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[Vladimir]

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[1714003502]

1714003502

[1714003502]

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[ronaldmaustin]

I do agree that my analysis does not take time and opportunity cost into account.  You are obviously an educated computer programmer with a diverse background and your time has a value and a cost.  As a full time job you might be able to make more doing other things rather than mining.  I was strictly figuring hardware costs and electricity.  I myself have 4 5970's running 24/7.  If I factored in all of the time spent going to and from stores to get the components, building the systems, getting the software running and tweaking the programs ... and added that to my cost, I would have to conclude the venture was not worth it at all.  

Having said that, I do think that so long as the upfront cost of the equipment is more than paid for by those buying contracts for GPU time, there is still a nice profit to be made by someone who values their time and skill set less than you do.  And where someone sees a profit, someone will act if there are no barriers to entry to compete.  Upfront cost is a barrier to entry in most businesses that does not appear to exist to a large degree in this case.  If someone would give me $2000 I could build them a box that runs two 5970's and I'd make a very small profit.  Better yet, I buy the box, plug it in at a little over $100 a month and break even in less than three months given current prices and difficulty.  Better still, THEY buy the box and I give them what I generate over the first three months.  Depends how one values their time, I guess.

[ronaldmaustin]

Also, re-reading your post, you are speaking of economies of scale.  It costs a certain amount for me to run a couple of GPU miners.  It would cost less, per mining unit, for me to run five of them.  After that, I suppose I'd have to run new wires in my walls to carry the increased amperage and eventually have to move to  a data center, which would drive the price way up.  So, yes, your actual costs to "do it right" large scale would be much higher than I'm quoting as well.

[ronaldmaustin]

Incidentally, I think you are in the UK, so I have no idea what you pay for 5970's (if that's what you use) but Frys here sells them for $599 with a $50 ongoing rebate from the manufacturer (Diamond), so $549 each.  Hard to beat, even online.

[Vladimir]

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[hendi]

Interesting discussion going on here! As a recent customer, let me give my 0.02฿:

I don't care if or how much profit vladimir earns with this service. First, it's a service, and like normal offline services for which I also have to pay I assume the person who offers it makes a profit. If not, why would he make this offer? And I have absolutely no problem with someone earning money with a provided service; in fact, that's what I do for a living, too.

Second, I just made a back of the envelope calculation how much it would cost me if I wouldn't use this service, but do the work for myself, by myself. Yes, if I only calculated the cost of hardware and electricity, than maybe it would be cheaper than using his service. But, I'd need a place to store these boxes, and either I'd have to pay for a decent DC, or I'd have to put these loud boxes somewhere in my home (no way!). I'd have to go around looking for the necessary equipment, do research for the best hardware, the best software, install everything, and tweak the settings. If I multiply the time needed for this with my hourly rate, vladimir's service is actually cheaper!

Of course I like to learn new stuff, but really, I've got more interesting things (for me at least) on my ToDo and ToLearn lists than building clusters and tweaking CUDA or Assembler code. So, if you don't have other projects that fulfill yourself, and find building clusters fun, than don't use this service but do it on your own! It'll definitely be a great learning experience! Maybe you could even offer an alternative service, e.g. with lower costs (use your own photovoltaics to produce the energy ;-)) or instant set-up. But if you have enough other stuff to do, use this carefree service

[Vladimir]

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[dust]

I suspected you would implement that payment scheme.  For now I will just pay out customers portion of fees every week if it is > .01 btc.  This requires some trust as only I know what fees were collected.  Currently, fees are negligible so it doesn't matter too much.

[Vladimir]

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[Littleshop]

You are falling into a 'mom's basement' trap. Even worse, you counting only cost of equipment and even comparing contract price to cost of equipment. Other posters at least counted cost of electricity as well. This would be all cool and dandy if there was no need for:
- shipping
- labour needed to assemble, test and deploy the rigs
- software development
- customer support
- public relations
- network and system management and monitoring
- insurance
- management
- accounting
- profit
 
  I've heard it all before, some claim that they can fit 4x5970's in a 3U box using water cooling and therefore fit 112 GPU's into a standard rack, some claim that one needs only hardware and electricity (or only hardware even) to run a mining rig. None of these people have real world experience running large computer farms or businesses. It is where the real world conflicts with fantasy.

  Very easy to build a biz plan with only hardware and electricity as costs. Trying to execute it without humongous cost overruns, is entirely another matter.

  As I said before, will be happy to give refuge to customers running from cowboy operators (if they have any money left).

  Ironically, every time I write responses, to such 'price too high' mathematicians, I count my expenses and profit margins and I have an urge to up the price another 10% or so.

+1

I am not commenting on the prices (though I think they are fair) but on the long term stability.  Doing this right costs money and doing it wrong will (in the end) cause failures.  With many machines running you can have all kinds of problems, especially if they are cobbled together, not close to identical and not well thought out. 

That being said... someone in a country with low electrical costs could be some serious competition. 

This is getting really interesting!

[Vladimir]

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[Txyru]

I love the low cost of electricity in Vancouver... around ~$0.05/kWh

Plus it rains all day every day.

[Vladimir]

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[Vladimir]

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[jav]

That being said... someone in a country with low electrical costs could be some serious competition. 

I currently live in Denmark and my understanding is, that electricity prices are actually sometimes negative here (!). That's because Denmark has a lot of wind energy and at peak times they just don't know where to dump all that energy. Well, I guess you have to be some sort of high-volume costumer to get these rates and can't just get them as an individual. But with renewable energy sources becoming more and more widespread, that will probably change pretty soon as well. Since it will actually be pretty important for the stability of the energy grid that individuals start to adjust their usage to the amount of energy available. I guess mining is a perfect fit here: "Oh, let me take all that excess energy of your hands... I can turn it into money!". :-)

[Vladimir]

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[gusti]

I have a relatively small "staging area" in my garage where I have so called "economy 7" electricity tariff. (Most of the rigs are on industrial tariffs). This makes my night electricity cost here about 50% of regular price. Too bad that this is rip-off Britain and night tariff lasts only 7 hours per day.

A few more full racks of mining rigs and I can make a biz case for immigrating to some country with better electricity prices :-)

Would you like to partner with a 0.02-0.04 /kwh country ?

[Vladimir]

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[Raulo]

Just a quick note to people complaining that my prices are high. Apparently it is possible to get some GPU hosting with GPU clouds like Amazon, Peer1 etc...

The only problem is that on per Ghps basis my prices are  about 10-20 times cheaper than those from Amazon and peer1 and I suppose all other known non "mom's basement" type of competitors.

The price difference is so overwhelming that I could not even be bothered to calculate exact numbers yet.

Yeah. It's like saying that your $10/liter gas is cheap because, you know, your only other choice is to burn perfumes and it's 1000$/liter.

Your prices are high because at difficulty 50000+ which is going to be in the next reset in 3-4 days, your 3-month 1GH/s = 7.88 PH contract is going to generate only 1835 BTC assuming no further difficulty increases (we all know how likely it is). At $2100 for no more than 1835 BTC (and likely 1000 BTC only due to further difficulty increases), it is much cheaper to buy coins on the market.

If your service is popular it can only mean that there is apparently ample supply of people who cannot count people who have not grasped the Bitcoin difficulty adjustment formula, yet. 

[Vladimir]

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