CEX.IO please give some hints.

[prolom]

My understanding is that CEX.IO setup an exchange for the GH of their own hardware. So users sort of rent their hardware capacity for a certain price and buy/sell that capacity from/to other users who are interested in it. I first thought there was some kind of free exchange where you could sell your own capacity but it looks like people sell to each other time on CEX.IO rigs so to speak. It also looks incredibly expensive as far as mining goes. It looks like it's geared mostly for trading GHs.

Please enlighten me. Thanks in advance.

prolom.

[player01]

Hi Prolom,

CEX.io uses their own machines for mining and they do it all out of the UK. The prices are open-market, so whatever people want to buy or sell at.

They take a fee for maintenance and electricity and they also have one of the largest mining pools for BTC as well.

The mining is very expensive if you are planning on never selling your Gh into BTC and the market heads continually downward, so there are many hazards, especially for those that just want to buy and forget. I think it is a silly move myself, but many of the people I refer do just that.

What I do is try to mine, then as it drops a little sell at the same price I bought at and I keep the amount I mine as well.  I have gotten hit a few times, but overall, I am doing quite well. I recommend using a bot to keep your GH and BTC working for you. Even if it looks like you are loosing there is one thing that people never calculate in (I don't know why)

--You resell your GH when you get out.--
so, on all the calculators it looks like a loosing deal, but even with a 90% drop in GH/BTC it generally isn't a loss at all.
I guess the reason that their own calculator does not account for it is that they want you to mine forever...

I recommend trying it with a small amount of BTC and seeing how you do for a set time period. Just keep in mind, it WILL go down.

There are also a good amount of people who are putting their heads and coding skills together to come up with bots that will survive and make BTC even in this market. Also, it is a very good way of learning how to trade any bear market such as FOREX or what the stock market is eventually going to do.

 Feel free to PM me if you have any questions.

 

[prolom]

Thanks for your thoughtful reply, player01.

It makes sense that the market goes down as far as BTC per GH go because the generation of the BTC by those GH goes down rapidly. I was surprised how expensive those GHs were in the first place. And it's kind of weird to have a market based on one company's machines.

Which bots are you referring to? I admit I've never heard of bots in this context.

As far as the CEX.IO trading interface itself all I'm seeing is red and green bars flashing through the buy and sell orders and the numbers constantly changing. What is the best way to approach this? I know a bit about mining but trading is a completely different thing.

Thanks again,

prolom.

[player01]

Look up how to read candle charts.

Then stare at the site for a couple hours and it will come together.

Right now pretty much everyone is losing their shirts... might be a good time to buy in for a bit, but just as easily could crash and burn harder... although you really can make good money day trading this... just not today.

Probably by the time someone reads this the price will be up 30% from where it is now. it always has short, sharp, short-lived, price increases.

The site is a little buggy, sometimes an order that has already been filled is sitting up on the order book and you have to look below it to see the actual next order in line.

Nothing beats getting in and messing around with it yourself, put in .00001BTC you can still trade with that low of an amount.

[prolom]

Thank you. I've been watching it and the price dipped quite a bit and rebounded a little. I was reading up on the candlestick charts so it makes a bit more sense now.

What doesn't make much sense is that unlike a stock market it looks like you can not short sell GHs. You can only make a profit if you buy lower and sell higher. Considering that GHS/BTC rate is guaranteed to decline it means that the vast majority of users is losing money. Although 0.035 BT per GH was probably not that bad of a price considering what mining contracts are being sold for at other companies.

It doesn't show a long term chart. Does the price dip after every difficulty increase?

Thanks,

prolom.

[player01]

In the past a lot of users had been taken by surprise at the difficulty spikes, I doubt that there will be a huge effect every time... Shorting is supposed to be in the works on CEX, no idea how long off that would be.

One thing I have been looking at lately is the live difficulty charts, it seems like there might be some chance of a dip in the next difficulty after this one, which means you have the possibility of making huge rewards... Also, there is a fairly well organized group of investors that have been raising the price lately, might be a good time to get in on the next crash.

You would likely be safer with your money by just buying BTC and holding it, but the real money to be made is in selling your physical goods with BTC.

The next difficulty spike is in about 24 hours, so check it out and see.

[prolom]

Thank you. I don't know what you mean by selling physical goods.

There seams to be some behind the scene maneuvering over there but for a person new to trading it's hard to tell what's going on.

Happy New Year!

prolom.

[FalconFly]

They way it looked to me (almost constant price/GHs for about a month despite massive BTC valuation flux and several difficulty jumps), is that behind the scenes the prices were generally manipulated upwards to give max. yield to cex.io and/or large holders - to the point of being ludicrously overpriced.

