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Author Topic: Bitcoin Mining Coop (GLBSE Investment Op)  (Read 1982 times)
Deprived
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August 29, 2011, 09:35:38 AM
 #21

Yeah - that's the sort of projections I was thinking about, though there's a few errors in them at moment.

Before you try to put them right you may want to wait to see if there's any interest from others in investing - as so far noone else seems to show much interest. Think most people here are more interested in speculating than investing.  Do note that whilst I AM making all these posts as a potential investor you're not likely to see a huge investment from me - probably only about $500ish - so you definitely need a bunch more interest.

Here's what I spotted as needing fixing so far:

1.  AS you already noted, hardware valuations are off.
2.  Electricty usage is wrong - look at first table month 2.  You add one rig but electricty cost drops by 5%+.  Even without adding any rigs it would only go down 1%ish due to BTC/US$ rate only going up by 1%.
3.  Net profit looks off to me after 1st month - e.g. in month 2 it's greater than gross earnings and in no month other than 1st is it equal to net earnings-elect cost.
4.  For comparison to wallet performance you need to compare it to 3500 BTC not 2500 BTC (and use a base value of 3500 BTC for project).  That's because investors are investing 2500 BTC but profits are shared as though there was 3500 BTC (due to you having 10k shares at start).  Obviously your own 2kBTC worth of hardware that's being added to the project should be included in initial hardware value.  That means that the project will start off being 800BTC in the red - which is correct, as if it was immediately liquidated you'd get 1/3.5 of the proceeds meaning investors would have taken a hefty loss (the projections need to value things from an investor's perspective).

Few other points:

1.  Looks to me like you're assuming about 900W/hr per rig power usage - is that correct?

2.  Cases I'd say to focus modelling on realistically are the feasible ones (e.g. I wouldn't worry about difficulty going up a lot AND BTC falling). No point doing ones with +/- 1% of either as it really won't change anything much and just makes verifying figures harder.  Here's the ones I'm most interested in:

a) Steady State - no real change in anything.  0% diff increase, 0% change in exchange rate. 
b) Increased mining but no growth.  10% diff increase, 0% change in exchange rate.  This one represents other people doing what you're doing but no real growth in BTC.  I'm not actually fussed about diff increase AND drop in exchange rate as I don't see that as likely.
c) BTC growth (exchange driven) : 10% exchange increase, 5% diff increase.  Would expect this one to be fairly good and if exchange rate starts to go up decently it's likely diff increase will lag behind.  I don't personally expect any huge increase in BTC exchange rate in the short-medium term but steady growth wouldn't surprise me.  This is my realistic optimistic view of things.  Better is obviously possible - but not worth modelling as we already know if this one's good anything better will be even better.
d) Slow BTC decline.  -10% exchange, -5% diff.  Both across all months.  If BTC value keeps falling I'd expect diff to drop as well - but nothing like as fast.
e) BTC Crash. -25% exchange, -5% diff.  Both across all months.  I wouldn't be surprised if this actually outperforms wallet - even though I'd guess it would end up with the rigs being turned off.  This one really represents one or more early adopters giving up on BTC and offloading - with the downward trend continued by miners selling off rather than hoarding.  This is pretty much the worst I'm interested in looking at - and I don't see this as too likely tbh.

3.  You may want to include insurance premiums into expenses - doubt 40 rigs would be covered on household insurance.
4.  You need to consider currency exchanging - not sure how you plan to turn BTC unto USD but likely some % of value will be lost doing so (both in having to sell below mid-rate and possibly then in withdrawal fees).  Have you actually planned how you'll be able to withdraw $22.5k from 2500 BTC?  Pretty sure MtGox (for example) only allows some small amount per day.

Anyway, I'm off out for rest of day - will check back tonight for updates.

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