you are the salesman, there is no such risk. Also, if you want to piss off your potential customers, you start working the mine with your backhoes and conveyor belts while they bang on hard strata with hand tools! That is exactly what would happen if BFL or any of the other ASIC developers were to just fire up a few of their machines and call it a day! The differential between the workload of a GPU-based mining rig, and the cost equivalent in ASIC hardware is measured in orders of 1000′s! EVERYONE in the pool would notice a vast increase in difficulty, and even bigger loss on their daily yield if someone were to add a bunch of ASIC machines to it! So what is it? Do you just sell shovels, and let your customers take all the risk, or do you risk alienating them all before you’re even able to recover your tooling costs?

      -Oz

  • http://www.facebook.com/seth.t.wilson.5 Seth T Wilson

    Anyone feeling bad for the folks who ordered from a certain company (who has yet to delivera single unit), after it was suggested they should pre-pay to get their hardware in October, then November, then December, then January, then February, then the first half of March? Not to name names, but it obviously isn’t Avalon, since they have some out now, or ASICminer, who never tried to sell hardware. All hail the pre-order and ever-changing availability date! I love the model – take a zillion orders, never give a solid schedule, then just move your tentative schedule back, every month, while the would-be hardware becomes less and less valuable every day. What a well-run scam. Too bad it can’t work forever.

    • ozlanthos

      If you knew anything about working in a fab, you wouldn’t have to ask. You would know that for something like ASIC chipsets, you have massive lead times because you have to build enough orders to make the retooling necessary worth it. You have to make THOUSANDS of wafers, all containing HUNDREDS of die, to even bother with designing continuity testing parameters! Well there aren’t that many people out there capable AND willing to throwing down $150 to $30,000 for a bitcoin mining rig…especially considering that with limited exceptions, ASIC machines are relatively untested in the wild. At this point, there is no way to tell if the investment will be worth it.

      -Oz

  • ozlanthos

    Well there is the cost of the next run to consider. Right now silver miners are choking because the costs associated with mining it are rising faster than Silver. I imagine they are trying to get as far out in front of the costs for their next batch as possible as to cut down on the lead time before the next batch is made…

    -Oz