SiaCoin ASIC Mining Analysis | Introduction and Overview of the Obelisk

in sia •  last year

obelisk.JPG

Sia Tech

Last month Sia Tech announced (https://t.co/CgbwRKCsIc) as a way to prevent 51% attacks that they are in partnership with a chip maker to produce an ASIC, The Obelisk, for SiaCoin mining. The Sia Tech blog goes in depth into why they believe ASIC’s are the correct move for the project and also provide a thoughtful introduction into differing blockchain proof systems. The post is a great introduction to the mechanics of the blockchain and ASIC mining vs GPU mining and we haven’t even started talking about the groundbreaking technology that all of this powers, decentralized cloud storage.

Obelisk by Nebulous

The Obelisk has already had its pre-sale come and go. Initially they planned to sell 2,000+ Obelisks with a hard cap of 10,000 total units offered in the pre-sale. After the week long pre-sale 1,000 units had been ordered so they extended the pre-sale indefinitely with the aim of 2,000 orders and a hard cap of 4,000 units total. At the time of this writing 1.260 out of 4,000 miner’s have been ordered. The Obelisk is not expected to be shipped for 6-12 months which, in conjunction with the recent market correction, seems to have scared away Obelisk buyers.

In exchange for taking the risk of pre-ordering the Obelisk, Sia and Nebulous have guaranteed that no Obelisks will be shipped for at least 6 weeks after the first batch has been shipped to those who order in the pre-sale. Even with the total ordered below the goal it appears (via Reddit) that the team will still be able to manufacture with what they have planned. All of this is great news for the Sia team and Sia Tech in the long run as they have laid out their vision and are allowing investors/miners/storage aficionados decide whether or not it fits their needs.

Risks and Investment Considerations

Having to wait 6 months to a year in the cryptosphere seems like a lifetime and with the current market correction Siacoin has seen its price lose about 60% of its value. While this is clearly a tough time for all cryptocurrencies, this also changes the equation on whether or not the Obelisk is a good decision knowing that your investment is tied up for at least 6 more months (if you pre-ordered early you got your money out near a peak). With that being said, let's take a look at potential risks of buying an Obelisk over the next 6-12 months and rebuttals to those risks:

  • Sia Tech could go bankrupt, developers leave, and/or the coin loses all value
    • Sia was recently rewarded a $400k grant - https://sia.tech/2017grant/ with which they can fund 5 MORE Devs for a year
    • Based on the current roadmap they plan to upgrade their UI and backend tech, including video streaming support, in the coming months which will hopefully lead to more customers and more SC demand.
    • 3.9% of all revenue from the use of Sia.Tech for storage goes to funding Sia.Tech and its parent company Nebulous
  • Sia.Tech and Nebulous take the money from Obelisk orders and run
    • The higher ups at Sia.Tech are US citizens and Nebulous a US company leaving them open to legal repercussions
    • The devs and higher ups have very public personas with a very active presence on Slack, http://forum.sia.tech/ Reddit, and other social media
  • Designing ASIC’s is really hard and numerous companies have failed to delivered before.
    • This is where it depends on your investment strategy and tolerance for risk. This will differ for everyone and should be thought through based on your current and future life situation.
    • This comes down to how much you believe in the technology to make the leap and if you trust that the ASIC can be made as well as live up to the power being advertised.
  • Someone else makes an ASIC miner before the Obelisk is released slashing the reward potential.
    • Given the low value of a single SiaCoin and its low visibility to the general public compared to ETH, BTC, LTC, Ripple, etc. it seems unlikely another chip company will throw it's hat in the SiaCoin ASIC game.
    • While this would hurt the miners profit and initial investors of the ASIC it could help shield SiaCoin from 51% attacks as discussed in their blog post on why ASIC’s are the direction they are taking the project.
  • Sia has a large and negative bug/black swan event/publicity making the coin lose so much value that mining Sia becomes poorly profitable
    • This cannot be predicted and when a but or black swan occurs it will more than likely not only affect Sia, but the market as a whole, as we have seen over the past month since hitting record highs.
  • The $2,500 used to buy the ASIC could have been put into another currency (e.g. ETH, BTC, LTC, etc) during this dip which in turn 5x's by the time the obelisk is released.
    • Example: $2500 into ETH and 1 year from now it is worth $10,000. Nice profit, but when do you sell and when do you Hodl? In the current situations this seems pretty unlikely but the crypto world is crazy and may flatten out once the Bitcoin power struggle has sorted itself out.
    • If the market 5x’s then SiaCoin would likely increase as well as we have seen a lot of correlation with the major coins during every swing. As resources grow investors look for items to diversify into and as it contracts everyone goes back to the pillars of the economy.

