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Author Topic: [CLOSED] Call for investors. Let's build a huge bitcoin mining DC together.  (Read 11913 times)
Vladimir
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May 29, 2011, 03:26:53 AM
 #1

[Update:]Currently there is only one spot for order with value about 15 000 GBP. Please note that cost estimates have been changed to 900£ initial and 120£ monthly recurring.

  My name is Vladimir and I've been in bitcoin mining business since late 2010.  I have qualifications, experience and passion suitable for this business and I do it on full-time basis since January 2011. It seems that this is now the right time for expansion and therefore I offer for your consideration this call for investors to participate in an exciting bitcoin mining project.

  I have recently secured a site for new data centre, let's call it DC3. DC3 has a benefit of secure environment for bitcoin mining rigs with plentiful electricity supply at relatively good prices with potential to negotiate an even better deal once the operation starts consuming lots of electricity. My DC design (tested and proved on previous DC's) is expected to have better than 1.06 PUE. For example, Facebook, recently boasted that they have a new state of the art DC with PUE (power use efficiency) of 1.07. As an another example a typical commercial DC with refrigeration(aircon) based CRAC's has PUE above 2.1 This is also known as the second watt problem.

  DC3 site has potential to accommodate up to 400 Ghps worth of GPU based equipment.

  Since January 2011 I've sold and fulfilled a significant number of mining contracts and also have more than one investor on board with terms substantially similar to what is proposed here.

  The proposed scheme is simple. Investor funds deployment and operation of the hardware and all reasonable and relevant out of pocket expenses, I do all the leg work. The results of calculations are split 65/35 for investments above 15k£ and 70/30 for investment above 60k£. For example, in case of 70/30 split, 70% of bitcoins mined by hardware goes to the investor and 30% to the operator.

  Moreover, property rights on hardware (mining rigs) built and operated under this agreement are split in the same proportion.

  It is estimated that it will cost, on per Ghps basis, 900£ to build and deploy the hardware followed by 120£ per month to run it.

  There are many options on what to do with hashing capacity for investors. They could point it to a pool, get zero-variance delivery from me, they could resell it in place, offer their own bitcoin mining contracts to the public, sell bitcoin option or futures contracts backed by mining capacity etc...

  Should you be interested in this opportunity please contact me for more details.

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Vladimir
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May 29, 2011, 03:27:23 AM
 #2

F.A.Q.

Q1. I want to invest 20 BTC. Where do I send?
A1. Minimal investment is 15 000 GBP. Should you wish to invest BTC or USD or SLL or Mongolian Tugrics or carrots you would need to convert it to GBP. Fiat currencies can be converted fairly efficiently to GBP using companies such as xe.com and transferwise.com. Bank details for wire transfers are provided when contract is signed.

Q2. Would you have have any problems if somebody took you up on your offer and divided that action up on GLBSE?
A2. No problems.  Moreover, it is certain that I will not list on GLBSE myself, because my legal counsel wont let me. Therefore, whoever uses GLBSE for this will not face competition from me directly.

Q4. Do you hand out guarantees/contracts/SLAs that include also commitments/penalty payments from your side if a rig goes down?
A4. Indeed I do offer a SLA in form of zero-variance computational results delivery. When a customer elects zero-variance option he will receive on daily basis as many bitcoins as statistically expected for given Ghps hashing capacity. This will happen regardless of rig's uptime. For comparison, some pools charge as much as 10% for "reduced variance" which is not even as good as my zero-variance delivery.

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Vladimir
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May 29, 2011, 03:27:35 AM
 #3

Q3. What type of hardware are investors investing in?
A3. GPU based high end mining systems. Only high quality components with mix of 6990's and 5970's. As they say... a picture is better than 1000 words and I have two pictures for you. This is shelf 1 in DC1, fairly typical unit, DC3 will be quite similar.





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May 29, 2011, 03:41:59 AM
 #4

I highly doubt you are going to find venture capitalists of that caliber here.
Vladimir
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May 29, 2011, 03:44:15 AM
 #5

I highly doubt you are going to find venture capitalists of that caliber here.

I have no such doubts. There are already people onboard with this and more people are in DD stage.


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Anonymous
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May 29, 2011, 03:46:24 AM
 #6

On second thought, you're right. If I had that kind of income, I would probably drop that kind of money on this, given a sound business plan.

Bitcoin geeks know it is a sound concept. This is a low-risk, high-reward start-up. Are you willing to link to a plan here or is that under NDA?
Vladimir
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May 29, 2011, 03:53:37 AM
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On second thought, you're right. If I had that kind of income, I would probably drop that kind of money on this, given a sound business plan.

