9.5 ASIC choices: Avalon ships, guerilla bitcoin mining and WWJE (what will Jeff earn?)

0. Introduction
Avalon confirmed they have started shipping the first ever ASICs designed to perform SHA256(SHA256()) hashes, and I congratulate the Avalon team on being the first. Since their shipping dates had always been later than BFL and the now sadly departed bASIC I didn't think they'd be shipping first, but they worked quietly toward their goal and only made changes to reduce the time to shipping or increase the devices output.

Once I have more information about the Avalon specs I'll post an update of the usual charts. For today, I'm going to post some lighthearted and probably not very accurate earnings estimates, jam packed with assumptions that may or may not be correct.

1. Guerilla bitcoin mining.
 Please note that in this section I am not promoting guerilla bitcoin mining as a valid method of increasing mining profitability. I think it would work to the detriment of the network if large numbers of miners did this. But it is a possibility, and one which I imagine others have already considered.

The estimated 400 watts power consumption for the Avalon device is high compared to the estimates for BFL SC Singles. In most of the US this might not matter, but in Australia and much of Europe, power consumption will eat a significant proportion of profits after:

exchange rate / mining difficulty = 7.230585e-08

with an assumed power consumption cost of US$0.25 per kWh and block reward of 25btc (if you want to try calculating this for yourself, read the first ASIC choices post). For example, if Difficulty = 5 million, the exchange rate would have to be US$0.36 per btc for the Avalon device to remain profitable, and at the current exchange rate, the Avalon with be profitable up to a difficulty of 207 million, which will occur when the network hashrate is ~ 70 times higher than it is now and would require about twenty two thousand Avalon ASICs to be added to the network. So the Avalon ASIC miner won't become unprofitable in the near future. But it is possible that some later purchasers may not be able to make a return on their investment.

So, what can the European and Australian miners do to ensure continued earnings once the power costs begin to eat their profitability away? I think that it's possible some miners might start guerilla mining and not paying for electricity at all.

The Avalon is a stand-alone device. Add 3G broadband and some power, and the Avalon can mine anywhere it can get a 3G signal. If a miner can find a location to which they have access but where they do not pay for electricity, all they need is somewhere they can hide the miner that is cool, ventilated and where fan noises wont be noticed, and they'll be able to mine without having to pay for electricity at all.

Decoupling mining from electricity costs could have significant repercussions for the network, and guerilla bitcoin mining would probably work against bitcoin's reputation. Still, I wouldn't be surprised if some Avalon purchasers decided on this device so they could locate their device in places they wouldn't have to pay for electricity or live with heat and fan noise.

2. WWJE - what will Jeff earn?
In the bitcointalk forum post "Avalon is shipping", BitSyncom from the Avalon ASIC team writes:

"First unit goes to Jeff Garzik in honor for the work he has done for the bitcoin codebase being the only developer who ordered from us."

So how much can Jeff expect to earn until BFL products start shipping? For that matter, what would be the expected earnings for miners obtaining a unit from subsequent product runs?

Assumptions:

• 300 units will be shipped each fortnight.
• The first units of a production run will be received after three days from the start of shipping, and the remaining units from of that production run will be received within ten days of start of shipping. I'm also assuming half of the units will be received after  seven days from the start of shipping. I have nothing to base this on other than my experiences in receiving parcels, so this may be completely wrong.
• Units will arrive in a log-normally distributed fashion, with mean = log(168) hours after the first unit ships, and standard deviation of log(1.26):

• The expected delivery date for the "BFL Single SC" has been updated to the week of the 10th of February. I'm assuming the first "BFL Single SC" will arrive on the 17th of February, which means about 25 days mining from the first Avalon unit is received until the first BFL unit is received.
• The exchange rate is US$16 per btc, and Jeff's electricity costs are US$0.15/kWh
• Jeff is able to have his new Avalon ASIC hasher up and running immediately at 66Ghps and 400W, and leaves it running for the entire twenty five days. There is no downtime.

So, with all that in mind, the chart below shows the estimated network parameters and what I estimate Jeff Garzik will earn (in btc and US$) from his Avalon device in the first approximately twenty five days of ownership:

So I estimate Jeff will earn approximately 211.80 btc, which after power costs will be about US$3355. Nice one, Jeff! Now, if I could just get one of these Avalon hashers, sooner rather than later ....

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