[Proposal] Mining Co-Op

[Biodom]

Armed has contacted me about purchasing PSU's (the IBM 2880W PSU's) to power the Co-Op, I am going to be putting some bulk pricing together to operate the miners as I feel they are the most reliable/cost effective PSU's for medium-large scale at present.

Here are some of my thoughts on the Co-Op:

The biggest challenge here seems to be where to store the accumulated funds in between confirming commitment and the actual payment to the manufacturer.  Instead of organizing this as a Co-Op, why not just run it as a Group Buy?  If you wanted to keep it extremely simple, break "shares" down to 1 full Avalon6 (so that everyone that buys in owns that hardware, and after the committed hosting period individuals could make arrangements with the Data Center to return/rehost/sell the miner).

Shares would be valued at price of the miner + VAT/Duty + Shipping + PSU cost + X month pre-paid hosting fee.  After that hosting period is done, it would be up to the owner to re-commit to another group hosting timeframe or sell the miner and have the Hoster ship it/host it for someone else, or just have it returned to them.

As for the funds, you could simply ask for a down-payment as a reservation fee, and once you have all the commitments in place all the funds could be transferred individually to the manufacturer's wallet and the order could be made up/shipped out, similar to how RoadStress ran the SP20 Group Buy last Winter (small deposit left with RS, remaining balances were paid to SP-Tech individually and the SP-20's shipped to individuals.  In this case instead all miners would go to hosting facility).  You would specify a date range for commitment & initial deposit, and then a firm date to send the balance of funds to the manufacturer, otherwise deposit is forfeit and you are excluded from GB.

I agree. Group buy initiated at SPT (for SP-30) also worked with Titan hosting and i did not hear anything wrong about it.
KSS, right?

[1714903406]

1714903406

[Biodom]

It looks that there are numerous legal and practical problems of joint ownership and joint custodialship of funds, and I think we can approach this better.

We can run the GB similar to the roadstress christmas GB. Everyone retains ownership of the miners (no corporation needed), the vast majority of funds are never held by me, and at the end of the hosting term they can do whatever the hell they want with em--although they have the option to renew hosting.

Here's the game plan:

• I take a 0.06BTC (per miner) deposit from those committing to miners. If you back out you lose your deposit, if we don't make the MOQ then everyone gets their deposit back.
• BlockC provides payment address, everyone pays for the miners.
• At the same time, Finksy provides payment address, everyone pays for the PSUs.
• Once miners arrive and are running at CryptoBoreas, Allinvain provides a single payment address and everyone pays for the hosting.
• If someone doesn't pay for the hosting by a set due date, their hardware is seized to pay for the cost of hosting.
• The buyers sign a message containing their username with the BTC address(s) they paid with.

Once hosting has been paid for, everyone gets their deposit back (except those who didn't pay at some stage).

I will sign the hosting agreement and will provide allinvain with your pool information so he isn't inundated with PMs. If you want pools changed, I will have remote access to the miners and will be able to do it for you in a jiffy.

Finksy PM'd me a full fee schedule of the PSUs, the prices are very good. I will post that when I make the official GB thread tomorrow.

see highlighted...not sure how you can seize something that cost $1300 if someone was one day late on a $323 hosting payment (assuming 6 mo).
this sounds drastic. I would prefer something else, maybe a suspension with hashing going to provider everybody else or perhaps a third party taking it over in 7-10 days after nonpayment and refunding the miner cost back to the initial owner.
Edit: yeah, as posted below, if not paid, miner is hashing for provider until payment is made. However miner still belongs to the one who paid for it initially.

[allinvain]

Seizing the hardware is a bit extreme, and should only be reserved for exceptional cases. I think something more reasonable from the hosting provider's point of view is switching the hardware to mine for the hosting provider until the customer pays the amount owing; thus it's not a double loss.

[armedmilitia]

I was not clear at all! The hardware would be temporarily "seized" (IE taken control of) and payments redirected in order to pay for the hosting costs, and then control would be returned after the costs have been covered. I agree that confiscating the miner permanently is extreme!

Good catch, guys.