Bitcoin geeks know it is a sound concept. This is a low-risk, high-reward start-up. Are you willing to link to a plan here or is that under NDA?

The business plan is essentially in my original post above. I make no representations with regard to future valuation of BTC, bitcoin difficulty, prices of electricity etc. I however give an estimation of costs involved into deploying and operating 1 Ghps. You do not expect me to provide cashflow projections here, do you?

Also I am not soliciting investments into my company. I am offering investors to outsource bitcoin mining to me on partnership basis.

However, I am prepared to discuss my offer in details privately.

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May 29, 2011, 12:00:08 PM
 #8

Would you have have any problems if somebody (probably not me) took you up on your offer and divided that action up on GLBSE? (Of course they'd take a small management fee)

WatchMine - get Bitcoin prices and pool stats on your Mobile
Vladimir
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May 29, 2011, 12:06:06 PM
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Would you have have any problems if somebody (probably not me) took you up on your offer and divided that action up on GLBSE? (Of course they'd take a small management fee)


It is none of my business what my clients do with their mining capacity, as long as I am not burdened with significant administrative overhead.

Funding it via GLBSE and than distributing 'results of calculations' as dividend might be a great idea for someone. Moreover, it is certain that I will not list on GLBSE myself, because my legal counsel wont let me. Therefore, whoever uses GLBSE for this will not face competition from me directly.







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darbsllim
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May 29, 2011, 08:03:37 PM
 #10

I love it!

Brad Mills
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May 29, 2011, 09:40:56 PM
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Shouldn't the operator be taking on the running cost (of what u wsay is 100 per machine?) for their 35% of otherwise no investment?
Vladimir
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May 30, 2011, 02:34:13 AM
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Shouldn't the operator be taking on the running cost (of what u wsay is 100 per machine?) for their 35% of otherwise no investment?

Dear filharvey, thank you very much for your interest and for your proposed business model. It is very interesting. I think I will pass on this one at this time, though.

Feel free to run a similar service yourself on the terms you have suggested.

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Sukrim
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May 30, 2011, 08:32:43 AM
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Your electricity costs are ~0,14 GBP (0,16 EUR/0,23USD) per hour per rig. Assuming a 1MH/W efficiency (which is quite low as you claim to have an overhead of just 6% for cooling and many AMD GPUs have more like 1,5MH/W or better) this is still higher than the electricity prices where I live, which are already quite high compared to other places.

Also I don't really get the point of paying you to set up hardware, paying for (overpriced?) electricity and THEN paying you 35% or 30% on top of that. This translates to over 100 GH/s (if the full datacenter can be filled) just for your own pocket with 0 expenses. Even if 1 rig fails per day, you still would make profit (currently 100GH/s would be worth nearly 2000 USD per DAY), plus you own 1/3 or that rig too! Do you hand out guarantees/contracts/SLAs that include also commitments/penalty payments from your side if a rig goes down? What are your exact services that are worth ~1/3 of investor's incomes?
I'm also not that happy about the fact that investors pay 100% of the hardware but you own 30/35% of that hardware afterwards just for plugging it together.

What I value though, is that you are at least upfront and tell in advance what to expect, maybe there really are people that see this as an interesting business model/investment?!

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Bitsinmyhead
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May 30, 2011, 09:04:33 AM
 #14

When at first I read this post...
I thought it was a pretty funny joke...
A play on SkepsiDyne and all the mining companies...
Now I realize it's just a very bad investment...

I know that maths can be pretty hard...
But when you look to invest 20k+++...
You should take the time to run the numbers...
I'll hold your hand and even do it for you...

Assumption 1: Average difficulty over next year: 1 000 000. (super optimistic)
Assumption 2: Value of mining equipment after one year 50% of new price. (super optimistic)

Alternative A) Invest in this:
Investment in equipment: 1000GBP
Monthly cost: 12*100 = 1200 GBP
Total: 2200GBP

BTC generated at 1Ghps after one year at 1M difficulty: 365
Of these you get to keep 65%: 237
At end of one year your hardware has a value of: 500GBP of which you get to keep 65%: 325

So for a total outlay of GBP: 2200-325= 1875 you get 237 Bitcoins.

Alternative B) Buy bitcoins for GBP 1875 today at USD price 8.5:
You get 361 bitcoins and get to keep all of them...

Even with these very optimistic assumptions...
This investment here is very very bad...
Maybe you hope to find someone...
With 20k+++ and no math skills...

But as I have said before...
Unless the investment is pure genius...
It will always be better to just hold coins...
A mining company is not pure genius...
In any form or way...

