Avalon ASIC Batch #2 Income Sharing; arrived and hashing

[ProfMac]

Don't be upset. Just run proper calculations with http://www.bitcoinx.com/profit/ taking into account a) current difficult, b) difficulty projection based on last two weeks increase, c) profitability decline, d) hashrate taking into account you won't get 24/7 uptime

You will see that 99% it will be impossible to get 250BTC back in 50 days with batch 2 Avalon.

I hope I don't come across as upset.
That calculator is a cool web page.  Thanks for sharing it.
I don't really have any idea of what numbers to plug into it.
My electricity rates are below 8.2¢ / kwh.

[ProfMac]

Really don't want to screw your post, but at least one of the auctions looks very scammy because of the bidding pattern. 250BTC is a high price indeed, and those auctions aren't solid enough to base the price on them imo.

I think you could share with us a scenario you expect based on difficulty projection and profitability decline per year factor - if the difficulty goes x2 there you go with 2.5BTC per day, with difficulty increasing week by week, imo that's the more likely scenario.

I don't want to defend any particular ROI scenario at all.  That is an area of pure speculation.

Right there. Regardless of what the payback period is, this offer still allows people like myself to be a part of mining (although not a very hands-on one) and be an active part of the bitcoin community.  What method will you use for bookkeeping and payouts?  Can we request payouts to a particular address?  Do you plan to list on btct.co and allow shares to be traded? 

Thanks,
Dave

If those answers are not in the original post, I have failed as a writer.  That's bad, bad news for a professor.

I will use the blockchain.  It will tell who paid, how much they paid, and who I should send the payments back to.  It is the full audit trail, and it is viewable by anyone.  You are anonymous or not, under your control.

In time, I will write some software to directly read the blockchain and construct the payout TXns.  In the present, I will just read on the web and click the mouse endlessly to make things go.

The link in the original post leads to a transaction on blockchain.info that shows when I paid for the avalon.  If you create a new payment address that is only used for this venture, the blockchain.info report on that address will show how much you have paid in, and how much your have received back.

I will only pay to the address that bought into the venture.  I can manually cash out someone, and they can sign up with a new address, and that will accomplish an address change.  For a large group, this will become very tedious.

You can look at the signup address, 17Pq8oPtk8rikxZhF1wENFqR9YtDyLyr8E, in blockchain to see how many people have signed up.  It's a pretty quick read right now 

I don't envision a way to trade this offer.

[davecoin]

Excellent, thank you for the details.

[ProfMac]

Don't be upset. Just run proper calculations with http://www.bitcoinx.com/profit/ taking into account a) current difficult, b) difficulty projection based on last two weeks increase, c) profitability decline, d) hashrate taking into account you won't get 24/7 uptime

You will see that 99% it will be impossible to get 250BTC back in 50 days with batch 2 Avalon.

I have run a calculation from this page.
I entered these numbers:

Conversion Rate: 79.99 (The limit sell value on BitFloor at this time.)
Hash rate (MHash/s): 65,000.00 (the advertised rate)
Electricity rate (USD/kWh): 0.08192 (The expensive winter rate.)
Power consumption (W): 650
Cost of Mining Hardware: $1499 (Is there a page that is all BTC based?  I don't need to have USD involved)

Results
Hardware break even:  4 days
Net Profit first time frame (3 months): 31928.05 USD
$31,928.05 / 250 portions = $127.71 / portion = $127.71 paid for bitcoin = $127 / 77.99

That is 63% interest paid in 90 days.  This is not guaranteed.  It is just some numbers plugged into the suggested web page.  It is an illustration for your amusement only.  Things will go wrong.  Things always go wrong.

[shibaji]

Don't be upset. Just run proper calculations with http://www.bitcoinx.com/profit/ taking into account a) current difficult, b) difficulty projection based on last two weeks increase, c) profitability decline, d) hashrate taking into account you won't get 24/7 uptime

You will see that 99% it will be impossible to get 250BTC back in 50 days with batch 2 Avalon.

I have run a calculation from this page.
I entered these numbers:

Conversion Rate: 79.99 (The limit sell value on BitFloor at this time.)
Hash rate (MHash/s): 65,000.00 (the advertised rate)
Electricity rate (USD/kWh): 0.08192 (The expensive winter rate.)
Power consumption (W): 650
Cost of Mining Hardware: $1499 (Is there a page that is all BTC based?  I don't need to have USD involved)

Results
Hardware break even:  4 days
Net Profit first time frame (3 months): 31928.05 USD
$31,928.05 / 250 portions = $127.71 / portion = $127.71 paid for bitcoin = $127 / 77.99

That is 63% interest paid in 90 days.  This is not guaranteed.  It is just some numbers plugged into the suggested web page.  It is an illustration for your amusement only.  Things will go wrong.  Things always go wrong.

You forgot to change the difficulty.

[ProfMac]

You forgot to change the difficulty.

I got this difficulty from https://blockchain.info/stats.  Should I use a different one?

[shibaji]

You forgot to change the difficulty.

I got this difficulty from https://blockchain.info/stats.  Should I use a different one?

Unless you have the unit in hand ready to hash, the difficulty needs to be adjusted with probable future rate.

[theGECK]

Regarding taxes:

http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

For an explanation, http://www.grc.com/sn/sn-396.pdf starting on page 13.