[Finksy]

I'd like to add that if you guys go with Finsky for PSUs you can save on shipping costs because a member of our team lives in Toronto, so he can just personally pickup the PSUs and we'll drive them up to Labrador free of charge. I would also recommend buying the necessary PSUs _before_ the miners ship, this way the PSUs are ready and waiting in Labrador.

Yeah buddy no problem.  I could drive them to you or your colleague in either city, considering your drive to the DC is about 8x further, lol.

Armed, PM'ing you back now.

[Finksy]

Well given the new nature of the GB, I may as well post my prices here for you all to see.  All prices will include delivery to Allinvain or his colleague, who will in turn graciously provide delivery to the Data Center on the East Coast.

Each PSU setup will be capable of running 2.5 Avalon6 miners, and would consist of the following:

-IBM 2880W PSU w/ fans
-Breakout board (with 22x PCIe connectors)
-C19-C20 cable
-10x 24" 16AWG PCIe cables

15x Miners - 6 PSU setups required. Cost per PSU bundle would be $165 or $66 per Avalon6
40x Miners - 16 PSU setups required.  Cost per PSU bundle would be $155 or $62 per Avalon6
75x Miners - 30 PSU setups required.  Cost per PSU bundle would be $150 or $60 per Avalon6
100x Miners - 40 PSU setups required. Cost per PSU bundle would be $147.50 or $59 per Avalon6

The only other issue is what happens with the PSU's once the hosting is terminated.  Since you can't request a part of a PSU returned to you, and they are being used to power 2.5 miners, everyone will have to come to a consensus.  Allinvain has mentioned that the DC may be interested in buying them out depending on pricing at the time.  There is also a possibility of looking for a bulk buyer to take them all and dividing the funds equally, if the opportunity arose at the right time.

[allinvain]

I'd like to add that ideally we would prefer that one PSU power 2 miners only, not 2.5, for a load of ~2200 watts. We like to run everything below max capacity and everything in our electrical setup is overspec and loaded up to a maximum of 70 to 80% for safety reasons (not to mention long term reliability).

[philipma1957]

I'd like to add that ideally we would prefer that one PSU power 2 miners only, not 2.5, for a load of ~2200 watts. We like to run everything below max capacity and everything in our electrical setup is overspec and loaded up to a maximum of 70 to 80% for safety reasons (not to mention long term reliability).

this is penny foolish and pound wise


ie  I like the idea

[Searing]

A 0.5% bulk discount on over 100 units.  

I've been lurking for a while and this urges me to add my voice here

Avalon6 and BitMain's S7 are overpriced, too much, they're actually priced for 2-3c/kWh electricity.

I mean, BitMain in China does not have access to such cheap electricity (I don't have any proof, just long reads here about cheapest electricity in China) so they have to be sure that nobody can earn more than themselves when selling an S7.

BTW, they sell it on Hashnest as well, so Hashnest's price is a little lower since you're paying .10c/kWh there.

What we should find, IMHO, is cheap electricity, like .05c or .04c and a bunch of second hand S5s or SP20s, which are overpriced as well (from the WTS offers I see here on bitcointalk), but not as much as a new S7 and should possibly ROI no further than April next year and be able to be marginally profitable (thanks to cheap electricity) beyond next halving.

Spending 1600 USD/unit now to earn 98 USD 400 or more days from now... well, is not that thrilling as a proposition, not to mention that a single failing unit wipes out the earnings of 16 more units.

spiccioli

Yeah I'm running into the same damn "MATH" you are....and of course when was the last time equip from an ASIC mnfg arrived ON TIME. As an example I have 2 Titan 650mh total scrypt miners running at 13c kwh ...assuming I could host them for 1/2 the elec costs etc and the equip is free (paid for ROI) I would make MAYBE an extra (after shipping fees etc hosting for 6 months) maybe say 75 bucks extra a month in elec savings....so using that kinda logic you toss up NEW equip at the prices and it kinda sorta becomes problematic quick. A person wonders it it really worth the hassle or risk on equip arriving on time and all the ducks in a row etc etc

The only catch I may have others may not is I'm a LEGAL miner in the states..ie the IRS knows about my efforts and approves...(read that sad tale on how it happened an a prev post back) anyway due to buying too much equip in 2013 and 2014 and it arriving at then back end of each year (that helped) I have paid no real taxes so far..and some extra $$$ to the CPA so been lucky