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Vladimir
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May 30, 2011, 12:04:18 PM
 #15

Surkim, where did you get "Your electricity costs are ~0,14 GBP (0,16 EUR/0,23USD) per hour per rig."?  This seems to be a statement of fact in writing, which is false, which is also damaging my business. Do you know what legal definition of this would be? What a bunch of noncence. Are we starting to suck arguments out of our thumbs here. What do you think it does to your credibility?

Sukrim, Bitsinmyhead: You are new here, obviously you lack backgraund info. Therefore I'll try to address your rhetoric.

First of all, please stop comparing this to ScpesiDyne... That is just an anonymous kid (based on his voice) copying me. In fact, ALL known mining contractors to some degree are copying me (thank you),  because I was the first one to offer this kind of service commercially.

Second of all, please stop comparing this to direct purchasing of coins. These two investmetns have completely different risks, rewards and tax liability profiles, etc.., etc.., etc...

Third of all, please stop counting some of my costs and my "outrageous" profits. Your approach is simplistic, and naive to the extreme. I've been pestered by kids like you about how badly I compare to their gaming rigs under the bed for long time now.  You think you are that good, please go and start competing business.  Please do house you rigs in open field by an electrcity pole.

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I'm also not that happy about the fact that investors pay 100% of the hardware but you own 30/35% of that hardware afterwards just for plugging it together.

"just plugging in"? O boy... where do I start....

Have any of you ever in your life managed 10 servers for a year? How old are you? What are your business credentials?  Why would anyone take anything you say seriously? Do you realise that running hundreds of servers consuming megawatts of electricity is a completely different ballgame as compared to running 1-2 servers in your mom's basement?

I've been delivering mining contract commercially for a while now. My multiply clients are who's who of this board, and they made boatloads of money on my contracts, most of them renewed expired contracts, many renewed more than one time and increased volumes.

Now I offer service at long term cost far below any competitor on the market plus offer hardware 'hedge' and skiddies are still not happy. Now they tell me I shall work for free, place hundreds of rigs by an electricity pole in the open field, provide zero-variance for free, etc.. etc.. etc... I am, frankly a little tired of this and wish there was a moderated business board where likes of you could not get to.

However, "Do you hand out guarantees/contracts/SLAs that include also commitments/penalty payments from your side if a rig goes down?" is a good question, and yes I do hand out such grantees and contracts and moreover I have significant proved track record of delivering on my promises. I will address this in F.A.Q further.

"What are your exact services that are worth ~1/3 of investor's incomes?" This is another good question and I will address it in F.A.Q. I do think however that for anyone with some money to invest the answer is pretty obvious already.

Sukrim, Bitsinmyhead: I would appreciate if you and your kind stop posting noncence in this thread. Please do not reply to this post in this thread. I really do not want another 10 page discussion comparing my business with a kid ruining mining rig in his mom's basement. I also invite you to consider deleting your not so well thought out posts. However, should you wish to ask further specific questions like the two I mentioned above, you are welcome to do so.


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Sukrim
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May 30, 2011, 01:18:31 PM
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Surkim, where did you get "Your electricity costs are ~0,14 GBP (0,16 EUR/0,23USD) per hour per rig."?  This seems to be a statement of fact in writing, which is false, which is also damaging my business. Do you know what legal definition of this would be? What a bunch of noncence. Are we starting to suck arguments out of our thumbs here. What do you think it does to your credibility?

Your statement in the OP: 1000 GBP initially per GH/s (approx.), 100 GBP per 1 GH/s per month for upkeep (approx.)
100 GBP/30 days/24 hours = ~0,14 GBP per hour "to run it" as you put it. I thought this would be most likely your electricity costs - if not, I'm sorry.

Honestly I'm not in the mood to argue around with your business model, whatever you want to achieve with it. Also asking for no answers/followups but on the other hand using mildly insulting/suggestive questions and words like:
kids like you
[...]
What a bunch of noncence. Are we starting to suck arguments out of our thumbs here. What do you think it does to your credibility?
[...]
Have any of you ever in your life managed 10 servers for a year? How old are you? What are your business credentials?  Why would anyone take anything you say seriously? Do you realise that running hundreds of servers consuming megawatts of electricity is a completely different ballgame to running 1-2 servers in your mom's basement?
[...]
skiddies
[...]
...you and your kind stop posting noncence...
might not be the smartest strategy for a respected businessman. Just saying... Wink

If it is not ok for you that people voice their opinion (and yes, my opinion is still, that your own share is too high for my taste - your's obviously is different and it's up for other potential investors to decide for themselves) please consider advertising on a website/forum you control and that you can edit/restrict/censor as you wish.