Essentially, you don't have to worry until you convert it into fiat. I suppose if you bought physical goods worth over $600 that might be debatable, but just getting BTC is not regulated.

And actually there's one last thing I forgot. Under "De-Centralized Virtual Currencies" -
so, I mean, they're leaving no doubt here. They said: "A final type of convertible virtual
currency activity involves a de-centralized convertible virtual currency (1) that has no
central repository and no single administrator, and (2) that persons may obtain by their
own computing or manufacturing effort. A person that creates units of this convertible
virtual currency and uses it to purchase real or virtual goods and services is a user of the
convertible virtual currency and not subject to regulation as a money transmitter."

[ProfMac]

Regarding taxes:

http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

For an explanation, http://www.grc.com/sn/sn-396.pdf starting on page 13.

Essentially, you don't have to worry until you convert it into fiat. I suppose if you bought physical goods worth over $600 that might be debatable, but just getting BTC is not regulated.

And actually there's one last thing I forgot. Under "De-Centralized Virtual Currencies" -
so, I mean, they're leaving no doubt here. They said: "A final type of convertible virtual
currency activity involves a de-centralized convertible virtual currency (1) that has no
central repository and no single administrator, and (2) that persons may obtain by their
own computing or manufacturing effort. A person that creates units of this convertible
virtual currency and uses it to purchase real or virtual goods and services is a user of the
convertible virtual currency and not subject to regulation as a money transmitter."

I have tipped one poster in the past.  You are a candidate for Nr. 2.  But I don't see any payment address in your signature.  I think that if you just update the signature, all your posts will show the new (current) one.

[theGECK]

I removed it because I wasn't active on these forums anymore and didn't want people wasting their BTC on me sending to a defunct address that I don't have the keys to anymore, but if you're going to offer, how can I refuse!

[ProfMac]

I removed it because I wasn't active on these forums anymore and didn't want people wasting their BTC on me sending to a defunct address that I don't have the keys to anymore, but if you're going to offer, how can I refuse!

Wise man.

Also, I have substantially changed the opening post.

[Rampion]

You forgot to change the difficulty.

I got this difficulty from https://blockchain.info/stats.  Should I use a different one?

Yeah. Make difficulty at least x2 (12,695,826). And please, in the USD cost of the hardware insert the price you are willing your investors to pay (250BTC, which at the current exchange rate is almost 20k). The details you should consider:

• Difficulty: at least x2 (12,695,826)
• Hashrate: make it 60,000, as you won't get 24/7 uptime
• Electricity rate: use your own ($0.08)
• Power consumption: 620w
• Time frame: as you wish (3 months in this example)
• Cost of mining hardware (USD): multiply 250BTC x current USD exchange rate = $19,767.5
• Profitability decline per year: I would suggest to insert 0.3 or lower (difficulty will raise fast. For my own calculations I usually use 0.1)

With that reasonable parameters your investors would be looking at ROI in 124 days. Probably more if difficulty goes x10 by the end of the year.

I think that you'r big mistake was:

- considering that the difficulty will be the same
- more important: including in the "cost of mining hardware" what it costed to YOU, not what it will cost to your investor (which is the point, don't you think?)

[theGECK]

What will happen to the received BTC if you do not get enough to purchase the Series 3?

[shibaji]

• Profitability decline per year: I would suggest to insert 0.3 or lower (difficulty will raise fast. For my own calculations I usually use 0.1)

I think this is reverse. 0.3 means in next year you are expected to earn 30% less. So, 0.1 means 10% less (i.e., you retain income level at 90% of first year). So, to be pessimistic, put in higher value.

[Rampion]

• Profitability decline per year: I would suggest to insert 0.3 or lower (difficulty will raise fast. For my own calculations I usually use 0.1)

I think this is reverse. 0.3 means in next year you are expected to earn 30% less. So, 0.1 means 10% less (i.e., you retain income level at 90% of first year). So, to be pessimistic, put in higher value.

No, it does not work like that. Play with that variable in http://www.bitcoinx.com/profit/ and you will see

[ProfMac]

What will happen to the received BTC if you do not get enough to purchase the Series 3?

Since I already have a paid order for the Batch #2, I will deliver what I promised.

So long as I have not spent the coin on Batch #3, I don't mind returning money to anyone who wants out, for any reason.

Batch #2 did re-open after Avalon did an audit on the orders that were paid or not.  So I suppose I should still try to gather the BTC 75 or so in case a Batch #3 becomes available.

[hchc]

You may purchase 1/100 (1 share) of the income of my Avalon Batch #2 ASIC Miner for each BTC 0.8683
</quote>

So can I buy out your batch #2 avalon with 86.83btc?

[ProfMac]

You may purchase 1/100 (1 share) of the income of my Avalon Batch #2 ASIC Miner for each BTC 0.8683
</quote>

So can I buy out your batch #2 avalon with 86.83btc?

There are some things to keep in mind:

Others have already bought in.
You cannot take possession of the device.
I have a buy-back right against your shares.

[ProfMac]

If you're just transfering bitcoin its okay.

Also, i can't believe you're valuing it at 250 bitcoin.  Also, it will not be generating 5 bitcoins a day for 50 days.  Batch 3 is scheduled to start shipping 22 days after batch 2.

I think the Avalon Batch #2 is supposed to ship soon.  I don't understand why you think it will be 50 days before it mines a block.

[PassiTheApe]

Can you tell me the quotient MH/s/share?