My point is under such a scenario if you are legal in my manner (don't recommend it but again my situation) I can get 1/2 of the 25% depreciation on equip back in my taxes paid to IRS the first year and that remaining 12.5% back parceled out the next 4 years (should I run the bitcoin biz that long into the future) bitcoin miners under the 2013 IRS virtual currency guidelines are considered computer equip and can be depreciated as such. (this is why my CPA laughs and says I'm a farmer she treats my entire business like the farmers she serves..same deal in that IRS treats mined currency as land and capital gains and all...and viola my ltc miners are 'tractors' so to speak)

So anyway there may be a bit of a hedge for me in my legal setup above and beyond that makes  this attractive from showing IRS my bona fides and such with the equip discounts (and that would include hosting fee etc I think but likely NOT electric)

but then again as in previous posts ..I may be thinking too shallow here if it is a long term ..go for broke ...build it up in future with SP50's balls to the wall project..if that is so..well hell I've dumped $1,600 bucks in dumber things

anyway my rambling thoughts at this time.


(man this is complex at least in my feeble little mind)

edited: got rid of USA hosting I re-read previous posts it is hosting in Canada from what I understand. The benefits to me as a legal miner on equip depreciation in states still applies thou to myself or others in my situation....so again 12.5% off equip purchase (and i think hosting) the 1st year ...is helpful in my situation. Also shows some bona fides for the biz (ie making revenue modest thou it may be) for the IRS to show me as continuing to be a legit biz

As a side note in 2013 a guy named LAB RAT tried to do something similar as you all with BFL ...but BFL as you know never shipped equip so it was a complete fiasco...not sure what kind of protections you can put in place for something like that ..just saying...good intentions sometime end up as roadkill w/o any fault to those involved.

[spiccioli]

I'd like to add that ideally we would prefer that one PSU power 2 miners only, not 2.5, for a load of ~2200 watts. We like to run everything below max capacity and everything in our electrical setup is overspec and loaded up to a maximum of 70 to 80% for safety reasons (not to mention long term reliability).

this is penny foolish and pound wise


ie  I like the idea

Well,

I have several PSUs of this kind powering some SP20s, each PSU has 3 powerfull fans which lower total efficiency if underutilized.

At 2.5 Avalons each we should be at 2.5 - 2.6 kW per PSU so at around 90% utilization of the PSU.

Just my 2c.

spiccioli

[Searing]

On a side note. (I'm likely to get shot down on this quick) but just for the sake of the question....could a person (supposedly) just do the Group Buy for the Miner w/o going for the hosting?

The reason I ask is my 'unique' situation with equip and deductions with IRS as that I'm a legal miner in USA. (again don't ask see my previous posts...trapped I was)

Anyway at 12.5% equip depreciation the first year and the remaining depreciation I can take off taxes owed for the next 4 years for the other 12.5% ..should I choose to run this 'bitcoin biz out that far"...well ......anyway even at my electric at 2x as much ..it could just plain be a wash for me..comparatively speaking. (I figure even if I just do 2 years on this miner before saying the hell with it that is 15.5% off the equip price on top of the group buy)


Anyway just asking ..fully understand if you tell me to go "stuff it" ...... Just trolling for options on this....from my somewhat 'odd' mining situation...and IRS etc.

[ATCkit]

It looks that there are numerous legal and practical problems of joint ownership and joint custodialship of funds, and I think we can approach this better.

We can run the GB similar to the roadstress christmas GB. Everyone retains ownership of the miners (no corporation needed), the vast majority of funds are never held by me, and at the end of the hosting term they can do whatever the hell they want with em--although they have the option to renew hosting.

Here's the game plan:

• I take a 0.06BTC (per miner) deposit from those committing to miners. If you back out you lose your deposit, if we don't make the MOQ then everyone gets their deposit back.
• BlockC provides payment address, everyone pays for the miners.
• At the same time, Finksy provides payment address, everyone pays for the PSUs.
• Once miners arrive and are running at CryptoBoreas, Allinvain provides a single payment address and everyone pays for the hosting.
• If someone doesn't pay for the hosting by a set due date, their hardware is seized to pay for the cost of hosting.
• The buyers sign a message containing their username with the BTC address(s) they paid with.