Seems the latest drop (judging the massive volume on no news and absolutely non-matching buy/sell graphs the time before it, all non-assiciated to a near difficulty jump still days away) were insiders acting & selling coherent at the same time. That triggered alot of follow-up orders and made the trading bots run crazy in addition to that.

That's the problem with the exchange, on one hand you have the "keep-it-up" algos that benefit cex and GHs owners via relatively high GHs price, on the other side you have lots of API tradebots hammering the site non-stop (to the point where the site creeps almost to a halt for manual users).
On the invisible 3rd hand - well, you have some folks in the know who decided to jump ship at the same time, screwing everybody else. Technically speaking, it could be come big customers got cold feet one by one, but you never know. On the day it happened, it didn't really look like normal trading and those volumes were nowhere to be seen in the hours or minutes before it.
Another viable theory would be that the price was kept way too high - way too long. When the first cracks appeared, things just went quick as usual (several large manual trades, which would be unusual but not impossible)



Fun fact :
On its lowest reached price levels, cex.io (for the first time) temporarily almost became a competitive seller of GHs

[prolom]

That was very informative although I would need to learn more about the trading jargon (massive volume on no news, non-matching buy/sell graphs ? etc.). "Keep-it-up" algos and API tradebots - I suppose those are different types of bots doing opposite things.

Speaking of competitive sellers of GHs - do you have any recommendations at all?

Thanks again and Happy New Year guys!

prolom.

[FalconFly]

That was very informative although I would need to learn more about the trading jargon (massive volume on no news, non-matching buy/sell graphs ? etc.). "Keep-it-up" algos and API tradebots - I suppose those are different types of bots doing opposite things.

Speaking of competitive sellers of GHs - do you have any recommendations at all?

Thanks again and Happy New Year guys!

prolom.

I'll try to give my best translation in layman's terms :

- massive volume = large sum of trade orders, often occurs compressed in short time during which alot of a commodity is bought/sold

- non-matching graphs = I referred to the buy/sell balance cex displays below above chart, it shows (or claims to show) all standing buy and sell orders in visual presentation, giving an indication of the balance between bid/ask (exchange-type, statistics about prices which trigger certain amounts of a commodity to be bought/sold); before the price smash, those did not contain any information of large, open standing orders that would have explained the witnessed trade volume, thus the surprise effect and massive price change

- keep-it-up algo = computer-trading programs (called "bots" using a programmed algorithm/logic to achieve certain goals), I labeled it that way because of the irrational/inexplainable and sustained high price level and frequently reported suspicious "buying activity" that apparently artificially kept the price level up

- API = this is basically a direct internet interface that anyone can use to directly connect to another network infrastructure that offers this option (i.e. an exchange like cex.io) without having to visit the website, thus perfectly suited for computer programs (bots) that now can do trading at very high frequency by directly talking to the exchange (best compared to computer based High Frequency Trading HFT on international stock exchanges).

...the only competitive seller of GHs seem to be those that manufacture real hardware, and only few of them deliver in a timely manner that fits your profitability calculations at the time of purchase.
Cex.io I would label as "the cleanest dirty shirt" on the cloud/virtual mining market (legit but not profitable for customers, unless they got lucky with additional trading on their exchange).
There were and are private undertakings (group buys) that instead of delivery of hardware offer shares of purchased hardware run centrally in a location with near-free or low power costs. As these are private, the risks need to be carefully assessed but some did turn out profitable. Your call if you consider giving your money to strangers to conduct and maintain your investment.

KNC Miner for example, so far more or less timely delivery of very potent hardware but basically we're always talking : latest generation, very expensive gear. The big guns.
For the typical low budget (less than 5000$), it really seems either you get a really lucky deal on good 2nd hand hardware (extremely unlikely) or you're actually better off NOT mining.

To actually make money, you need to do a large risk investment and pray for timely delivery of undamaged hardware that doesn't get stuck in customs & runs without failure while you own it... that's basically the only way.
(alternatively, you can try to sell overpriced Bitcoin/Altcoin related stuff i.e. on EBay, if your conscience allows for such action, there you can make a killing even with relatively low investment - even selling small BTC/Altcoin fractions for >125% of market price, you will find buyers that pay these premiums)

Buy BTC directly is usually the best answer.
That gives you the advantage of time, you can wait for a desirable exchange value or buy in rates you decide. Mining is always about being quick, and business/investment decisions under time pressure often turn out as not the best ones. In mining, timing is literallly everything, and everything best happens immediately (every day counts, as the next difficulty jump is always a max. of 11 days away) and with maximum effort. It's go big or go bust and it's always go now!.

