Gigamining / Teramining

[Sukrim]

It's not 100% clear at which block your "seconds" start. Also you are paying as if blocks were mined at exactly the rate that die difficulty suggests. Depending on if the difficulty grows or goes down, this benefits either you or your bond holders. If you only pay per real blocks mined on the network, this might be closer to the real hash rate. I haven't thought this 100% through though, I might be wrong on that.

Your calculation currently goes like this:
There are 100800 (with 50 BTC reward blocks atm.) Bitcoins emitted in 1 difficulty.
You assume that they are "handed out" uniformly (at a rate of X coins per second).
You don't know the real rate though, as it takes longer than 1 week until all 100800 BTC of 1 difficulty have been mined, so you estimate that it would take 2 weeks on average, resulting in a rate of 0.08333... BTC/second generated for the whole network.

The problem I see in this is that it can take longer or shorter than 2 weeks (and never really does take exactly that much time) but you don't seem to account for that. So as long as the hash rate is rising, it seems to me as if people are not being paid for the time that is left to fill up the theoretical 2 weeks. On the other hand, should hash rates of the network drop down, you would end up paying longer than expected your average PPS payout (in extreme cases for up to 8 weeks instead of 2) even though only few blocks are being solved.

Ok thought this through once more and I am sorry, because I'm completely wrong up there - if you did it as suggested by me, this would no longer be PPS but a different payout system that would take the hash rate calculated from the difficulty and just pay out the proportional part that 1 MH/s (or anything else) would have created. This might make it much easier (as you could issue dividends as soon as the new difficulty is fixed) but is a different concept.

Everything that's missing in your current payout system imho is a certain point in time where you say that each week begins (I'd recommend something in UTC) and you could (for convenience/transparency) offer a link to every 2016th block where the new difficulty is included, so people can see the exact timestamp on that, which you used. Also the 2**32 thigie might be fixable...

[1714211992]

1714211992

[1714211992]

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[1714211992]

1714211992

[jamesg]

Ok thought this through once more and I am sorry, because I'm completely wrong up there - if you did it as suggested by me, this would no longer be PPS but a different payout system that would take the hash rate calculated from the difficulty and just pay out the proportional part that 1 MH/s (or anything else) would have created. This might make it much easier (as you could issue dividends as soon as the new difficulty is fixed) but is a different concept.

Everything that's missing in your current payout system imho is a certain point in time where you say that each week begins (I'd recommend something in UTC) and you could (for convenience/transparency) offer a link to every 2016th block where the new difficulty is included, so people can see the exact timestamp on that, which you used. Also the 2**32 thigie might be fixable...

I will offer a 3 BTC bounty for a google doc that does the calculations to the exact specification. Payment windows are Sunday 00:00 to Sunday 23:59 and are paid the following Monday.

Otherwise, we'll call this good enough.

[DeathAndTaxes]

Financially speaking, from a non-Bitcoin perspective, the ROI for a perpetual holding like this is just ridiculous - over 100% annually at the current difficulty. I suspect that draws some with less technical ability or inclination.

Where are you getting 100% ROI?  Even if difficulty remains flat block reward will be halved in 8 months.  My first thought was great concept but it will never fly due to low ROI%.  I have to hand it to giga though executed awesomely on his end and a very impressive offering.  Kinda bizzare it is trading up to 0.3 BTC per MH/s post IPO.  All the risk vs reward concerns are magnified is someone is paying 50% higher price.   I guess that also points out giga could have gotten away with even higher price (which just blows my mind).

[eroxors]

I am curious......

There seems to be huge demand for this offering, which by my math works out to paying approximately $1 per MH (or .2 BTC per MH for you real die-hards).  It is very easy to build rigs that offer nearly 2 MH per $1, so why the rush to buy this? 

I am assuming people don't want the hassle of maintaining a farm?  Don't want the electric bill? 

I understand paying a premium for simplicity, but paying twice as much seems a bit steep. 

Just curious. 

Financially speaking, from a non-Bitcoin perspective, the ROI for a perpetual holding like this is just ridiculous - over 100% annually at the current difficulty. I suspect that draws some with less technical ability or inclination.

Speaking as someone who is technically inclined and does run a mining farm, this is still appealing. I have (a) mediocre facility access, (b) frequent travel and (c) electricity that's not ludicrous but not cheap either. My mining farm is certainly profitable, but diversifying my holdings with a good ROI and an extremely trustworthy operator seems a good call.

Also, I think speculation is a significant factor. 

