[GLBSE] Feedback wanted: Gigamining, the first 5Mh/s mining bond

[Sukrim]

[snip]
How's my math!??!

Quite bad, considering you didn't calculate for difficulty increases properly and also didn't account for the 25 BTC/block change in early december 2012.

After all, you're betting against(!) Moore's law, miner expansion, the 25 BTC/block "crash" and global hash rate. Anything more than 10-15 Bitcents per MH/s is quite insane in my opinion as a buyer.

Also (as with Meni's same bond) I'd like to have the operator verify his hash rate by: Mining on P2Pool/solo/Eligius for at least 1 week continuously to a single BTC address and then signing a message with the key of this address as proof he is in possession of that hashing power.
It is VERY easy to go Ponzi on things like this otherwise, I would NEVER invest even a single bitcent unless I have very good proof (even pictures can be made elsewhere...) that the issuer really has this hash rate at hand.

[jamesg]

Quite bad, considering you didn't calculate for difficulty increases properly and also didn't account for the 25 BTC/block change in early december 2012.

After all, you're betting against(!) Moore's law, miner expansion, the 25 BTC/block "crash" and global hash rate. Anything more than 10-15 Bitcents per MH/s is quite insane in my opinion as a buyer.

I have made it through the price of BTC being $2 and we will make it through the halving of the block reward. The equipment this contract will run on is some of the best designed in our industry thus far.

As for the price, Meni's bond is currently trading at 1.75 BTC for 5Mh/s. So 1 BTC for a similar bond it quite a deal.

Also (as with Meni's same bond) I'd like to have the operator verify his hash rate by: Mining on P2Pool/solo/Eligius for at least 1 week continuously to a single BTC address and then signing a message with the key of this address as proof he is in possession of that hashing power.
It is VERY easy to go Ponzi on things like this otherwise, I would NEVER invest even a single bitcent unless I have very good proof (even pictures can be made elsewhere...) that the issuer really has this hash rate at hand.

I have no problems verifying my identity, hash rate, or anything else you would like to inquire about before the bond gets off the ground. I make no attempts to try and hide my identity and have done business with many people in the community.

You can look at my past post history to see pictures of my equipment (GPUs and BFL singles) or if you like, I can re-post some images.

I can understand your concerns as this is an offering "at scale" but if you looks at my -otc ratings and my business dealing in this forum, you can see for yourself whether I am legit or not.

[NothinG]

Quite bad, considering you didn't calculate for difficulty increases properly and also didn't account for the 25 BTC/block change in early december 2012.

After all, you're betting against(!) Moore's law, miner expansion, the 25 BTC/block "crash" and global hash rate. Anything more than 10-15 Bitcents per MH/s is quite insane in my opinion as a buyer.

I have made it through the price of BTC being $2 and we will make it through the halving of the block reward. The equipment this contract will run on is some of the best designed in our industry thus far.

As for the price, Meni's bond is currently trading at 1.75 BTC for 5Mh/s. So 1 BTC for a similar bond it quite a deal.

5Mh/s @ 1 BTC (Current difficulty with 50 BTC/block) would roughly take 300days to earn back and finally make profits.

[Vbs]

It is VERY easy to go Ponzi on things like this otherwise, I would NEVER invest even a single bitcent unless I have very good proof (even pictures can be made elsewhere...) that the issuer really has this hash rate at hand.

Then don't.

[NothinG]

It is VERY easy to go Ponzi on things like this otherwise, I would NEVER invest even a single bitcent unless I have very good proof (even pictures can be made elsewhere...) that the issuer really has this hash rate at hand.

Then don't.

Seems I have a lot to share today. 

There are the 9GH/s just in his BFL Singles.

[jamesg]

There are the 9GH/s just in his BFL Singles.

Thanks NothinG. Here is the GPU farm when I won the "Rig builder of the year" award.

Everything is a small room in the warehouse now with 3 tons of HVAC cooling it off. If we deem it necessary to see more pictures, I can snap some with the phone.

I've been waiting a while to post these, but here we go. It's still not complete, but it good enough shape to share.

[mcorlett]

Also (as with Meni's same bond) I'd like to have the operator verify his hash rate by: Mining on P2Pool/solo/Eligius for at least 1 week continuously to a single BTC address and then signing a message with the key of this address as proof he is in possession of that hashing power.

