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Author Topic: Diablo Mining Company  (Read 87295 times)
bitcoinbear
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September 15, 2012, 02:11:22 PM
 #621

After reading through this thread, I think Diablo deserves a "SCAMMER" tag. Anybody want to start a thread over in scam accusations?

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September 15, 2012, 03:05:34 PM
 #622


Let me repeat something, the electricity costs USD no matter what. If electricity is our largest operating cost, it doesn't matter if it costs thousands of dollars or dozens of Bitcoins... if I can cut that the whole way down to 1/5th of it, we save thousands, or we save dozens. That operating cost doesn't go away because we calculated the math in a different currency.

BTC prices since its inception have been rather random. Without an actual economy to back Bitcoin, it will continue to be unstable. Your example of BTC doubling is just as possible as BTC halving. We pay electricity in dollars, hell, we pay every cost in dollars, it simply doesn't matter what the price of BTC is now or what it will be in the future, we must pay those costs.

The point is that for a bit-coin mining operation (what Diablo claims to be) your revenues are produced in BTC not US$.  Each block mined produces the same number of coins irrespective of the exchange rate.

When the exchange rate changes, the cost of mining (the electricity element) also changes.

If, at the current exchange rate, the cost in electricity to generate 1 BTC is X BTC (X would be less than 1) then were the exchange rate to double (twice as many US$ per BTC) then the new cost in electricty to generate 1 BTC would be X/2 BTC.  This is a simplfication - ignoring the impact rising difficulty has.

YES - you still DO save money by having cheaper electricity.  But it's less of a saving.  If you're saving less per unit mined the time needed to reach break-even obviously also increases.

Further unless mining is inherently unprofitable (i.e. even with free electricty you couldn't make a profit) then there MUST be an elecricity price (expressed in BTC) where it's more profitable to invest in more mining gear than to invest in cheaper electricty costs. 

This is indisputable - just consider the extreme where electricty were free (or as near free as made no difference).  Hopefully you can see that at point there'd be zero value investing in cheaper power.  Now there's also the other extreme - if the electrical cost of generating 1 BTC WAS 1 BTC then there'd be no way to make a profit UNLESS you invested in (or otherwise obtained) cheaper power.

Somewhere in between is the point at which investing in cheaper electricty makes more sense than investing in additional hardware and buying the higher electricty rate. 

Now here's where you're going wrong:

1.  Nowhere in this thread have you made any effort to calculate where that cross-over point is - yet the only possible financial justification for investing in generating power rather than using the same cash to invest in more mining gear is that there's some non-trivial chance that it's actually more profitable to do.
2.  You don't seem able to grasp that the exchange-rate has a huge impact on where that crossover point is.

Let me explain point 2 for you.

Let's say we'd bought our hardware and were mining.  We'd worked out that the point at which investing in  cheaper power was better than buying more mining hardware was X BTC (X<1) to mine 1 BTC.  Your power currently costs X*1.5 BTC to mine 1 BTC - so all looks rosy.  But now the exchange rate doubles.  Suddenly the cost to mine 1 BTC has dropped to X*0.75 BTC - and we're in territory where we're now making less profit (or more loss) than if we'd just spent all the capital on mining gear.

And if the exchange rate rises further then each rise just makes even worse the loss of value gained.

All I'm trying to prove to you here is that IF you denominate the investment in BTC then exchange-rate fluctuations can have a huge impact on profitability.  I can't see why anyone would invest when you've produced no calculations or figures that address this at all.

There's even the theoretical possibility that exchange-rate fluctuation could make investing in solar-power completely unprofitable (expreseed in BTC) even if it ran for the whole 30 years life-span and all power was sold off at market rate.

 You're selling shares denominated in BTC - so the base-point for calculation of profit is "how well would investing do, compared to leaving the BTC sitting in my wallet".  Whenever you invest in something that generates product valued in US$ then the answer will ALWAYS be "that depends very much on how the exchange-rate fluctuates." 

And when you're considering investing in two different things (mining and generating power) it's not a bad idea to work out how profitable each of them is - then you may well see you could make way more money (and have less complication) just doing twice as much of one of them with the same capital.

I've only referred to mining here - not to running a data-centre.  That's because this apaprently is (or was supposed to be) a mining company.
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September 15, 2012, 05:56:27 PM
 #623

After reading through this thread, I think Diablo deserves a "SCAMMER" tag. Anybody want to start a thread over in scam accusations?

How in the world could you rationally accuse Diablo of scamming? Do you know what the word "scam" means?

"Scam: Noun. A confidence game or other fraudulent scheme, especially for making a quick profit; swindle."

Has he been fraudulent to make a quick profit? No. He's caused DMC to lose value. Nobody wins in that situation, so I can't imagine he'd ever do that on purpose.

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September 15, 2012, 06:41:35 PM
 #624

Has he been fraudulent to make a quick profit? No.