Further questions:
If they are not 100% electricity costs, what other costs are covered with the ~100 GBP/month an investor should pay?
Until when are you looking for investments? If for example someone would start a collection on GLBSE, this might take one month or more - and by that time you even might be already "booked out".
What type of hardware are investors investing in? With that amount of money you want to raise, FPGAs/ASICs wouldn't be that much out of reach any more... but these have different 2nd hand value to be considered.
Which country will this data center be in? Still in GB or somewhere else?
What types of services are investors allowed to host on "their" machines? Only Bitcoin related stuff (what about hosting a pool server?) or also different services, like webservers, torrent boxes...

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Bitsinmyhead
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May 30, 2011, 01:46:09 PM
 #17

So you are some kind of legend on this forum...
David Hasselhoff is a legend in Germany...
Doesn't mean I want to invest in his brand....

Why let numbers ruin such a nice investment idea...
You just hide behind the...
Different risks, rewards and tax liability profiles...

Tax liabilities are very unclear...
At least where I live...
Thats what my accountant says...
Doubt it is much different in the rest of world...

And for the risk/reward...
I want to challange you...
To come up with a set of assumptions....
Where your risk/reward profile...
Is better than just buying coins...

You do that and I leave this thread alone...
But right now this just looks like an easy way...
Of getting rich of someones dreams...
Nothing sells like printing your own free money...

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Vladimir
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May 30, 2011, 01:58:25 PM
 #18

Surkim, you are correct I do get worked up by people assuming that my only cost is mining hardware and electricity, you would be not the first one. Perhaps I should keep my cool better. But trust me you are not the first one pestering me with this by far and my not quite board room style response is provoked by the level of critique.

Quote
If they are not 100% electricity costs, what other costs are covered with the ~100 GBP/month an investor should pay?

Let's see.. Rent, property taxes, water, electricity, shared hardware depreciation (floors, CCTV cameras, alarms, shelving/racks, security contracts (including police response), management and monitoring servers, networking equipment and Inet connectivity, cooling system, ventilation ducts, shipping, insurance, electrics ... the list goes on) Also the quoted numbers are estimate. It might get higher in reality, definitely it should not be surprise if thing go 5-10% or even a bit more over budget. Should you try to get something like this in a 'proper DC' expect costs 3-6 times higher, though. This is rather different from just electricity, is it not?

Quote
Until when are you looking for investments? If for example someone would start a collection on GLBSE, this might take one month or more - and by that time you even might be already "booked out".

There are no set time limit. DC3 is expected be scalable up to 400 Ghps which is a lot. Further expansion is possible. It might make sense to let me know about large GLBSE listing being prepared so that I amend my plans accordingly and prepare for scaling up further if needed. Also I do not need any specific number of investors to come in order to start the project. DC3 will come online with existing funds and arrangements which are either already in place or being finalized.

Quote
What type of hardware are investors investing in? With that amount of money you want to raise, FPGAs/ASICs wouldn't be that much out of reach any more... but these have different 2nd hand value to be considered.

GPU based machines, 6990's mostly at the moment, not the cheapest ones either where it comes to mb/PSU/case.


Quote
Which country will this data center be in? Still in GB or somewhere else?

Derbyshire, UK.

Quote
What types of services are investors allowed to host on "their" machines? Only Bitcoin related stuff (what about hosting a pool server?) or also different services, like webservers, torrent boxes...

None. Investors will not get any access to raw machines. The delivery of the results of calculations would be done either via weekly zero-variance method or by pointing miners to investors RPC end point. Note that costs are quoted per Ghps not by GPU's or boxes.



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Vladimir
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May 30, 2011, 02:03:23 PM
 #19

And for the risk/reward...
I want to challange you...
To come up with a set of assumptions....
Where your risk/reward profile...
Is better than just buying coins...

You do that and I leave this thread alone...

Here you go...

tomorrow exchange rate of bitcoin goes to 0 and stays there forever. You've just lost 100% of your bitcoin investments while me and my investors will have some computer hardware and a working supercomputer which coluld be sold or may be used to mine namecoins or bitcoin 2.0 or towncoins or googlecoins or visacoins or ciacoins or even fedcoins or carotcoins to be rented out to GCHQ or something else.

Goodbye.

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May 30, 2011, 02:08:48 PM
 #20

Gpu's are good because they can be used to do computational work on other problems to bitcoin...

The real question is why don't we make a co-op and build bitcoin asic's?  Then sell them for profit... this means that we get GBP or other asset, while still helping the bitcoin community.

One off NP-Hard.
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