As a client of gigavps', I can attest to him currently having control over at least 9.5 GH/s of mining power.

[Sukrim]

5Mh/s @ 1 BTC (Current difficulty with 50 BTC/block) would roughly take 300days to earn back and finally make profits.

The current difficulty will double in less than 300 days just because the block reward halves + it is likely that it grows naturally as well. Even if the Bitcoin net hash rate just follows Moore's law, we'd expect a doubling in hashrates every 18 months.

You're essentially betting that the network will stall for ~1 year or grow considerably slower than right now for ~1 year with this bond.

If you do the calculation again with doubling of hash rates every 18 months and additional doubling every 4 years (= splitting of block rewards) you get an increase of nearly 2% of hash rate per week (~1.763%) or if you want to have bi-weekly difficulty increases ~3.5% increase of hash rate every 2 weeks. Factor this in your equation and then the ~4.7 bitcents per 2 weeks you'd get at current difficulty (that will soon be over btw. and be even higher in May) about 1.38 BTC _ever_ from this contract.
If you take the difficulty in 200 blocks, you only get a little bit less than 1.3 BTC ever and after one year a bit less than 79 bitcents (after 2 years still not even 1.1 BTC).

Yes, it will not always grow exponentially etc. etc. - still it might be a wise thing to do (especially on such a longterm investment - in bitcoin mining relations even 3 months are kinda long term!) more calculations like mine if someone should think about buying in. Also one could just speculate on earning money by trading just the contracts of course.

[jamesg]

The current difficulty will double in less than 300 days just because the block reward halves + it is likely that it grows naturally as well. Even if the Bitcoin net hash rate just follows Moore's law, we'd expect a doubling in hashrates every 18 months.

You're essentially betting that the network will stall for ~1 year or grow considerably slower than right now for ~1 year with this bond.

If you do the calculation again with doubling of hash rates every 18 months and additional doubling every 4 years (= splitting of block rewards) you get an increase of nearly 2% of hash rate per week (~1.763%) or if you want to have bi-weekly difficulty increases ~3.5% increase of hash rate every 2 weeks. Factor this in your equation and then the ~4.7 bitcents per 2 weeks you'd get at current difficulty (that will soon be over btw. and be even higher in May) about 1.38 BTC _ever_ from this contract.
If you take the difficulty in 200 blocks, you only get a little bit less than 1.3 BTC ever and after one year a bit less than 79 bitcents (after 2 years still not even 1.1 BTC).

Yes, it will not always grow exponentially etc. etc. - still it might be a wise thing to do (especially on such a longterm investment - in bitcoin mining relations even 3 months are kinda long term!) more calculations like mine if someone should think about buying in. Also one could just speculate on earning money by trading just the contracts of course.

I appreciate your feedback. Unfortunately (and you mentioned this) the network is not just going to keep growing and an ever increasing rate. There are competing forces at work including more efficient equipment, miners profit margins and the general mood of miners in the community.

When the block reward halves, a good deal of GPU miners will become unprofitable and will stop mining. It is of course a possibility that the price rises sufficiently to keep miners profitable, but I would give this a 5% chance.

A much more likely scenario is that the price bounces in a range where we are now and will stay that way after the subsidy halves.

Please also note that I believe in my point of view enough to pull the trigger on close to 140Gh of mining power.

[silverbox]

The current difficulty will double in less than 300 days just because the block reward halves + it is likely that it grows naturally as well. Even if the Bitcoin net hash rate just follows Moore's law, we'd expect a doubling in hashrates every 18 months.

You're essentially betting that the network will stall for ~1 year or grow considerably slower than right now for ~1 year with this bond.

If you do the calculation again with doubling of hash rates every 18 months and additional doubling every 4 years (= splitting of block rewards) you get an increase of nearly 2% of hash rate per week (~1.763%) or if you want to have bi-weekly difficulty increases ~3.5% increase of hash rate every 2 weeks. Factor this in your equation and then the ~4.7 bitcents per 2 weeks you'd get at current difficulty (that will soon be over btw. and be even higher in May) about 1.38 BTC _ever_ from this contract.
If you take the difficulty in 200 blocks, you only get a little bit less than 1.3 BTC ever and after one year a bit less than 79 bitcents (after 2 years still not even 1.1 BTC).

