[nwh]

The BFL gear is cute and all, but there's a simple fact with selling Bitcoin mining hardware that is probably never going to be overcome. Why would you sell something you could make profit on if you kept it for yourself? This is pretty much the reason why we have ASICminer, KNCminer and Bitfury all either running or building mammoth sized facilities of their own.

I particularly liked this juxtaposition on their store — http://i.imgur.com/uZVKRBX.png

[Heliosmaster]

I asked the same thing on BTC StackExchange a year ago: http://bitcoin.stackexchange.com/questions/5975/why-there-ar...

The most popular reply was:

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."

and also

"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"

[fnordfnordfnord]

>Why would you sell something you could make profit on if you kept it for yourself?

This question has been answered an immeasurable amount of times.

Several groups organized ASIC production projects. Avalon, BFL, and a couple others I can't remember. None of these initial groups had the capital to finance the NRE (Non-Recurring Engineering) for the ASIC, nor were traditional venture capital sources willing to do so. The ASIC production process has a relatively a high NRE, but low incremental cost. So, Bitcoin folk organized and participated in pre-sales to finance the NRE for these ventures. They had to sell the things or they would never have been able to afford to produce the initial units.

Additionally, even if some group would've had the capital to spin their own ASIC, it would have been a bad bargain for them to monopolize ASIC mining when competing against FPGA miners. Their capacity would have been limited to some fraction of the much smaller total network capacity in the FPGA era. Also, a single party swamping the network would've earned enmity from all of the other miners and Bitcoin users who could possibly have forced them out of the network, rendering their investment useless.

[scott_s]

The same reason that people would package and sell mortgage-backed securities, but not keep them for themselves.

[deelowe]

I can think of one reason: long term risk. It's probably an easier ROI calculation to determine that selling a miner will be profitable vs deploying your own and hoping you'll get large enough returns over a much longer period of time. This is especially true if you take pre-orders.

[morsch]

Why? How about lack of faith in BTC long-term price stability but existence of faith in people buying mining hardware?

Depending on your evaluations on those things, it'd make sense to sell none of the miners you manufacture, or all of them, or some of them to hedge your bets.

Also, short-term liquidity. You need to pay for manufacturing in hard currency, and you may want to hold on to your own BTC or have other reasons for not wanting to pay for manufacturing with USD converted from BTC.

[icoder]

Well, just as with disk storage, scaling up doesn't mean things get cheaper per unit, because you'll have to pay for infrastructure that you take for granted at low scale (cooling, storage, security, power, network, etc). Many customers mining at different locations could therefore be more profitable as a whole than one company doing all the mining, especially since many hobbyists don't count their hours like a company has to.

Also, BFL will benefit from the share of users that will not use their equipment to the max for whatever reason and they may not have the equity required to do the upfront hardware investment.

[nwh]

Completely different situations. Actually building an ASIC design is expensive, has a lot of cost in research and development, and the batch sizes are in the millions of dollars. You do benefit from scale of supply in the chips themselves, and you don't need to worry about pretty consumer cases and electrical safety certifications. Once you've paid off the R&D cost you're basically in the green (bitfury sold his up until this point, then abruptly stopped).

[patmcc]

>>Why would you sell something you could make profit on if you kept it for yourself?

Anyone building a bunch of good mining rigs could certainly have a decent amount of bitcoins - but lots of people don't want to hold a large amount of a currency that is risky, volatile, possibly illegal, difficult to exchange for their local currency (that their taxes and rent need to be paid in), impossible to pay their vendors in, etc.

If you want gold, mine gold. If you want dollars, sell shovels.

[yebyen]

I think a more appropriate question is, why would you ship on time when all of your previous customers' viability depends on your delaying new shipments as long as possible?

[eru]

Because you already have their money?

[yebyen]

> I bought some Jalapeños [again] ... after my January order was not shipped until August > I will probably not order from them again.

Do you have it already now, are you completely sure of that?

[jliptzin]

Two different but related businesses. That's like asking why does Ford/Toyota/Honda manufacture and sell taxicabs when they could make more money hiring a fleet of drivers and operating the cabs themselves?

In reality though, the ASIC companies are probably doing a mix of both - selling the hardware until they've reduced their exposure to BTC/USD to their desired levels, then keeping the remaining miners for "testing."