Topic: [CLOSED] Call for investors. Let's build a huge bitcoin mining DC together. - page 3. (Read 12732 times)

Was talking about ASIC with someone not too long ago, we came to the conclusion that we would probably need something along the lines of USD$1Million. We also came to the conclusion that the bitcoin economy couldn't handle a venture that size at the moment as it would essentailly be a 1million withdrawl from the bitcoin economy.

Right now I don't think the price of bitcoin is high enough to justify something like this.

This would only pay off, if difficulty stabilizes "soon (tm)" or if you intend to run the same hardware for a few years.

Otherwise high initial bursts with GPUs would pay off far more BTC for your investment, have a much higher resale value (BTC ASICs are nearly worthless except for BTC mining) and can be sold + upgraded if a more efficient model comes out.

It might both have it's pros and cons, but ASIC/FPGA mining is not the solution to everything (much like quantum computing).

[Edit: The above is again only valid for MINING investments, not for BITCOIN investments! As Vladimir already said: Investing in mining is something different from investing in BTC itself, as for example you have some "fiat value" through hardware components in there, some additional benefit for the network itself though hashing power and more flexibility what you use the computing power for. This comes (probably, as Bitsinmyhead calculated) at a price against buying BTC directly but is a different investment model!]

I would be prepared to make a significant investment into ASIC mining, but not into GPU mining anymore.

I think on buying vs. mining, Bitsinmyhead made enough points already [pun intended! ].

I did a few calculations on your 2 products and it seem like that after quite exactly 180 days the "Hashes solved per unit of money invested" ratio of investing into this business model starts to beat the 400 GBP/month mining contract (meaning the lower costs per day start to pay off compared to the high initial price)

HOWEVER:

What any investor needs to keep in mind is that the total hashing output is 35% lower, so unless the whole BTC system stays more or less stable on a certain difficulty level (doesn't really matter which) it might still be wiser to consider a high initial burst.
In which (mining) product to invest depends on if you believe that the difficulty will rise (Yes: Get as much capacity as possible NOW!, No: Get as much efficient capacity as possible, maybe even look into the OpenFPGA project [though that only pays off in a few years at it's current hashrate + initial price...] or similar stuff) and also how long you want to invest in it (everything below 180 days makes only sense to be invested in a mining contract).

I also did a more thorough spreadsheet on this, but I guess that's not in the general interest and can be calculated by anyone else.

Wise move, GLBSE is not suited for everyone. We'll have it up in about 8 hours, and the payment function will be working at that time.

no comments

You didn't think it would be that easy...
It's time to look at the number once again...
Thats where the answers will be found...
Not in peoples lofty dreams...

So Im going to assume that if bitcoins fall to 0 overnight, the value of the equipment will probably fall to something like 50%. So your investors are risking:
1000 investment + 100 monthly payment - 500*65% value of investment after BTC becomes worthless = 775GBP

Now what I am going to do is buy coins today for 775GBP.
That would equal about 150 coins.

Now every month I will spend the 100GBP buying coins. With average difficulty level of 1M, I should be able to pick up at least on average 10 coins per month. After a year I have 260 coins this way and risked exactly the same as you.

You might argue, but what if price goes up a lot... Well then difficulty will do the same, so it will be worse for you because I get most of my coins in the beginning... Even giving you the very favorable assumption of average 1M difficulty over the next year, which I think most would agree is kinda unrealistic...

The end of the story is:
Your clients risk: 775GBP to gain 237 Bitcoins.
Buying bitcoins risk: 775GBP to gain 260 Bitcoins.

And that my friend is why its called a risk/reward profile and why you just don't look at the risk or reward in isolation.

Investing in bitcoin mining today is questionable...
Investing in bitcoin mining today keeping only 65% is outright terrible...
If its a bad investment...
There is no way you can play around with numbers to make it good...
Its the beauty of the game...

Yep.


This is a great idea. I'd be happy to be a customer. But someone else would need to do it. I simply do not have expertise required for this.

Gpu's are good because they can be used to do computational work on other problems to bitcoin...

The real question is why don't we make a co-op and build bitcoin asic's?  Then sell them for profit... this means that we get GBP or other asset, while still helping the bitcoin community.

Here you go...

tomorrow exchange rate of bitcoin goes to 0 and stays there forever. You've just lost 100% of your bitcoin investments while me and my investors will have some computer hardware and a working supercomputer which coluld be sold or may be used to mine namecoins or bitcoin 2.0 or towncoins or googlecoins or visacoins or ciacoins or even fedcoins or carotcoins to be rented out to GCHQ or something else.

Goodbye.

Surkim, you are correct I do get worked up by people assuming that my only cost is mining hardware and electricity, you would be not the first one. Perhaps I should keep my cool better. But trust me you are not the first one pestering me with this by far and my not quite board room style response is provoked by the level of critique.


