If Vlad and Co produce an ASIC, I would not expect them to have a monopoly for long, and I would anticipate that the follow-up fabs (assuming he is even first to market) could well be more optimized.

From: http://marginalrevolution.com/marginalrevolution/2010/01/estimating-soviet-production-speed-for-a-nuclear-weapon.html
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In the mid 1940s he and his colleagues were commenting on how quickly the Russians would get the bomb – most of his colleagues put it to 20-30 years. He however amazed them with his estimate 5 years. His reasoning was they they would be much more effective and focused in their research , since they knew it *can* be done. This is the key thing in research be it purely for science or military.

In two years the Soviets had the bomb and it’s all history after this.
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This matter of existence of technical solution and specific details will be discussed privately and covered by NDA's where required.

How auditors would account for BTC? I suppose exactly the same as they would account for potatoes. Imagine a company which pays dividend in potatoes that it grows. These are open questions how BTC's will be accounted for, whether there will be dividends payable in Bitcoins or not, and it is for accountants to figure out.


"Accepting fiat and extracting fiat" for me sounds as neutral. I am discussing with advisers our options of having both fiat and Bitcoin dividends. This is not a trivial matter considering dividend taxation and VAT. It was also suggested that it would be bad idea to commit to a fixed dividend schedule as this would put the company and shareholders at disadvantage and it would be difficult to react to changing market conditions. We do not know yet how exactly the company will be structured, there are no investment prospectus prepared yet. It is complicated. We are working on it.


REIT is a pipe dream for now. Not going to happen before the company is listed on main market of LSE, and this in turn would not make any sense unless the company is wildly successful and Bitcoin's market cap is measured in billions. Even if it would be accepted that racks of ASIC mining gear is a new sort of "real estate".

However, it is rather rare than companies that are less than 3 years old are listed on public exchanges. Considering how quickly Bitcoin is developing, the future is uncertain. Should it happen that in 3 years time Bitcoin will be in mass adoption stage already, the best time to start thinking about being the first Bitcoin company that goes public is now.


I do not think that this is a fund. This is a company that operates Bitcoin mining hardware on large scale. There is no requirement for minimum turnover for a PLC in UK, to the best of my knowledge. You perhaps mean a listed PLC when you refer to turnover requirements. If so, then we talk about different things.


No, I do not mix private and public, plc and ltd, (they are both limited) , I founded quite a few of ltd's and do know the difference. However, plv vs ltd matter is being discussed behind the closed doors and there are good arguments for both routes.

EDIT:

Catfish, I have one question for you.

Do you think that Bitcoin mining will be confined to the "garage" stage forever?

1.  It can cost several million dollars to develop a new ASIC.
2.  If you want an open-source ASIC, you have to find a group of engineers willing to work for free.
3.  If a company or investment group spends millions of dollars on a new ASIC, they would be fools to give it away for free.
4.  What else do you need to know?

Sure, it'd be great if someone developed a free and open-source ASIC for Bitcoin mining.  But it's probably not going to happen.  Why?  Because the software and personnel needed to do the job aren't free.

And if you need a reason for companies to not release too much detailed information early on in a project, just look at Matthew announcing the Bitcoin Magazine.  He had plans, those plans didn't come to fruition as quickly as he had anticipated, and his reputation is suffering because of it.  Obviously, vlad doesn't have all the details of his plan worked out, and doesn't want to share any information about it to avoid raising people's expectations.

It can also be a competitive advantage to keep corporate strategies a secret.  The more you know about a competitor, the better you can compete against them.  The counter to that is making sure your competitors know as little about you as possible.

that's why i like vlad

what's not to like about such an ambitious nature?

I suppose a bitcoin asic would be relatively simple to design, and so you might find some hobbyists (or pro's with free time) willing to collaborate on a design; but the one thing that REALLY costs money when making an ASIC, is the mask set, and there is no way around that. Depending on process, you are looking at at least $500.000 to a high multiple of that. Opensource or not wont make that go away. And I imagine someone risking that kind of money on a bitcoin specific chip to not want to inform potential competitors too early.

That said, I think ppl are getting a bit too excited over Vlad's announcement just yet. Ill get excited when I see a demo of working hardware. All I see so far is plans to start a 'HUGE' company doing who knows what using who knows what. If he is planning to build his own chips as he suggested, and particularly if he is new to that field as he seems to be, he might be in for a few very unpleasant surprises.

I know damn well the cost of a mask set and packaging, and the engineers still need their salary. But I was asking why must there be a "competitive advantage"? I'll bet that even if the thing were crowdfunded, that the one making it would still demand secrecy, just because that is the way it has always been done.

When I put on my investor's hat, I start running scared because of the potential cost and devastation to the entire economy to be running this operation. When I put on my miner's hat, I see a concentration of power that could have been spread to keep the network secure, instead all working under the thumb of one group of investors, some of whom may not have the positive motivations that I am sure Vladimir has. And when I put on my end-user's hat, I see the rich getting richer and the poor getting poorer, just like the failed world of today.

Maybe as a peon myself, I don't understand what it's like to be rich, and why the rich must continue to become more rich. Perhaps if I had a larger discretionary income, I wouldn't be preaching about this, and would be demanding NSA-level secrecy about my organization, my investors, my product, and my vision of the future. But I'd like to think not, and I'd hope that others would feel the same way.

Cornering 100% of the market is highly improbable because to do so you would have to drive everyone else out.  Even cornering 70% of the market is very difficult.

The only way a monopoly can survive and make monopolistic (above-average) profits is to have barriers to entry in the market.  In this case the barrier to entry is the development cost for an ASIC. 

What is unknown is whether the bitcoin economy can support the development of one, two, three, or more ASICs.  One possibility is that if there is one ASIC effort it will be profitable, but if there are two ASIC developments then they will both lose money.  In this case, an investor/developer would have to decide the probability that they would face competitors, how many competitors they might have, and whether the risk was worth it.

So Vladamir is advertising an effort to develop an ASIC to reduce the probability of competition and thus increase his probability of profit.

Where it could get interesting for miners is that if ASIC developers lose money on their overall project they are likely to still over run the mining industry as their marginal cost of production will be very low.

I expect the emerging of a large ASIC industry (if it happens) will lower the value of bitcoin by reducing the number of miners and thus the number of participants and the size of the bitcoin economy. 

51%-ing the network to capture 100% of profit is a barrier to entry that would produce monopolistic profits. You don't need ASICs, 5970s will do. Txn fees would also be increased under the 51% monopoly. The monopolist is a price-maker and has the luxury of choosing appropriate fees for the user base.

...rightfully so. "Bitcoin, the revolutionary online currency for the people by the people one big mining corporation". It could happen but if it does without people using FPGAs profitably, bitcoin identification will plummet. User identification is a big factor, and one that Bitcoin can't afford to lose IMHO. People will take their money somewhere else, investments won't pay out without enough users. Again, rightfully so.