Yes, it will not always grow exponentially etc. etc. - still it might be a wise thing to do (especially on such a longterm investment - in bitcoin mining relations even 3 months are kinda long term!) more calculations like mine if someone should think about buying in. Also one could just speculate on earning money by trading just the contracts of course.

I appreciate your feedback. Unfortunately (and you mentioned this) the network is not just going to keep growing and an ever increasing rate. There are competing forces at work including more efficient equipment, miners profit margins and the general mood of miners in the community.

When the block reward halves, a good deal of GPU miners will become unprofitable and will stop mining. It is of course a possibility that the price rises sufficiently to keep miners profitable, but I would give this a 5% chance.

A much more likely scenario is that the price bounces in a range where we are now and will stay that way after the subsidy halves.

Please also note that I believe in my point of view enough to pull the trigger on close to 140Gh of mining power.

Sukrim's equations seem to neglect the value of transactions, which at present are negligible, but later are likely to be substantial.

[NothinG]

I was trying to say at current, it would take ~300 days to earn back.
I know about the half in December, but didn't take it into consideration seeing how it's still more than 6+ months of an investment.

Not bashing on the idea, just 1 BTC per 5Mh/s is kinda harsh.

[rjk]

I was trying to say at current, it would take ~300 days to earn back.
I know about the half in December, but didn't take it into consideration seeing how it's still more than 6+ months of an investment.

Not bashing on the idea, just 1 BTC per 5Mh/s is kinda harsh.

I don't know about you, but I'll be buying all I can get my hands on if they are that cheap.

[jamesg]

I was trying to say at current, it would take ~300 days to earn back.
I know about the half in December, but didn't take it into consideration seeing how it's still more than 6+ months of an investment.

Not bashing on the idea, just 1 BTC per 5Mh/s is kinda harsh.

I don't know about you, but I'll be buying all I can get my hands on if they are that cheap.

I think 1 BTC per bond is the sweet spot.

[RoloTonyBrownTown]

Hi Giga,

As a fellow BFL supporter, I'll have to give this some serious thought.  It does sound tempting

Quick question, where will you be pointing the hashing power (just to get an idea of the PPS value)?    I'd ask you to pool hop but that probably won't go down too well (until the better than average dividends come through obviously ).

[jamesg]

Quick question, where will you be pointing the hashing power (just to get an idea of the PPS value)?    I'd ask you to pool hop but that probably won't go down too well (until the better than average dividends come through obviously ).

The bond will pay 100% PPS whether the equipment is down for an entire month or it makes 120% PPS. This is part of the risk that I take on with the bond.

The bond guarantees the holder a set amount of BTC each week. No excuses. This is also why I have decided to have redundant hashing power in case the worst should happen.

[guruvan]

Thanks NothinG. Here is the GPU farm when I won the "Rig builder of the year" award.

that's a very nice looking rig. I really like nice neat wiring and construction. It gives me confidence in your skillz

[jamesg]

that's a very nice looking rig. I really like nice neat wiring and construction. It gives me confidence in your skillz

Thanks guruvan. If I'm going to do something, I try to do it right.

I'll have more pics of the singles once a get the wiring completed for them.

[aseldon]

I think this is a great idea and will be buying as many shares as I can afford when you launch it. The main request I would have has nothing to do with the shares or IPO. I want to see more pictures of your setup. Nothing like hardware pr0n to pass the time haha. 

[jamesg]

I think this is a great idea and will be buying as many shares as I can afford when you launch it. The main request I would have has nothing to do with the shares or IPO. I want to see more pictures of your setup. Nothing like hardware pr0n to pass the time haha. 

Noted. I'll take some more pics today and post them to this thread.

[jamesg]

So it's a little hard to get a shot of the entire room because it is so small. The room most of the GPUs are in along with the singles is just 9x16 to make the most of the three tons of AC.





Here is a shot through the side door looking that the rack farthest away in the previous picture. You'll notice that the bottom rack is empty. This will be the home of the 4 mini rigs. If they are too big to fit on the rack, I will remove it and they will sit on the floor.



Here is a pic from outside of the room but still inside the warehouse. You can see the HVAC ducts to push all cooling into the room.



Since I only have three tons of AC at the moment, some rigs are still in the warehouse portion. With cgminer, they self regulate to 75c.