Quote from: chriswilmer on July 26, 2013, 09:03:21 PM

Quote from: Entropy-uc on July 26, 2013, 07:20:41 PM

As someone technically and financially capable of doing this, the whole thing has been expressed with a very poor explanation of the value proposition.

Why would someone want to franchise from Friedcat?

This is a good question and I would also be interested in knowing the answer. What exactly does it mean anyway? It's not a hosting service right?

I expect friedcat to publish the terms in more detail within the not so distant future.

Right now, consider the franchising model an extension of the self mining model, where some of the yield is sacrificed (=profit for the franchisee) to gain decentralization and make the long term profit from self mining scalable.

As for the value proposition:
benefits for ASICMINER:
- decentralization without sacrificing long term profit from hashing power (except the cut for the franchisee)
- integration/partnership with bitcoin mining community.
- reduce/remove the single point of failure characteristics of self mining.

benefits for the mining operator:
- no deprecation risk of hardware, i.e. removes any ROI failure
- hardly any capital expenditure needed, mostly collateral required (can be loan financed, i.e. a better application for mining bonds, where the franchisee raises the required deposit from the capital market)
- more flexibility and control over cost vs. profits (i.e. the "rent" can be adjusted according to difficulty), which makes the viability of the operation less dependent on difficulty growth.

I don't want to dig into the details of how franchising compares to hardware sales and how that relationship depends on the risk aversion and available investment capital in the market. Let's just say franchising satisfies a different target customer than hardware sales.

addendum: ROI failures seem to be one of the most pressing issues of 2013/2014. Unless you're totally risk-on, you should always ask your hardware supplier for ROI guarantees.

addendum: with "renting" out hashing power it is implied that the device is controlled by the franchisee, NOT ASICMINER. I.e. the blades are sent to the customer and in exchange ASICMINER receives a fraction of the theoretical yield. However, it is up to the customer on how to use the device.