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ASICMiner, the only company selling ASIC bitcoin mining hardware out of available inventory, just reduced the price of their largest miner to 3.5 BTC. The ASICMiner blade was unavailable for several weeks before Friedcat, CEO of ASICMiner, announced on August 11th that they would be selling them again at the then-reduced rate of 10.5 BTC each. Given that every other ASIC bitcoin mining hardware company sells pre-orders for units months in advance of actual delivery, ASICMiner has used their monopoly over the in-stock market to be able to charge a premium for their products.
The ASICMiner blade runs at 12.8 GH/s overclocked and is the larger of their two products, the smaller being a USB miner that runs at around 300 MH/s. The original sales strategy when Friedcat announced two weeks ago was to divide customers to different re-sellers depending upon their location (each name below corresponds to a bitcoin.org user name):
US: eleuthria, CanaryInTheMine, SilentSonicBoom
EU, Switzerland and North Europe: yxt
China, Taiwan, Hong Kong and Macau: rockxie
It now appears that Friedcat will be taking large orders personally and has implemented a tiered pricing system depending upon how many units are ordered. For any quantity less than 20 it must be purchased through one of their re-sellers. Returning customers and previous auction winners are offered blades at the lower price of 3.5 BTC regardless of quantity.
Causes for the Price Drop
There are several factors that influenced this price cut. The network hash rate has continued to increase exponentially as companies bring their ASIC Mining power online. The difficulty has increased from 37 million when these were first announced to over 66 million currently, reducing customer’s return by 78% without even factoring future difficulty increases.
Avalon, one of ASICMiner’s closest competitors, has begun shipping after a one-month hiatus. Avalon pre-sold over 1,000,000 ASIC chips for a total of 400 TH/s and most customers are still waiting to receive them. Because of the significant delays there are people waiting with printed circuit boards ready to assemble the chips as soon as they arrive. Due to the large increase in difficulty, it is likely that many people are nervous about making their return back and will sell their miners rather then use them. It is likely that ASICMiner is trying to stay ahead of these sales by capturing as much of the market as possible now.
ASICMiner is a publicly traded company and their shares have fallen precipitously over the past two months. After reaching an all-time high of 5.15 BTC per share on July 3rd they have dropped 48% to 2.71 BTC per share as of today (according to BTC Trading Co the most liquid exchange). Several factors have influenced this decline: a significant decrease in their hash rate relative to the network, reduced hardware sales, and smaller dividends due to reinvestment. While these price reductions will help clear out their existing inventory, they are playing a waiting game until their next generation of hardware is introduced.