Total noob, late in the game thinking about terra hashing with friends?

[cedmonds]

A couple of friends and I have come across the opportunity to accumulate 2.8 th/s worth of mining equipment a mix of AMT and Hashfast machines that we can physically put our hands on no preorder. We would like to start a small company solely mining bitcoins and are definitely going to need more advice on how... I've been pool mining on bitminter because It was just ridiculously simple to do with no setup. I started playing around with writing a CFG file for phoenix but have not finished reading up on all of that and getting it tweaked right.

We thought about the ethos of starting a solo mining operation but with the crazy spike in terrahashing we saw throughout november we figured maybe it would be best to stay in a pool such a bitminter and profit off our combined computing power? I'm still researching the advantages versus disadvantages of poolmining. I looked at the bit wiki pool comparison chart and feel pretty good about staying on this pool.

 
We will be running 2 miners at one location as "workers" and one miner here. I'm not sure what clients will run on what hardware yet but i'm confident i'll figure that out when I get there. I've only been mining and reading up on bitcoins now for about a month, some of my friends have been playing with it since 2010. None of us are too familiar with the different ways you can turn bitcoin into USD but more specifically how to setup automatic payouts. Ideally we'd like to cash our "coins" out with some frequency say once every 2 weeks or every time it hit a certain percentage of a coin. I imagine this is where trading on Mt Gox or one of the other exchanges comes in... None of us have done that yet either.

It might seem really short sighted for a group of guys to jump right in but it's an opportunity that opened up and we haven't much time left to act. I need any and all advice from anyone who is out there mining with friends in a business.  We've been using this calculator and it seems plausible!

http://www.bitcoinx.com/profit/

Bitcoin difficulty 609,482,680
Bitcoins per Block (BTC/block) 25.00
Conversion rate (USD/BTC) 797.98
Hash rate 2.8 Th/s
Electricity rate (USD/kWh) .28
Power consumption (W) 1650 watts
Time frame (months) 1
Cost of mining hardware (USD) $14000
Profitability decline per year .61


Hardware break even   9 days
Net profit first time frame   39639.08 USD (1 month) even if we made half of that we'd be satisfied

[turkmagurk]

It looks like you've done your due diligence in terms of the potential profits, but please make sure to cover yourselves in terms of liability.

Obligatory IANAL, but I do suggest you guys get things down in writing before things start.

Who's paying for the electricity costs?

What happens if something happens to the miners?

What is the split in profits?

Tax implications?

Things get often get dicey when money is involved.  If these types of issues are settled beforehand, everyone understands where they stand.  I'd take the time to consult a lawyer beforehand to draft a quick agreement for everyone. 

Just my thoughts.

[cedmonds]

We actually are retaining a lawyer at the cost of about $2000

Justin is paying for the electricity on 2 of the miners and i'm paying for electricity for the smaller miner at my location, Miners are on uninterruptible power supplies to protect from power outages and lightning strikes.

Profits split is 55% to our un-named head investor, 35% to my friend justin who is gonna manage the system and 10% to me who is setting up and maintaining the system. There is a small chance of fires or burglary but we'll do our best to circumvent that

Tax implications.... I suppose I should do some more research tonight

Liability is our huge concern, we would set it up as an LLC to isolate ourselves from business as much as possible and hopefully any legal counsel we have between now and then helps us dot T's and Cross I's


I am currently drafting a "business plan/portfolio" outlining the operation so hopefully that will help flush out any weak areas that need further research


We are currently also seeking who all has terra hash miners in stock 5-6k$ range RIGHT now, We don't want to rely on one source but it seems that they are all gone till about january. Anyone have any leads???

[turkmagurk]

Do you have the miners' ship date? That is something to keep in mind.  Don't let the potential for money cloud your vision.  I'd suggest reading up on the difficulty.  Here's a place to start, along with the threads on bitcointalk:

http://www.reddit.com/r/bitcoinmining

While I'm not one to quote attorney's fees, $2000 to setup a simple LLC sounds pretty high.  I've incorporated in the past for a fraction of that cost.  Is your attorney also drafting your contracts? Providing the setup to limit your tax risk? Liability?