Whatever you do, always take your time, a calculator and ALOT of common sense, carefulness and lots of critical thinking. After all those checks, most "sexy" deals quickly turn out as either scams or people trying to find the greater fool (which is a hughe thing in BTC, the entire hardware regeneration cycle of almost every product is about finding the greater fool who has to buy your used hardware that stopped being profitable).
To me, BTC truly is a shark tank. You can decide to dive for pearls & treasure in it - but be careful about every decision you make. Almost everything in that shark tank is after your money, always keep that in mind and both eyes open.

[kostja]

CPU cloud mining have fixed price in dollar.

[FalconFly]

CPU cloud mining have fixed price in dollar.

Yes, but not useful for Bitcoin.

[prolom]

Thanks FalconFly for such a thoughtful and eloquent reply. It makes a lot of sense.

[player01]

"- non-matching graphs = I referred to the buy/sell balance cex displays below above chart, it shows (or claims to show) all standing buy and sell orders in visual presentation, giving an indication of the balance between bid/ask (exchange-type, statistics about prices which trigger certain amounts of a commodity to be bought/sold); before the price smash, those did not contain any information of large, open standing orders that would have explained the witnessed trade volume, thus the surprise effect and massive price change"
-------    -------

As far as that goes, the big price swings happen when you don't expect it... That is kinda the point of working a market that is that volatile. Once everyone is convinced that it will move up, they act accordingly and once it becomes evident, you have the general disposition of the market and you sell instantly, causing a big red candle. Because of the rapid popping of the anticipation bubble, you have the panic seller, pushing the market further down into your waiting hands. Then the majority of the market is anticipating the continuation and...

You get the idea. The big price changes happen instantly because if you placed a non-instant order (one that is visible on the order-book), the market would have a chance to react to the sell-wall or buy-wall.

[Thom]

My cex.io analysis is less technical. Nonetheless I've been exploring it for a month now, and it's beating the pants off of straightforward mining with my own devices. since their mining has no downtime and Ghs are available by any amount, so it's more efficient than my own miners, even when they're pointed to cexio.

Cex can't compete with hardware miners on preporder for price per Ghs, but compared to however long it takes to accumulate mining rewards, buy miners with them, then await their arrival, the way you can turn a single mining reward into more GHS in seconds at cex is pretty valuable.

The way they mergemine is useful too, since the mined NMC (and/or BTC) can be traded for more Ghs after every confirmed block reward, so by doing this one's own mining speed increases to compete with rising diff. I like to sell all my mined NMC and 10% of my mined BTC for a steady, visible rise on the GHS speed chart. the IXC and DVC don't add up to much BTC, but it's better by far than only mining BTC with private mining contracts.

Cex does make some mysterious market moves, but it differs to regular markets in that cex themselves are presumably constantly adding new Ghs to their supply, and the market is in a constant GHS/BTC downslope as diff rises and GHS make less BTC. This seems disheartening at first, but a bot running an (adjusted) EMA strategy can make gains on fluctuations, and all the time you hold GHS you're mining too.

I screengrabbed and annotated this graph of my december @ cex for an as-yet-unwritten blog post, but it's pretty pertinent here. (it's largely aimed at miners who have a stack of spare NMC but relevant nonetheless)

EDIT: the account from which I post this graph also had a variable 3-6Ghs of hardware miners running on it!

[FalconFly]

My cex.io analysis is less technical. Nonetheless I've been exploring it for a month now, and it's beating the pants off of straightforward mining with my own devices. since their mining has no downtime and Ghs are available by any amount, so it's more efficient than my own miners, even when they're pointed to cexio.

Cex can't compete with hardware miners on preporder for price per Ghs, but compared to however long it takes to accumulate mining rewards, buy miners with them, then await their arrival, the way you can turn a single mining reward into more GHS in seconds at cex is pretty valuable.

The way they mergemine is useful too, since the mined NMC (and/or BTC) can be traded for more Ghs after every confirmed block reward, so by doing this one's own mining speed increases to compete with rising diff. I like to sell all my mined NMC and 10% of my mined BTC for a steady, visible rise on the GHS speed chart. the IXC and DVC don't add up to much BTC, but it's better by far than only mining BTC with private mining contracts.

Cex does make some mysterious market moves, but it differs to regular markets in that cex themselves are presumably constantly adding new Ghs to their supply, and the market is in a constant GHS/BTC downslope as diff rises and GHS make less BTC. This seems disheartening at first, but a bot running an (adjusted) EMA strategy can make gains on fluctuations, and all the time you hold GHS you're mining too.

