Inwards Butterfly Labs: Challenge of producing bitcoin mining hardware

CoinDesk’s Daniel Cawrey recently visited and toured the facilities at Butterfly Labs, one of the most vooraanstaand and written about producers of bitcoin mining technology. Te this very first part of this series, he reports on how they’ve attempted to manage customer expectations and why they stay away from mining themselves.

“Wij understand that wij didn’t supply on time, you know? Wij take responsibility for what wij’ve done”. I nod spil I’m listening to Jeff Ownby, who is the VP of marketing for Butterfly Labs ter the company’s conference slagroom at their headquarters near Kansas City.

Indeed, Butterfly Labs admits that they’ve made mistakes te the past, but they want to stir forward and I get the sense that they indeed want to do right by their customers. “Bitcoin has grown from a forum sphere to a business field,” Ownby tells mij. “I think wij’re past the ‘BFL is a scam’ thing at this point. Wij’re te this for the long haul”.

Meeting expectations

It has bot written with a fair amount of frequency that Butterfly Labs had bot incapable to meet the expectations of its early customers. Indeed, CoinDesk has written about the company with a degree of mystique spil its ASIC hardware began to emerge. Many of BFL’s customers waterput down a significant amount of money to preorder hardware, expecting to be at the forefront of the ASIC mining revolution.

Butterfly Labs aimed to be one of the very first companies to suggest ASIC bitcoin mining hardware, but problems with their chip designers resulted ter deadlines slipping. Ter that time, organizations like Avalon were able to ship ASIC hardware and to also supply OEM chips for other manufacturers.

This meant Butterfly Labs received a loterijlot of attention te the bitcoin and mining communities, and much of that has bot critical and negative. Some don’t even believe that Butterfly Labs is a real company. But I can tell you, from the uur I contacted them to ultimately eyeing their facility, it’s all very real.

Butterfly Labs headquarters

The Butterfly Labs HQ is bustling with employees, overheen 35 of them I’m told. Customer service, assembly and logistics are all run from the facility.

“Wij’re shipping about 300 units a day, but wij’d like to be doing more”, Butterfly Labs Chief Operating Officer Josh Zerlan tells mij. Wij’re standing ter the back of their facility ter a suburb south of Kansas City. This is the warehouse portion of their headquarters, and it is chock utter of boxes from floor to ceiling. A forklift is parked off to the side. The executives tell mij that they need more warehouse space, and are thinking about using a tractor-trailer temporarily te one of the cargo bays to make more slagroom.

Butterfly Labs warehouse

They share the building with a general contractor company and are presently te talks about possibly taking overheen and occupying the entire building. It doesn’t take much to realize that this company is outgrowing its office. When you are the very first to be commercially selling bitcoin mining hardware to the public, you’d have to be. Bitcoin is getting big, and mining is one of the best ways to get involved.

Assembly of BFL Jalapeno unit (Five GH/s bitcoin miner)

One of the lighter methods of getting te involved te bitcoin mining is to purchase a $274 BFL Jalapeno specimen, a lil’ cubed device that can mine at Five gigahashes vanaf 2nd. I observed spil the entry-level Jalapeno wasgoed waterput together. There wasgoed no soldering involved, it wasgoed more of an assembly process. The ASIC PCB houtvezelplaat wasgoed laid down te the chassis very first, followed by the warmth bury.

Then the fan wasgoed waterput ter place, with the wiring snaking around the warmth submerge. Then a few screws tightened the entire cube into one little opbergruimte. The components come from all overheen, from China, Chicago and the westelijk coast, to be assembled and tested ter this facility.

The shifting hardware landscape of bitcoin

The bitcoin network has gone through a hardware evolution. This is going to proceed – and more on that te the 2nd lump te this series – but it has moved overheen the past few years through several different technologies. It used to be that you could use PC CPUs to process the computational problems that are required for the bitcoin network to operate. Spil well spil sophisticated setups with numerous graphics cards, there wasgoed also FPGAs that could mine more efficiently.

ASIC PCBs (bottom left, background) vs old FPGAs (center)

Today, wij’re ter the ASIC era. ASIC stands for application-specific integrated circuit. That means Butterfly Labs – among others like Avalon – have developed chips that specifically solve SHA256 cryptographic problems needed for the proof of work to mine fresh and process existing bitcoins. That’s what their chip wasgoed built for, and unlike GPUs, that’s all it does.

Mining vs production

Many have said that Butterfly Labs has an interesting business proefje. It has bot pointed out by some people that BFL is selling mining hardware when they could just use their own equipment to mine bitcoins.

But they were clear with mij that their purpose is to supply the technology, and not to be a mining company. I asked them about their hosting services that they suggest for equipment to be stored ter datacenters around the Kansas City area for a toverfee with hardware services provided by BFL. They told mij specifically that wasgoed all being done by a third-party company te the business of datacenter hosting. They would service warranties and make repairs, but nothing else.

And spil for the information that the media wasgoed getting special treatment ter getting BFL units, I got none spil a writer for CoinDesk. When I asked about a 25 G/H Single unit that I had ordered, I wasgoed told I’d be waiting, just like everyone else. On a deep level, I felt pretty good that BFL wasgoed doing the right thing by getting through their backlog spil orders have come te.

Cart of BFL ‘Little Singles’ (25GH/S bitcoin miner)

Wij’re ter Zerlan, the COO’s office, talking about mining. Ter the corner behind his chair I see a modified Mini Equipment SC top end unit with the chassis split open. It’s emanating some kleuter of crimson glow that gives the impression that it is some sort of futuristic mining prototype. I don’t even ask what its for, expecting that information on a machine like that wouldn’t be collective with this writer. I wasgoed also afraid that my mind might be bitcoin deep throated.

Zerlan is flying a puny remote managed helicopter around his office, shooting projectiles from the airborne machine into a wall. He says it’s a bounty from one of Butterfly Labs’ customers. I can understand why: once you obtain some of their mining gear and begin making some bitcoins, you’re going to be one glad customer. Time can heal the past, and it seems that Butterfly Labs is acutely aware of this.

Up next, part two: How BFL sees the future of ASIC bitcoin mining, how it affects bitcoin price, the arms wedloop inbetween hardware manufacturers, and more sensational pics from inwards Butterfly Labs.

The leader ter blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a rigorous set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests te cryptocurrencies and blockchain startups.

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