Once hosting has been paid for, everyone gets their deposit back (except those who didn't pay at some stage).

I will sign the hosting agreement and will provide allinvain with your pool information so he isn't inundated with PMs. If you want pools changed, I will have remote access to the miners and will be able to do it for you in a jiffy.

Finksy PM'd me a full fee schedule of the PSUs, the prices are very good. I will post that when I make the official GB thread tomorrow.

Great plan...with the clarity on the seizure aspect. You might want to start a new thread with Group Buy and Avalon6 in the title. You might end up doing a couple batches if demand continues after the first GB.

[philipma1957]

I'd like to add that ideally we would prefer that one PSU power 2 miners only, not 2.5, for a load of ~2200 watts. We like to run everything below max capacity and everything in our electrical setup is overspec and loaded up to a maximum of 70 to 80% for safety reasons (not to mention long term reliability).

this is penny foolish and pound wise


ie  I like the idea

Well,

I have several PSUs of this kind powering some SP20s, each PSU has 3 powerfull fans which lower total efficiency if underutilized.

At 2.5 Avalons each we should be at 2.5 - 2.6 kW per PSU so at around 90% utilization of the PSU.

Just my 2c.

spiccioli

I suppose they could but are there any issues with multiple psu's power an avalon 6.

we may find 2 ¼ is better then 2 or 2 ½ 

 one avalon 6 would use a pcie from 4 psu's

rather

 then one avalon 6 using a pcie from 2 psu's

I think a lot depends on the owner of the avalon 6.  If these prove to be real flexible in over clock or under clock  and up volt or down volt.

[MrBitcoinMiner]

Here's the game plan:

• I take a 0.06BTC (per miner) deposit from those committing to miners. If you back out you lose your deposit, if we don't make the MOQ then everyone gets their deposit back.
• BlockC provides payment address, everyone pays for the miners.

[/list]

Good update, I just want to clarify a few things. Do you have final pricing from BlockC on the machines? Also what are the final offers you got from the most competitive hosters?

I also agree with anyone who is not making payment will have their pool settings switched to mine to the hosts account until their account is back in good standing, that is the only fair thing to do.

[Biodom]

A 0.5% bulk discount on over 100 units.  

I've been lurking for a while and this urges me to add my voice here

Avalon6 and BitMain's S7 are overpriced, too much, they're actually priced for 2-3c/kWh electricity.

I mean, BitMain in China does not have access to such cheap electricity (I don't have any proof, just long reads here about cheapest electricity in China) so they have to be sure that nobody can earn more than themselves when selling an S7.

BTW, they sell it on Hashnest as well, so Hashnest's price is a little lower since you're paying .10c/kWh there.

What we should find, IMHO, is cheap electricity, like .05c or .04c and a bunch of second hand S5s or SP20s, which are overpriced as well (from the WTS offers I see here on bitcointalk), but not as much as a new S7 and should possibly ROI no further than April next year and be able to be marginally profitable (thanks to cheap electricity) beyond next halving.

Spending 1600 USD/unit now to earn 98 USD 400 or more days from now... well, is not that thrilling as a proposition, not to mention that a single failing unit wipes out the earnings of 16 more units.

spiccioli

all profitability numbers are bogus anyway with btc being $380 one day and $295 the next.
the only play here is for halving-associated btc expected jump.
So, you accumulate coins like there is no tomorrow, then sell some.
If no jump, then profits would be marginal, if any.

[Finksy]

I suppose they could but are there any issues with multiple psu's power an avalon 6.

we may find 2 ¼ is better then 2 or 2 ½ 

 one avalon 6 would use a pcie from 4 psu's

rather

 then one avalon 6 using a pcie from 2 psu's

I think a lot depends on the owner of the avalon 6.  If these prove to be real flexible in over clock or under clock  and up volt or down volt.

Phillip,

2500W DC (2.5 Avalon6) is well within the capability of the IBM 2880W PSU's, for long-term reliability and efficiency. These are nothing like ATX PSU's as far as durability, 87% steady load is a walk in the park.  However, as far as safety is concerned it is naturally up to the hosting facility to decide, as they are the ones with the liability.  2 1/4 miners wouldn't work as the Avalon 6's use only 2 hashboards, and mfr's don't recommend having multiple PSU's on one board.