[BinaryMage]

Financially speaking, from a non-Bitcoin perspective, the ROI for a perpetual holding like this is just ridiculous - over 100% annually at the current difficulty. I suspect that draws some with less technical ability or inclination.

Where are you getting 100% ROI?  Even if difficulty remains flat block reward will be halved in 8 months.  My first thought was great concept but it will never fly due to low ROI%.  I have to hand it to giga though executed awesomely on his end and a very impressive offering.  Kinda bizzare it is trading up to 0.3 BTC per MH/s post IPO.  All the risk vs reward concerns are magnified is someone is paying 50% higher price.   I guess that also points out giga could have gotten away with even higher price (which just blows my mind).

5 MH/s is ~0.1 BTC for month for the first 8 months, then ~0.05 for the next four, unless I screwed up something. .8 + .2 = 1.

(Not that I think difficulty is likely to remain constant, but I have no real way of effectively predicting what it will do.)

[BinaryMage]

Gigavps - are you planning to offer any more of these anytime soon?

[jamesg]

Gigavps - are you planning to offer any more of these anytime soon?

Hi BinaryMage,

I think I am going to get some coupon payments out, and get the mini-rigs tested and running before I decide on a next move with the bond. I also want to let the glbse.com market settle down a little and for investors to start seeing a return.

So in the short term (4-6 weeks) there will not be another bond issuing. In the medium term (6-12 weeks) my my magic 8-ball says "cannot predict now". 

Best,
gigavps

[BinaryMage]

Gigavps - are you planning to offer any more of these anytime soon?

Hi BinaryMage,

I think I am going to get some coupon payments out, and get the mini-rigs tested and running before I decide on a next move with the bond. I also want to let the glbse.com market settle down a little and for investors to start seeing a return.

So in the short term (4-6 weeks) there will not be another bond issuing. In the medium term (6-12 weeks) my my magic 8-ball says "cannot predict now". 

Best,
gigavps

Thanks for the prompt response; that tells me what I need to know.

[jamesg]

Well this is quite interesting, it would seem one of the bond holders has decided to make an ETF out of the gigamining bonds he holds.

http://polimedia.us/bitcoin/mpex.php?mpsic=F.GIGA.ETF

This has to be a first!

[MPOE-PR]

Just you wait for the CDOs hehehe.

[JWU42]

For those not knowing what a CDO is...

http://en.wikipedia.org/wiki/Collateralized_debt_obligation

[jamesg]

To all gigaminers,

I have updated the gigamining home page with the amount of the first coupon payment. There is an extra bonus that will be paid out every time the difficulty changes. Since I don't want to spend too much time on calculating coupon payments every week, the day of the difficulty change will go to the lowest difficulty.

You can see the first coupon payment amount here -> http://gigamining.com/

You will also notice that there are only 5k bonds being paid coupons. I have struck a deal with a large bond holder to hold back receipt of the bonds for a couple weeks which will help with coupon payments until the mini rigs arrive in 4-6 weeks (yes, that is both a joke and the actual time frame).

I have also bought back the remainder of a mining contract I sold for 10Gh to make sure enough bitcoins are being produced to make coupon payments. On top of this, my glbse.com account will always hold, at a minimum, two weeks of coupon payments.

Why am I telling you all this? I want to be as transparent as possible so that you can have confidence in me and this bond.

Best,
gigavps

[MPOE-PR]

BTC / Bond : 0.02202454

Sounds pretty good, about 10 cents per, close to 2% for some people.

[yochdog]

Giga,

I have been following this thread with a lot of interest.  I am curious what you hope to accomplish with the bond? 

If you are paying out 100% of the PPS earnings on your 50 GH/s, aren't you eating the power cost?  How about inevitable replacement needs?  The time you spend keeping everything running smoothly?  Is this a one time cash-out by you in order to monetize your (extensive) effort?

Perhaps you are just a benevolent benefactor for the entire community?? 

[DeathAndTaxes]

Giga,

I have been following this thread with a lot of interest.  I am curious what you hope to accomplish with the bond?  

If you are paying out 100% of the PPS earnings on your 50 GH/s, aren't you eating the power cost?  How about inevitable replacement needs?  The time you spend keeping everything running smoothly?  Is this a one time cash-out by you in order to monetize your (extensive) effort?

Perhaps you are just a benevolent benefactor for the entire community??  

The price of the bond is higher than his hardware cost and his anticipated electrical cost over the effective lifespan of the bond. If he is right he comes out ahead.  If he is wrong he comes out behind.

