How much return should I offer an investor?

[alexdrans]

Basically, I've pitched the idea of investing into Bitcoin mining to my friend. He would provide the capital to build the PC, and I'd do everything else from there.

I'm thinking of loaning around £500-600 from him, and then building a rig and either...

a) Paying him back a fixed amount, I'm not sure how much is a reasonable about, £700/£750?

b) Giving him a percentage of the income from day 1, say 40 to 60%, again, i'm not sure how much is reasonable.

I would be paying the electricity costs and everything too, so paying him back a percentage of the income would need to take this into consideration.

Anyone have any suggestions?

[FreeMoney]

A few good options:

He puts in all the money and takes all the profit, less a wage for you (and maybe a small cut to get incentives correct)

You borrow money from him, paying back up to double if you make that much.

You borrow money from him promising to pay back no matter what and give him something small like 10% interest.

[JJG]

It depends how much risk you want to shoulder. Whatever you do, run the projections for scenarios where bitcoin exchange rates plummet as well.

If you give him a fraction of the income, he's shouldering some of the risk as well.

If you give him a fixed amount, you're shouldering a lot more risk, but you also have increased upside in some scenarios as well.

If you choose fixed amount, don't forget that difficulty adjustments happen every ~10 days or so. A month from now, you don't want to be paying him the same rate that you're paying him today, unless exchange rates mysteriously keep increasing.

[Justsomeforumuser]

IMHO you should never borrow from friends to begin with, but the fastest way of resolving that at least is a direct pay-back of the original money +10% on top.

That's more than any credit interest charge or savings account and in ideally less time.

Not sure why you are borrowing money in the first place though.

Wait tables for 2 months on weekends and you have the extra money. And you can build a rig around the 5770 (most hashs for the watt I would assume) for less than 500 GBP as you only need low end everything to "hold" the GPU, as it's all about that running on it's own. No RAM, HDD or CPU power needed at all, and thanks to the 5770 being conservative, not a huge PSU required, either.

[AbEnd954]

I just did something similar with two family members. They are each investing ~$800 for two new HD6990's. I fully explained Bitcoin to them, showed them what I was currently generating with a HD5770 and a HD6950, and what the exchange rate is. I told them that there are no guarantees and that the coins generated will decrease over time as difficulty increases. I'm getting a 60/40 split with me getting 60% for power, cooling, and maintenance costs.

I'll let you know in a couple of months where my family has disowned me.

[Justsomeforumuser]

I just did something similar with two family members. They are each investing ~$800 for two new HD6990's.

Aren't 6990s tons less efficient compared to the 5770? In fact, I am curious as to whether anything has yet "beaten" the performance per Watt of that card?

Faster doesn't always mean more, it may very well just mean less profit per kwh invested..
Performance per cost unit is the first thing I'd research for this stuff..but then again there is no real "scaling" as you can usually only plop in 2-3 cards until you need a new "container" PC.

[AbEnd954]

My 5770 get's about 185 MH/s. 6990's get 683-746 MH/s. I'm guessing the 746 MS/S is due to overclocking which I wouldn't be doing so I'll have to see what I actually get. Both of my rigs on have single 16x PCIe slots. So I'm trying to get the most bang for my buck with the hardware that I already have without having to buy new motherboards and possibly CPU and memory too.

[Justsomeforumuser]

Given that the 5770 uses about 108 Watt and the 6990 375 Watt (around 3.5 factor), yet also performs at around that fraction/factoring, it appears that the performance per Watt actually scales.

That is incredibly impressive to me as a feat for AMD/ATI.

The initial purchase cost still is at a premium (100 vs 520 EURish, so more a factor 5 than a factor 3.5), but compared to not requiring a whole new "case" around it, I guess you have a fair argument there.

(Although you could probably build a barebone supporting 3 5770s for 2-300 EUR, too)

Cool, learning something about the GPUs on the side here. :p
Sorry for going off topic so far.


Btw - I am not sure you need the 16x PCIE..given the nature of this stuff, it isn't exactly that you are constantly swapping gigabyte of texture data per second..but then again, I have no idea what the bandwidth throughput is on P-miner(though I suspect it is negligible).
Would be worth looking into though, seeing as how it would enable 3-4 cards vs 1 per PC.
(I.e. maybe just keep one of the 5770s for a normal PCIE and run it parallel, see how it performs? If still 180 mhash/s, then there at least my theory holds)

[PiGames]

You could offer 100% profit (mining output - electric cost) until the loan is repaid. Than once that is done maybe 10% profit for x amount of months.
Mining @ 350MH/s @ current diff. would be 2btc/day or ~60/month. If selling @ $6/btc (really low) you're grossing ~$360/month...shouldnt be too long to repay the initial investment.
From a personal standpoint, I always feel better resolving loans/debts/investors as soon as possible, than after that, everything is gravy