I've been lurking for a while and this urges me to add my voice here

Avalon6 and BitMain's S7 are overpriced, too much, they're actually priced for 2-3c/kWh electricity.

I mean, BitMain in China does not have access to such cheap electricity (I don't have any proof, just long reads here about cheapest electricity in China) so they have to be sure that nobody can earn more than themselves when selling an S7.

BTW, they sell it on Hashnest as well, so Hashnest's price is a little lower since you're paying .10c/kWh there.

What we should find, IMHO, is cheap electricity, like .05c or .04c and a bunch of second hand S5s or SP20s, which are overpriced as well (from the WTS offers I see here on bitcointalk), but not as much as a new S7 and should possibly ROI no further than April next year and be able to be marginally profitable (thanks to cheap electricity) beyond next halving.

Spending 1600 USD/unit now to earn 98 USD 400 or more days from now... well, is not that thrilling as a proposition, not to mention that a single failing unit wipes out the earnings of 16 more units.

spiccioli

all profitability numbers are bogus anyway with btc being $380 one day and $295 the next.
the only play here is for halving-associated btc expected jump.
So, you accumulate coins like there is no tomorrow, then sell some.
If no jump, then profits would be marginal, if any.

Did ROI calculators a year ago predict that the S5's would still be worth what they are today? They haven't really depreciated much at all in fairness.  For quite a few generations now skeptics have doubted ROI, assuming that difficulty would drive hardware obsolescence.  And yet, those who have bought hardware for the past 12 months have done considerably better than those who have bought coin.  We have reached the point where you can factor equity into the purchase price of miners, unlike early generations of ASICs, and that is something that calculators do not include.

Now, with the halving coming, revenue will be cut in half. However, I don't believe that the interest in bitcoin will be cut in half.  In between the lowering of difficulty (due to many miners becoming un-profitable) and the raise in price due to similar demand and lowered supply, I don't believe anything drastic will happen in the world of mining, and that current gen miners will stay profitable for a long time to come.  Just my BTC

[armedmilitia]

There's a lot of good questions here, but at the moment I just have time for a big update:

I have very good news for you guys. Jamie from great north data just got back from out of country (where he had no internet access), and has undercut allinvain's pricing by a fair margin. We'll get cheaper hosting and a 24/7 tech!

I've also sent blockC a message relating to the recent drop in BTC price to see if they will lower their quote for the Avalon6.

I was about 90% of the way done the new group buy post when jamie emailed me. I've put that on hold until we sort out the details. Hopefully we can still get this underway by the end of today!

[armedmilitia]

Finksy:

If members choosing not to renew the hosting contract cannot come to a consensus about what to do with their fractional ownership of PSUs, I think we should sell the excess PSUs and split the funds between them proportionately.

It seems to make the most sense intuitively.

[armedmilitia]

On a side note. (I'm likely to get shot down on this quick) but just for the sake of the question....could a person (supposedly) just do the Group Buy for the Miner w/o going for the hosting?

For this group buy, no! It's a package deal. 

[spiccioli]

all profitability numbers are bogus anyway with btc being $380 one day and $295 the next.
the only play here is for halving-associated btc expected jump.
So, you accumulate coins like there is no tomorrow, then sell some.
If no jump, then profits would be marginal, if any.

The problem is that you spend 1600 using BTC now with the risk of having less BTC when price doubles...

The only play, IHMO, is hoping that difficulty slows down to 1 or 2% max per retarget, otherwise the risk of ending up with less BTC one year from now seems real.

Did ROI calculators a year ago predict that the S5's would still be worth what they are today? They haven't really depreciated much at all in fairness.  For quite a few generations now skeptics have doubted ROI, assuming that difficulty would drive hardware obsolescence.  And yet, those who have bought hardware for the past 12 months have done considerably better than those who have bought coin.  We have reached the point where you can factor equity into the purchase price of miners, unlike early generations of ASICs, and that is something that calculators do not include.

Don't forget that for a good half of 2015 difficulty moved very little, now it seems we're back at 4-5% increase each retarget.

Anyway, if, as it seems, there is a lower electricity cost available now.. well, let's redo again all our calculations and predictions and see what they give.

spiccioli