Hypothetically if you buy a 1 MH/s contract from you for 100 BTC upfront would you?  
Would you consider it losing money even if you needed to pay ~$0.01 per month in electricity?
If 100 BTC if profitable and 0 BTC is unprofitable obviously there is an equilibrium somewhere in the middle right?

[yochdog]

Giga,

I have been following this thread with a lot of interest.  I am curious what you hope to accomplish with the bond?  

If you are paying out 100% of the PPS earnings on your 50 GH/s, aren't you eating the power cost?  How about inevitable replacement needs?  The time you spend keeping everything running smoothly?  Is this a one time cash-out by you in order to monetize your (extensive) effort?

Perhaps you are just a benevolent benefactor for the entire community??  

The price of the bond is higher than his hardware cost and his anticipated electrical cost over the effective lifespan of the bond. If he is right he comes out ahead.  If he is wrong he comes out behind.

Hypothetically if you could sell a 1 MH/s (perpetual) for 100 BTC upfront would you?  Would you consider it losing money even if you needed to pay ~$0.01 per month in electricity?

Kid of a ridiculous hypothetical.  Of course if I could sell 1 Mh/s for 100 BTC I would.  That is so far outside of what we are actually talking about, I am not even sure why you would throw it out there.

It is pretty easy to calculate (roughly) what Giga has invested in his farm just by looking as the specs he has posted, as well as pics, etc.  It is also fairly straightforward to estimate his electrical bill based on the same info.  It is possible that he has invested less than $1 per Mh/s, but it cannot be hugely so.  Lets say he did the whole thing for $.80 per MH.  His $.20 profit that he is getting today by cashing out will be eaten up in a couple months by the electrical cost. 

So again, I am wondering what his angle is. 

[Andrey]

He is using money he gets to invest into more equipment, which is also more energy efficient. I thought he explained it already?

[DeathAndTaxes]

It is pretty easy to calculate (roughly) what Giga has invested in his farm just by looking as the specs he has posted, as well as pics, etc.  It is also fairly straightforward to estimate his electrical bill based on the same info.  It is possible that he has invested less than $1 per Mh/s, but it cannot be hugely so.  Lets say he did the whole thing for $.80 per MH.  His $.20 profit that he is getting today by cashing out will be eaten up in a couple months by the electrical cost.  

So again, I am wondering what his angle is.  

What he paid for the farm is utterly irrelevant.  What the farm is worth today is what matters.  If the NPV of his farm is $0.50 per MH and his electrical cost is $0.02 per MH/s per month he has a long time before the deal is unprofitable.  He also can close out the deal by buying it back at 105% of market value which will decline significantly over the next year (due to difficulty & reward cut).

Getting the cash up front gives him capital to buy next generation of hashing power so when the farm is obsolete he already has replacement that has been running for a year.

[yochdog]

It is pretty easy to calculate (roughly) what Giga has invested in his farm just by looking as the specs he has posted, as well as pics, etc.  It is also fairly straightforward to estimate his electrical bill based on the same info.  It is possible that he has invested less than $1 per Mh/s, but it cannot be hugely so.  Lets say he did the whole thing for $.80 per MH.  His $.20 profit that he is getting today by cashing out will be eaten up in a couple months by the electrical cost.  

So again, I am wondering what his angle is.  

What he paid for the farm is utterly irrelevant.  What the farm is worth today is what matters.  If the NPV of his farm is $0.50 per MH and his electrical cost is $0.02 per MH/s per month he has a long time before the deal is unprofitable.  He also can close out the deal by buying it back at 105% of market value which will decline significantly over the next year (due to difficulty & reward cut).

Getting the cash up front gives him capital to buy next generation of hashing power so when the farm is obsolete he already has replacement that has been running for a year.

Wildly optimistic.  I get the 2nd cheapest power in the country and can't get to that number. 


Anyway, it just seems like he should have priced it higher given the cost/benefit. 

[DeathAndTaxes]

Wildly optimistic.  I get the 2nd cheapest power in the country and can't get to that number. 

How inefficient are your rigs?

(1 MH/s) / (3000 MH / KW) * 24 hour * 30 days = 0.24 kWh

At $0.10 per kWh that's 2.4 cents.
At $0.05 per kWh that's 1.2 cents.

Anyway, it just seems like he should have priced it higher given the cost/benefit. 

Priced higher is present a larger risk and lower profit to the purchaser.  I mean we are talking zero sum game here.