Avalon Ships First - Implications

There’s a lot of panic and drama surrounding Avalon’s recent announcement that they have shipped the first ASIC Bitcoin mining hardware to their waiting customers. Many feel like they chose incorrectly, put their money into the wrong company and that this choice is going to impact them dramatically. Many fear that the difficulty will skyrocket and ruin their profitability, but how realistic are these fears?

Thankfully, Bitcoin being the wonderfully transparent system that it is, we can do a pretty good job at estimating the actual impact of Avalon’s ASICs, so there’s really no need for speculation.We know quite a bit about Avalon’s first shipment. They claim to have 300 units going out the door at 60GH/s apiece, so we should expect to see about 18TH/s being added to the Bitcoin network, which is currently around 23TH/s in its entirety.

This means that the first Avalon customers to switch on their rigs will be, at current prices and difficulty, earning about $160 per day and paying about $1 per day in electric costs - until they’ve mined enough blocks to retarget the difficulty.

The new power of the network will be about 41TH/s, so the first real retarget should increase difficulty by a factor of roughly 1.78, bringing the current difficulty of about 3.2 million to somewhere in the neighborhood of 5.8 million.At this point Avalon miners will have raised the difficulty as much as they’re capable of and will be earning about $90 per day and paying about $1 per day in electric costs at my local rates - still not bad.

Had BFL shipped first, given that their hashrates and initial costs are identical to Avalon’s equipment, the profit points would have been quite similar - but what would those profits look like after Avalon ships?Well, the answer should be pretty obvious - Assuming that BFL doesn’t ship until after the above adjustments (but before subsequent rounds of Avalon shipping)  their units, being equivalent in performance to Avalon’s ASICs, should reap about the same reward - around $90 per day, but with a somewhat less substantial $0.20 per day electricity cost to run.

That may not sound like much, and at this stage in the game it really isn’t, but a net cost of $73 versus $370 per year to operate is likely to make a difference in days to come - after all, I have a feeling BFL is shipping quite a few more than 18TH/s worth of ASICs.