[turkmagurk]

Here's a stickied post that summarizes things pretty well:

http://www.reddit.com/r/BitcoinMining/comments/1qzmvj/updated_faqs_for_newcomers/

[cedmonds]

Excellent post! I understand a lot of people are saying its dead and you can only make money now from buying bitcoin but the more people repeat it the less I believe it. 

By anchance does anyone know who is making a miner in the tera hash ranges that is shipping beginning of december or soon?

[Fiyasko]

Excellent post! I understand a lot of people are saying its dead and you can only make money now from buying bitcoin but the more people repeat it the less I believe it.  

By anchance does anyone know who is making a miner in the tera hash ranges that is shipping beginning of december or soon?

Sorry, not gonna happen at the Beginning of december, or late december for that matter.
Try looking at KNC miner or Bitfury?

[monbux]

Let me point out some negatives:

- Bitcoin Difficulty increasing day by day
- 9 days break even, huh?  Why isn't everyone getting rich then?
- Where to place hardware, and pay for electricity costs
- Hello?  Shipping will be like, in a few months to a year.

[vaelrock]

Looking at the different "promised" shipping date from a lot of companies, if you order today, I don't think you'll be able to get an ASIC TH/s miner before at best february.

Knc is not before march at best with their neptune
HashFast's preorders are for march too
BFL is ... no nothing
CoinTerra's preorders are for late february
BitMime.ch's preorders are for february
BlackArrow's preorders are for february/march
etc..

You also have to keep in mind that many of those companies will not ship at the promised date, and their rig may very well underperform...
This is as dicey as it could get, nobody really knows who's gonna be the shit in a few months.

[cedmonds]

Thats what i was reading on reddit, about the poor shipping timelines and overpromising. I'm looking at AMT Mid to late february, VMC Sometime in february


you mentioned all the other ones so ya, february if not later.

Thanks guys for the replies!

[tinus42]

Don't mine, just buy some Bitcoins. Or some altcoins. Some of them have been appreciating faster than BTC.

[cedmonds]

I'm still curious to see how the "fee's" are going to come in play once the coining slows down majorly (i know its getting more complex as we mine more data

it was on the bitcoining mining data wiki

"Additionally, the miner is awarded the fees paid by users sending transactions. The fee is an incentive for the miner to include the transaction in their block. In the future, as the number of new bitcoins miners are allowed to create in each block dwindles, the fees will make up a much more important percentage of mining income."


Anyone care to speculate how this is gonna work well into the future?

[w0lv3n]

Buying bitcoin will have a lower yield and theres more 'work' involved following the market, but it has a better lifespan than hardware.

Shipping issues aside, if a unit like the Neptune doesnt fulfill its Q1 'promise' it should still arrive ahead of any comparable miner. Being in line for the first of a next gen product will give you an edge over other miners, but it could last between a month and 6 months.

In terms of your estimates in the first post, I would be using a far lower value for conversion, like $250/BTC.

W

[cedmonds]

I'm pretty sure we are sticking with AMT and just dealing with the wait, they are located less than 5 hours from my house which is always a bonus.  1.2 Tb/s may not be data center grade but i'd consider it more than the average joe especially in the pools i've been operating in it seems like the top miners are running just over a terahash... I gotta try it! But i'm definitely going to recalculate everything lets say around 100$ bitcoin to usd conversion to stay more realistic. Our original source for data miners is seeming more like a scam so I'll deal with the wait and go directly to the manufacturer. 

I'll expect to loose my ass if it makes anyone feel better! 

With how overpriced mining equipment is on ebay think about what a 1.2 AMT would sell for if we threw the equipment up..... They have 1 th/s rig on there for 12k right now which is ridiculously overpriced for 1 th/s even 2 th/s....

Great input guys!

[eoakland]

Do it !  Take your hacks and swing for the fences.  Best of Luck...keep us posted.