Quote from: jomay on September 17, 2014, 06:40:55 AM

Quote from: samsonn25 on September 17, 2014, 12:34:01 AM

Quote from: vesperwillow on September 16, 2014, 01:41:52 PM

As to building miners for dirt cheap, if KNC's profit margin is similar to the Jupiter series, they're making about 86-89% pure profit on the gear. So it could be done.. but.. the whole thing of they won't do it because they know they can just keep the money to themselves.

I dont think their profit margin is that high with the gear, their secret is to build the machines and then mine with them a couple months before giving to public.

Unable to pre sell to the public at inflated prices anymore, I doubt they can make mining gear at that profit margin again unless they can con more people as they are going private now, which is what the new strategy is I believe with the A series funding round.

What do you think is their profit margin?
I would expect at least 30% of ~25m$ pre-order sold (Batch 1). The NRE of a 28nm ASIC and production cost should run much about 10m$? Batch 2 was then pure profit for them, as R&D has been paid for. I'd expect the marginal cost to be comparable or lower than the Bitmain L1, so a Titan costs 1800$ to produce after R&D.
That said, this is pure speculation, I simply don't know.

The pre-order scams etc. will also damage Bitcoin and the hoped for spike in prices may not happen. At that point it's going to be difficult to make new hardware and profit from that as before, because the marginal increase in performance/watt does not justify the explosion in R&D costs. So from now on it'll be about "cheap", not about "quick to market" (IF they sell any)

I based my figures off of Jupiters batches 1 and 2, where KNC's internal insurance invoiced their value at $1000USD when being shipped back to them, or within their company controls. These figures came out hundreds of pages back. A company won't take a loss on a product in RMA when it can be insured, and would insure it for what their cost would be plus return shipping.

Further examination of the individual components also correlates to that value. BeagleBone value was around $99 back then. Arctic Cooler has remained $35. The other four fans ran around $9. Aluminum casing about $15 at most. Examining those costs:

Beaglebone 1 @ 99
Arctic Cooler 4 @ 35
Arctic Case Fan 4 @ 9
Aluminum Case 1 @ 15
Subtotal: 290
Bulk Discount 15%: 43
Potential Total: 247

Mining boards at their lowest were being sold for $200 I believe, and there was discussion a thousand pages back that the chip costs were likely close to $30 each. So figuring PCB components and the chip costs add up to internal cost of somewhere between $125-$150/ea, speculative pricing but close to real-life costs based on other industries.

If that's the case, 4 mining boards @ $150 = 600. Add on maybe $35 for the controller board.

So now the estimate is at $635+$247=$882. With the remainder on that shipping, which is close to their public original pricing of $150 UPS Air.

That's how I, and others, arrived at an internal KNC cost of $1k per Jupiter for 2013. Honestly, if you think about it, it absolutely makes sense. They crowdfunded their R&D / standup / profit buffers with the very first sale. They didn't have to sell batch 2 to make profit, they were making profit with batch 1. They simply kept the margins high after that, while still giving you guys a break, and it makes it seem like everyone is a winner.

Consider how many tens of millions they took home in profit on their tax statement. Their profit margins weren't 30%, they were generously higher.