I am evaluating the feasibility of a large mine, 10PH+. As for any miner, the main drivers of profitability are low cost of hardware, low costs of power/hosting and difficulty on the network/total network hashing power.

Here is an excel model that incorporates the following components (note: all inputs/outputs are on the "Pro Forma" tab, all inputs that can be changed are in yellow cells):

Main conclusions:
 

• With a realistic increase in difficulty to 376PH on the network by the end of the year (start difficulty at 16% increase per 14 day step falling to 3% at 0.006% speed), it is hard to see how buying hardware in the fall beyond $0.50/GH will be profitable in the long run,
• With a severe increase in difficulty to 600PH (start difficulty at 20% increase per step falling to 3% at 0.006% speed), it will take hardware at $0.25/GH to make a modest ROI.

Assumptions:

• difficulty is modeled in a way consistent with the quasi-linear decrease in growth observed this year, where the pace of increase can be adjusted to reflect the predictions by insiders (bottom of article),
• reward halving at block 420,000 is taken into account,
• constant BTC price to look at the merits of the mine, not at an investment in BTC,
• capital structure: can include debt at an interest rate set by the user,
• cost of hosting/cost of power: an overall cost is assumed all-in (likely hosting in Central Washington), rather than modeling them separately,
• start date: mid-October (can be changed),
• duration of project: until marginal revenues < marginal costs.

What I am looking for:

• Any feedback on the modeling,
• Any comment on the assumptions used, additional revenues, hardware sourcing strategies, and project finance funding.

Thanks!

 I am evaluating the feasibility of a large mine, at least 10PH, possibly 15. The objective of the project is:

1. To build a mine that is governed by strict rules that force it to reduce risks facing Bitcoin. E.g.  commit to not associate with any pool with more than 40% of mining network, work with the community toward a replacement for the POW should a worthy successor be discovered)

2. To govern the mine with a board composed of ethical and experienced Bitcoin community members

3. To allow anyone holding bitcoins to lend bitcoins to the operation in exchange for an interest in the mine's output and anyone who wants to start cloud mining to do so at the lowest price available (with the aim of supporting adoption)

4. To allow application developers access to a % of the mining capacity to build and test applications (for ex - altcoins, vanity names, etc)

The mine would run a network of full bitcoin nodes located in North America, and conduct business according to published, transparent governance rules.

The purpose of this post is to solicit input on: a. which governance rules should be incorporated to ensure that the mine works in the best interests of the broader Bitcoin community and b. which risks the mine should be focused on mitigating.

I appreciate your input and feedback.