How do you know that? Until we get to see the full logs of what he did, you are left with the choice between unbelievably incompetent and corrupt. Possibly both. Since he has been caught lying and blatantly refuses to show the logs which should exonerate him if he didnt do anything wrong (only incredibly stupid) , Im going to have assume there is at least some corruption involved.
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September 15, 2012, 06:43:50 PM
 #625

Diablo is just an idiot and highly incompetent. I wouldn't give him the prestige of a scammer.
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September 15, 2012, 06:50:03 PM
 #626

After reading through this thread, I think Diablo deserves a "SCAMMER" tag. Anybody want to start a thread over in scam accusations?

How in the world could you rationally accuse Diablo of scamming? Do you know what the word "scam" means?

"Scam: Noun. A confidence game or other fraudulent scheme, especially for making a quick profit; swindle."

Has he been fraudulent to make a quick profit? No. He's caused DMC to lose value. Nobody wins in that situation, so I can't imagine he'd ever do that on purpose.

I dont believe he made it on purpose too. But getting warnings over and over and still doing wrong things is hard on the edge.

 

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September 15, 2012, 09:56:23 PM
 #627

I've only referred to mining here - not to running a data-centre.  That's because this apaprently is (or was supposed to be) a mining company.

Read the op.

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September 15, 2012, 10:31:54 PM
 #628

Diablo is just an idiot and highly incompetent. I wouldn't give him the prestige of a scammer.

No, he's an example on why you do not let "technical guys" run a business, no matter how brilliant they are in their field of expertise.

Diablo may be a genius when it comes to building miners and optimizing them for various GPUs, but he's not a businessman.

And I'm not even talking about the destruction of value showcased here, but the real reason why this could happen at all: a severe lack of communication skills.
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September 15, 2012, 10:47:31 PM
 #629

I remember one of the very first posts when he brought this idea up being to get someone more business savvy to help him out, which he declined. Probably would've been a good idea.

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September 16, 2012, 12:38:36 AM
 #630

From the sound of it his biggest mistake was to issue his shares on a platform that forces everything to be denominated in, and traded in, bitcoins.

His goal seems to be to build something of real actual usefulness type of value, not to play exchange-rate games to make things look useful by looking at them only from the viewpoint of the bottom lin e of one single currency's accounting of the venture.

Bitcoin seems to be a particularly bad unit of account to be using in fact, because it is itself an investment that is likely to out-perform most markets. It is quite likely that simply buying and holding bitcoins is better than almost any investment other than ones in which someone has been talked, convinced, fooled or suckered into using bitcoins as a unit of account thus ends up owing the investors more bitcoins than were invested rather than merely more buying power than was invested.

In fact his overall operation seems like the kind of thing where the "sysbucks" I used in my Internet Provider Utilities toolkit could be useful, as the "sysbucks" serve as a currency specific to the range of goods and services provided by the provider independent of how many of some other currency the sales staff manage to sell "sysbucks" for at any particular point in time.

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September 16, 2012, 01:43:15 AM
 #631

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Bitcoin seems to be a particularly bad unit of account to be using in fact, because it is itself an investment that is likely to out-perform most markets. It is quite likely that simply buying and holding bitcoins is better than almost any investment other than ones in which someone has been talked, convinced, fooled or suckered into using bitcoins as a unit of account thus ends up owing the investors more [b[bitcoins[/b] than were invested rather than merely more buying power than was invested.

Look into s.mpoe, s.dice etc. There's plenty of real businesses making 100s and k's of bitcoins every month.

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September 16, 2012, 01:49:04 AM
 #632

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Bitcoin seems to be a particularly bad unit of account to be using in fact, because it is itself an investment that is likely to out-perform most markets. It is quite likely that simply buying and holding bitcoins is better than almost any investment other than ones in which someone has been talked, convinced, fooled or suckered into using bitcoins as a unit of account thus ends up owing the investors more [b[bitcoins[/b] than were invested rather than merely more buying power than was invested.

Look into s.mpoe, s.dice etc. There's plenty of real businesses making 100s and k's of bitcoins every month.


Buying shares in s.dice will take 10 years to payoff.

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September 16, 2012, 01:54:54 AM
 #633

I remember one of the very first posts when he brought this idea up being to get someone more business savvy to help him out, which he declined. Probably would've been a good idea.

Its not that I refused, I would have loved to have been the technical cofounder of this and let someone else take on the full time job of Chief Ego Officer, but the community simply doesn't have such people, and there have been wildly successful businesses that have been ran by technical solo founders.

The community is going to have to figure out how to run a successful company, but destroying DMC in the name of greed isn't going to help things.

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September 16, 2012, 02:04:15 AM
 #634

From the sound of it his biggest mistake was to issue his shares on a platform that forces everything to be denominated in, and traded in, bitcoins.

His goal seems to be to build something of real actual usefulness type of value, not to play exchange-rate games to make things look useful by looking at them only from the viewpoint of the bottom line of one single currency's accounting of the venture.

