buying shares in other peoples mines?

[ricksta]

I have a question about buying shares in other peoples mines.

1. how do I know if the seller who haven't bought the hardware yet, would actually use the bitcoins send to them to buy the hardware?

2. even if the seller start mining, how can we trust that he would pay the bitcoins that he mined to the shareholders?

3. What if the sellers miner break or get stolen or something unexpected, does the investors take the loss?

[ezview]

Passive investments require risk mostly that are out of spenders control, but, looking around alot of people seem to accept this risk in third party mining rather than own equipment and buy the whole piece of equipment.  Also, it is hard or impossible to purchase current equipment under $1000 that has any ROI.  Three dollars per GB seems to be the best deal around for equipment.  I, to date, have been paying about $50 per GB and that does not work anymore in my calculations, as well as with recent reductions to about $30 per GB.

[klondike_bar]

I have a question about buying shares in other peoples mines.

1. how do I know if the seller who haven't bought the hardware yet, would actually use the bitcoins send to them to buy the hardware?

2. even if the seller start mining, how can we trust that he would pay the bitcoins that he mined to the shareholders?

3. What if the sellers miner break or get stolen or something unexpected, does the investors take the loss?

1) and 2) you dont and you cant
3) most likely, unless there is a contract clause to cover it. in which case, refer back to 2)

IMO, its worth it to just buy the equipment yourself. You will control where it mines, its income, and even when mining is unprofitable in 6-9 months, you will have the hardware in hand to keep or resell for some small value.

right now is a bad time to buy/invest in hardware. as i see it:
cointerra/fasthash are pre-orders
Bitfury is preparing to switch to an in-stock sales model soon (within a month?)
BFL is about as close to a scam as possible, while delivering behind schedule and insulting investors/users (BFL_josh...)
Avalon has a 2nd gen around the corner that will use the in-stock sales model, but has a poor power efficiency for gen2 (2x wattage use of what competitors offer)
KNC is nearly done fulfilling the first round of pre-orders with questionable success. second round will likely be better though

in my opinion, bitfury and KNC are the best options. soon they will both sell in-stock products to protect you against pre-order delays and untested items, and the resulting bidding war will bring down the price.

[qwk]

I have a question about buying shares in other peoples mines.

No, you have three.

1. how do I know if the seller who haven't bought the hardware yet, would actually use the bitcoins send to them to buy the hardware?
2. even if the seller start mining, how can we trust that he would pay the bitcoins that he mined to the shareholders?
3. What if the sellers miner break or get stolen or something unexpected, does the investors take the loss?

1. Let him show you the receipt, try to verify with the vendor of the hardware.
2. Tricky. You could engage a third party to do the distribution, but that would require trust in that third party.
3. That's the point of an investment. Otherwise it would be interest, not an investment.

Basically, a few tips if you really want someone else to mine for you:
- If it looks too good to be true, it probably isn't.
- Use escrow / third parties to verify the seller, hold funds, watch over the project.
- Don't invest more than you are willing to lose. Because you might.