Topic: CEX.IO - page 10. (Read 69772 times)

Appreciate the input guys.

The fact overlooked by all the analysis is that this is the Bitfury pool, who manufacture their own asic chips, sell them and also mine themselves. I'm pretty sure that they wouldn't be doing this for free, far from it, so not all of the total pool earnings will be revenue being paid to external pool members and I'd expect them to quarantine their hardware sales profit from the pool. Furthermore, the pool fees might not be zero forever, it could very well be a loss leader as part of their customer acquisition strategy. I'm only speculating based on these comments from their FAQ, https://cex.io/faq :


"How can a GH/s be owned forever considering electricity costs and other fees?

Maintenance fees will be set per GH/s to electricity costs and datacenter fees. It may be adjusted according to the BTC/USD exchange rate because our fees are in fixed USD.
If the maintenance fees exceed your mining income, GH/s be sold at current market price to cover fees.
CEX.IO MUST buy back sold hashing power at market price to close accounts.
At anytime you always have the option to request GHS withdrawal as hardware devices, just contact support to negotiate shipping details."


Anyway, this is just my supposition based on the information they provide. I'm not associated with the company in any way and really, I figure that they're looking out for their own interests, have you ever known any asic manufacturer to do otherwise? Now either you wait for a CEX rep to comment on this thread to give you the 'proper answer' or if you're really that concerned about their business model, then contact them directly.

I was wondering a similar thing, after all, there's not many businesses that offer 'no fees' to the end user.

The way I understand it (and feel free to correct me if better information is available) is that the Ghash.io pool also mines Namecoins by way of merged mining and it's these NMC that provide profit to CEX. On www.ghash.io it states this at the top of the page: "Pool fee is 0% ! However, we have NMC merged mining to cover pool expenses."

The pool also generates fee revenue from mining transaction fees (the fees you pay to send BTC across the network) so if you look again at www.ghash.io and scroll down to the 'Last Blocks' section, you see that under the "BTC value" column not only is the pool receiving 25BTC for each new block found, it also appears to distribute some fee (or merged mining?) revenue back into the pool:

2328    2013-10-23 00:08:47    265415    25.2284    3/120    2 hours    632.68 Th/s    
2327    2013-10-22 22:09:57    265404    25.0114    14/120    11 minutes    624.69 Th/s    
2326    2013-10-22 21:58:50    265401    25.0526    17/120    34 minutes    628.95 Th/s    
2325    2013-10-22 21:24:40    265396    25.0642    22/120    3 minutes    631.95 Th/s    
2324    2013-10-22 21:21:37    265394    25.0031    24/120    a few seconds    542.11 Th/s    
2323    2013-10-22 21:21:20    265393    25.2119   25/120    42 minutes    629.53 Th/s    


If you look at pool sizes here https://blockchain.info/pools the ghash.io pool is the second largest, so I imagine that it's generating a reasonable amount of fee income and NMC merged mining income to cover costs and provide a level of profit for the pool operators.

Anyway, that's the way I understand how things work, but if anyone has any clarity to share, please do.

Moved almost all of everything out and into a mcxnow account where it will at least collect interest. the rate changes a lot but it's something.

Est. annual interest rate: 6.07810768%

Interest on deposits -
25% of all mcxNOW exchange fees go towards paying interest on deposits every 6 hours!
Interest calculated as: (YOUR_BALANCE / TOTAL_USER_BALANCE) * 25% of fees. This applies to every currency on the exchange.
Fixed-point integer math trading engine -

At some point in time CEX will cease to sell GH/s and instead sell TH/s for xxxx so, that will have a new energy cost per TH/s. This can continue constantly up the point that ppl are still willing to mine and to exchange btc/$$$ for so said mining.

I think CEX is a great idea, just, don't think mining is priced correctly atm. But, I am still hashing and trading on CEX.

Thanks, I understand that.

The value of a Gh/s should be equal to the present value of future income generated. If expected future income is zero (BTC - maintenance < 0), then the market value of Gh/s should be zero as well. There might be some residual value to the H/W owned, but it will be negligible compared to today's prices.

So the issue is when maintenance fees exceed mining income, the market price of Gh/s should be valued at zero in a CEX.IO type environment. So the statement above doesn't say much because the market price should be near zero here.

My basic point is breakeven mining has value in a home environment, but does not seem to have value in a traded environment. It is this end game that I want to understand better.

From their FAQ:

At this point another 50x increase in the hash rate makes mining with BitFury chips break even with electricity costs (assuming $0.10 electricity, $200 BTC, zero datacenter costs).

What happens to CEX.IO mining when power cost breaks even with mining value? Today they are providing free electricity since it is negligible to the value of BTC mined, but that is changing fast.

In the GPU/FPGA era, many people mined at near break even just to generate coins (i.e. pay electicity for bitcoins). That can make sense and work in a home/private environment since it is just a way to purchase coins, but I don't understand how the CEX.IO model works here. CEX.IO will have to charge the full value of mining just to cover their costs. This would leave zero value left for Ghash owned since all BTC generated would be used to cover their costs.

Any thoughts on this would be appreciated, I'm interested in the service, but having a hard time trying to model how it makes sense in 6-12 months from now.

Very True, depends how you view your earnings...$ vs. BTC Lost BTC, but Gained $ based on the X Rate

You can't buy CEX.IO hashrate with dollars. You have to convert your USD to BTC first, and then spend it so you can earn less BTC...

Join the club. but really it's hard to tell at the price of btc is jumping. So, in term of actual $ investment you should be ahead a lil. You won't get a true gauge of mining until btc is stable in price for a long period of time. GO BTC!!!

i lost value of the ghash drop too fash...vs the ROI of mining...

sad..

I've read about this problem with KnC hardware, and it's most likely harmless. Only thing that matters is how many valid shares you end up sending to the pool. IIRC the firmware just doesn't clear its results sometimes, so cgminer thinks the same old result is a new one. No work is wasted when that share is sent again, but it ends up in the duplicate statistics.

I've been mining with cex.io for about a week and I'm seeing VERY high stale counts for my ghash.io account and very high duplicate counts for my KNC miner.  Overall the performance is what I expected but I'm wondering if there is anything I can/should do about the high stale and duplicate counts??!!

hit nail on the head. greater fool's game.

some things ive observed:
+ keep small positions to exit quickly
+ enter positions looking for valuation on uptrends, not from mining profits. the longer you hold with this, the more market variance you are exposed to
+ be careful with reinvesting mining profits. check price before you extend your position
+ keep an eye on the time till the difficulty change
+ keep an eye on the severity of the upcoming difficulty change
+ buying pressure is strongest right after the change
+ selling pressure begins a few (3-4?) and peaks right before the change


read and understand the order book constantly!

exactly. this only works because you can sell your share to an even more gullible newb down the road...

Yes. Just like any other form of mining right now.

Then CEX is a sure way of burning your coins quick..

Yes