Bitcoin seems to be a particularly bad unit of account to be using in fact, because it is itself an investment that is likely to out-perform most markets. It is quite likely that simply buying and holding bitcoins is better than almost any investment other than ones in which someone has been talked, convinced, fooled or suckered into using bitcoins as a unit of account thus ends up owing the investors more bitcoins than were invested rather than merely more buying power than was invested.

In fact his overall operation seems like the kind of thing where the "sysbucks" I used in my Internet Provider Utilities toolkit could be useful, as the "sysbucks" serve as a currency specific to the range of goods and services provided by the provider independent of how many of some other currency the sales staff manage to sell "sysbucks" for at any particular point in time.

-MarkM-


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September 16, 2012, 02:10:20 AM
 #635

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Buying shares in s.dice will take 10 years to payoff.

Last dividend was ~7k for the whole thing, it only is selling for ~350k, so your math fails on that score.
Further, after 10 years you'd have both the shares in their original, pristine, mint condition and the dividends paid during the 120 months. What "pay off" are you talking about?

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September 16, 2012, 10:46:19 AM
 #636

@markm... what are you speaking of? Of course BTC in itself is an investment. But investors of glbse are aware of this. So normally you have btc, invest them and you earn money from the investment. But on top of it you earn $ because the BTC are getting a higher value. And when diablo would have build a mining rig from the start, like he stated in the contract, then he would had the chance to make 100% ROI after 10-11months. Thats the rate pyramining.com has, a real mining project.
So no... btc isnt a bad investment currency. In fact its a good one because you earn 2 ways when you make sure you have more BTC after you are out of investment.

 

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September 16, 2012, 10:51:39 AM
 #637

Its good for mining and bitcoin-gambling and of course "gold games" aka HYIPs.

But for Diablo's plan, of building a datacentre with a solar power farm, it is not so good.

Although conceivably had he put it all into mining as cost-effectively as possible from the start, in a couple of years when bitcoins are worth thousands of dollars each it could have picked up the datacentre and solar out of the amount the mined coins appreciated if at the right time he had stopped putting it all into mining gear and instead just started hoarding the mined coins...

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September 16, 2012, 10:59:13 AM
 #638

Yes, youre right... it should have been a mining project reading from the contract. In fact the second part about hardware that is supporting mining i wouldnt have thought of a solarfarm. Simply because such a farm has a 100% roi after 10-12 years. Thats, compared with simple mining, a real bad roi. So i wouldnt have thought he would invest in such thing.
At the end it became a investingproject with many bad decisions that dropped the course near zero.

 

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September 16, 2012, 12:46:32 PM
 #639

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Buying shares in s.dice will take 10 years to payoff.

Last dividend was ~7k for the whole thing, it only is selling for ~350k, so your math fails on that score.
Further, after 10 years you'd have both the shares in their original, pristine, mint condition and the dividends paid during the 120 months. What "pay off" are you talking about?

I doubt MPEx would still be there in 10 years is what I really mean.

The operator is basically anonymous and runs a porn site on the same server.

Anonymous entities and bitcoin financial services  has proven in the past to be a bad combination and people would be nuts to send any coins to such services.By urging people to invest in such services you are actually doing the community a disservice and teaching people bad habits. People should boycott anonymous financial services not encourage them. 

Either identify yourself or GTFO.

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September 16, 2012, 12:49:15 PM
 #640

In a suprising turn of events, Diablo-D3 has agreed to hire me, usagi, as his representative in this issue.

I will speak on behalf of Diablo-D3 and represent him in this issue. My fee is 5 btc. Diablo has expressly authorized me to field all questions on behalf of the GLBSE, investors, and the public on this issue.

We are issuing a statement: Things have gotten blown out of proportion. Everyone wants what is best for DMC and for investors. Therefore we are prepared to make an offer. The DMC contract will be modified as follows:

1. Diablo-D3 will modify his contract to state his business plan:
a) Buying shares of mining issues on GLBSE.
b) Buying hardware (when appropriate) for the datacenter.
c) Buying solar power (possibly before mining hardware) and possibly reselling solar power into the grid should surplus exist.
d) Selling dedicated hosting/web hosting if there is spare datacenter capacity
e) Other sources of income, from time to time, to be passed through shareholder approval via binding motion.


2. Seeing as how if the business he runs can't exist if it can't pay him a reasonable amount, the dividend structure will be changed as follows:
a) Out of all the money DMC recieves as income (excluding sale of shares), Diablo will recieve 20%.
b) The remaining 80% will be used to cover operational expenses.
c) Of the money remaining after operating expenses, half will be paid as dividend each month, and
d) the remainder will be used to expand and grow the company.

3. Diablo-D3 will hire smickles of S2 capital management to do accounting for DMC (effective immediately).


This simple 3-step plan shows that Diablo-D3 is competent enough to manage DMC and is the best person for the job.

I will be speaking with Nefario immediately to vet this and see if we can't turn this situation around.

I knew I should I have bought that giant red USB button they had on ThinkGeek.

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