I screengrabbed and annotated this graph of my december @ cex for an as-yet-unwritten blog post, but it's pretty pertinent here. (it's largely aimed at miners who have a stack of spare NMC but relevant nonetheless)

I've done exactly the same with just a tad more GHs (13) and I can tell you this :

Until the recent price crash, there was NO WAY you could even cover the increase of Pool speed, even with reinvesting every single BTC/NMC/IXC/DVC you mined there.
And there is absolutely no way you were able to buy those GHs with the displayed mining power.

Last weeks, ~13GHs 24/7 and everything fully reinvested hourly resulted in an approx. increase of +100MHs/day, slowly creeping up to +110MHs/day - that's 9-10 days just to buy additional 1GHs.
Noteworthy, the most surplus was generated with BTC reinvestment, the direct NMC output/reinvestment was miniscule compared to it and hardly worth mentioning. It really didn't make much difference. If anyone hoped that detail would push you into a positive yield curve - it doesn't happen (wouldn't work even if you could buy GHs with merged mined DVC/IXC, as those have almost no buying power at all).

And we're not even talking about diff increases yet. Without successful trading, it is impossible just to maintain constant payouts over time. You'd have to increase your performance by at least 2-3% every day just to keep up with Pool growth rates to keep your own GHs/Pool GHs ratio constant. That is impossible at cex.io with any GHs, especially as any rented Ghs takes the >3% maintenance fee hit.
(I even had the advantage of using only rented  ~1.07GHs that climbed to ~1.98GHs, while running my own ~11.4GHs from Home, so the majority of my GHs weren't even affected by the ~3.3% maintenance fee in the timeframe)

Even with the latest price drop, ~13Ghs would take you some 6-7 days just to get another GHs on top.

Without tossing additional cash (BTC/NMC) at cex.io, your Graph was absolutely impossible to reach - been there, done exactly that with clearly more GHs - most of it not even rented. No-Go, not a chance.

If it was so easy to achieve a positive income curve at cex.io, everyone would do it. I tried for the heck of it but the Problem is : cex is a money-burning machine, your income curve without additional, successful GHs trading will always be negative by design. No matter how many BTC or NMC you throw at them, you'll lose money every day.
If you don't mind losing money and enjoy the convinience of cex trading, they actually work as advertised and their exchange does work pretty good at 0 fees.

PS.
I'll book your post under "shameless plug advertising", as your presented results don't add up, it's simply fairy tales you're telling.

[Lethn]

Well shit, thanks for that piece of maths FalconFly ( no really ) It seems that solo mining low difficulty scrypt coins or trading on the price swings is a better option because I kept doing the maths in my own head going by what my history was giving me and it didn't make much sense, nice to have someone confirm for me.

If they actually offered up hash rate for scrypt coins it would make everything a lot more interesting but it looks to me like they're up to something regarding that because they don't seem very eager about it or have even really given any responses. I wouldn't be surprised if they were charging a fortune for the hashpower and then re-investing in hardware of their own so they can solo mine the crap out of altcoins, while it may not be the case and they're perfectly legit my paranoia is being set off now the more I look at the numbers .

[FalconFly]

Well shit, thanks for that piece of maths FalconFly ( no really ) It seems that solo mining low difficulty scrypt coins or trading on the price swings is a better option because I kept doing the maths in my own head going by what my history was giving me and it didn't make much sense, nice to have someone confirm for me.

If they actually offered up hash rate for scrypt coins it would make everything a lot more interesting but it looks to me like they're up to something regarding that because they don't seem very eager about it or have even really given any responses. I wouldn't be surprised if they were charging a fortune for the hashpower and then re-investing in hardware of their own so they can solo mine the crap out of altcoins, while it may not be the case and they're perfectly legit my paranoia is being set off now the more I look at the numbers .

Basically you're right on.
As they run their own PetaHashes not rented out at real (far lower) costs, it's completely legit for them to invest their surplus into next-gen machines and of course they mine BTC/Alcoins for themself (which should be their main income - every company does it AFAIK and that's perfectly okay).

I've heard there are Scrypt ASICs in preparation but word is they won't hit the market until a few months (if at all). But when they do, LTC and derivates will likely share the same fate of BTC within a short time.

Anyway, for experimenting on small budgets without risking hardware pump&dump and the offered convinience, cex.io is actually quite okay. One just has to realize that this enourmous convinience comes at a high price - that's why I'm confident they're legit on all accounts, it's just their business model and I can't fault them for being successful if customers are willing to pay the price.

[stuartrgreene]

I'm sorry for being the one with the short and probably stupid question, but I get so confused seeing all this new terminology. It is possible to rent GH and direct it to another server or only on Cex.io BTC miners?

[becherovka]

Thank you for that excellent analysis FalconFly. I'll be re-reading it again for more understanding.