Rundown by the Numbers

No one can predict where the price of SiaCoin will be in 9-12 months but to get an idea of how much SC the ASIC miner will be able to generate, you can visit https://obelisk.tech/ and use their simple calculator to predict a rough cost/profit analysis. Using the assumption that 4000 Obelisk’s are sold the expected monthly mining reward per ASIC is 150,000 SiaCoins for the month of June 2018. For the sake of this analysis we will also assume that electricity is at a rate of .15 KW/H which is roughly $55 a month to run the Obelisk. Since the block rewards decrease every block by an increment of 1 this equates to 4,320 in a month and we can use the following chart to estimate what it will look like after a year.

Cost

----ElectricityObelisk
June 2018$55.00$2,500
July 2018$55.00$0
August 2019$55.00$0
September 2019$55.00$0
October 2019$55.00$0
November 2019$55.00$0
December 2019$55.00$0
January 2019$55.00$0
February 2019$55.00$0
March 2019$55.00$0
April 2019$55.00$0
May 2019$55.00$0
-----------------------
----$660$2,500

First Year Cost -> $2,500 + $660 = $3,100

Revenue

  • Block Rewards - Found at http://siapulse.com/page/market
  • Daily Block Reward -> Block Reward * 6 blocks an hour * 24 hours
  • Daily Estimated Reward (SC) -> Daily Block Reward / 4,000
    • This number is based on the assumption that 4,000 Obelisks are in use, this estimate can change based on the total number of Obelisk's being used.
  • Monthly Estimated Reward (SC) -> Daily Estimate * 30 days
  • Current Price (BTC-SC) -> 0.00000300 BTC
  • Speculative Price (BTC-SC) -> 0.00000500 BTC
----Block RewardDaily Block RewardDaily Estimated Reward (SC)
June 2018138,90020,001,6005,000
July 2018134,58019,379,5204,845
August 2019130,26018,757,4404,689
September 2019125,94018,135,3604,534
October 2019121,62017,513,2804,378
November 2019117,30016,891,2004,223
December 2019112,98016,269,1204,067
January 2019108,66015,647,0403,912
February 2019104,34015,024,9603,756
March 2019100,02014,402,8803,601
April 201995,70013,780,8003,445
May 201991,38013,158,7203,290
----Monthly Estimated Reward (SC)Current Price (BTC)Speculative Price (BTC)
June 201850,012.000.450036000.75006
July 2018145,346.400.436039200.726732
August 2019140,680.800.422042400.703404
September 2019136,015.200.408045600.680076
October 2019131,349.600.394048800.656748
November 2019126,684.000.380052000.63342
December 2019122,018.400.366055200.610092
January 2019117,352.800.352058400.586764
February 2019112,687.200.338061600.563436
March 2019108,021.600.324064800.540108
April 2019103,356.000.310068000.51678
May 201998,690.400.296071200.493452
----------------
----1,492,214.404.476643207.461072
  • BTC ~ $2,300
    • Current SC Price -> 4.5 BTC * $2,300 = $10,350
    • Speculative SC Price -> 7.5 BTC * $2,300 = $17,250

Profit

  • Current SC Price -> $10,350 - $3,160 = $7,190
  • Speculative SC Price -> $17,250 - $3,160 = $14,090

Like everything in the cryptosphere, this is entirely speculative (i.e. gamble) but doing some basic math to analyze the options can put things in perspective. Like most miners out there, it all comes down to the price of the underlying coin and expected monthly reward to know the value of your investment. Whether or not you Hodl till the uptick or sell to Bitcoin to protect is up to you.

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this was a great read! im looking to buy an obelisk but my scare is, does it actually guarantee me 150,000 sc in 2018? what if tht drops to 50,000 or even less? How can they ensure that

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No, these are not guaranteed numbers, this is all based on the split that should be rewarded with the assumption that 4,000 Obelisks are in use. If the number of Obelisks in use goes up, then the expected rewards would go down since the mining rewards would have to be split up amongst more miners.

What is guaranteed is the block reward for solving a block during the time period above (it's part of the Sia whitepaper), what is not guaranteed is the number of miners and the amount of hash power competing for the rewards.

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AHH thank you! you deserve a follow for the help!