Let's see.. Rent, property taxes, water, electricity, shared hardware depreciation (floors, CCTV cameras, alarms, shelving/racks, security contracts (including police response), management and monitoring servers, networking equipment and Inet connectivity, cooling system, ventilation ducts, shipping, insurance, electrics ... the list goes on) Also the quoted numbers are estimate. It might get higher in reality, definitely it should not be surprise if thing go 5-10% or even a bit more over budget. Should you try to get something like this in a 'proper DC' expect costs 3-6 times higher, though. This is rather different from just electricity, is it not?


There are no set time limit. DC3 is expected be scalable up to 400 Ghps which is a lot. Further expansion is possible. It might make sense to let me know about large GLBSE listing being prepared so that I amend my plans accordingly and prepare for scaling up further if needed. Also I do not need any specific number of investors to come in order to start the project. DC3 will come online with existing funds and arrangements which are either already in place or being finalized.


GPU based machines, 6990's mostly at the moment, not the cheapest ones either where it comes to mb/PSU/case.



Derbyshire, UK.


None. Investors will not get any access to raw machines. The delivery of the results of calculations would be done either via weekly zero-variance method or by pointing miners to investors RPC end point. Note that costs are quoted per Ghps not by GPU's or boxes.

So you are some kind of legend on this forum...
David Hasselhoff is a legend in Germany...
Doesn't mean I want to invest in his brand....

Why let numbers ruin such a nice investment idea...
You just hide behind the...
Different risks, rewards and tax liability profiles...

Tax liabilities are very unclear...
At least where I live...
Thats what my accountant says...
Doubt it is much different in the rest of world...

And for the risk/reward...
I want to challange you...
To come up with a set of assumptions....
Where your risk/reward profile...
Is better than just buying coins...

You do that and I leave this thread alone...
But right now this just looks like an easy way...
Of getting rich of someones dreams...
Nothing sells like printing your own free money...

Your statement in the OP: 1000 GBP initially per GH/s (approx.), 100 GBP per 1 GH/s per month for upkeep (approx.)
100 GBP/30 days/24 hours = ~0,14 GBP per hour "to run it" as you put it. I thought this would be most likely your electricity costs - if not, I'm sorry.

Honestly I'm not in the mood to argue around with your business model, whatever you want to achieve with it. Also asking for no answers/followups but on the other hand using mildly insulting/suggestive questions and words like:
might not be the smartest strategy for a respected businessman. Just saying...

If it is not ok for you that people voice their opinion (and yes, my opinion is still, that your own share is too high for my taste - your's obviously is different and it's up for other potential investors to decide for themselves) please consider advertising on a website/forum you control and that you can edit/restrict/censor as you wish.

Further questions:
If they are not 100% electricity costs, what other costs are covered with the ~100 GBP/month an investor should pay?
Until when are you looking for investments? If for example someone would start a collection on GLBSE, this might take one month or more - and by that time you even might be already "booked out".
What type of hardware are investors investing in? With that amount of money you want to raise, FPGAs/ASICs wouldn't be that much out of reach any more... but these have different 2nd hand value to be considered.
Which country will this data center be in? Still in GB or somewhere else?
What types of services are investors allowed to host on "their" machines? Only Bitcoin related stuff (what about hosting a pool server?) or also different services, like webservers, torrent boxes...

Surkim, where did you get "Your electricity costs are ~0,14 GBP (0,16 EUR/0,23USD) per hour per rig."?  This seems to be a statement of fact in writing, which is false, which is also damaging my business. Do you know what legal definition of this would be? What a bunch of noncence. Are we starting to suck arguments out of our thumbs here. What do you think it does to your credibility?

Sukrim, Bitsinmyhead: You are new here, obviously you lack backgraund info. Therefore I'll try to address your rhetoric.

First of all, please stop comparing this to ScpesiDyne... That is just an anonymous kid (based on his voice) copying me. In fact, ALL known mining contractors to some degree are copying me (thank you),  because I was the first one to offer this kind of service commercially.

Second of all, please stop comparing this to direct purchasing of coins. These two investmetns have completely different risks, rewards and tax liability profiles, etc.., etc.., etc...

Third of all, please stop counting some of my costs and my "outrageous" profits. Your approach is simplistic, and naive to the extreme. I've been pestered by kids like you about how badly I compare to their gaming rigs under the bed for long time now.  You think you are that good, please go and start competing business.  Please do house you rigs in open field by an electrcity pole.


"just plugging in"? O boy... where do I start....

Have any of you ever in your life managed 10 servers for a year? How old are you? What are your business credentials?  Why would anyone take anything you say seriously? Do you realise that running hundreds of servers consuming megawatts of electricity is a completely different ballgame as compared to running 1-2 servers in your mom's basement?

I've been delivering mining contract commercially for a while now. My multiply clients are who's who of this board, and they made boatloads of money on my contracts, most of them renewed expired contracts, many renewed more than one time and increased volumes.

Now I offer service at long term cost far below any competitor on the market plus offer hardware 'hedge' and skiddies are still not happy. Now they tell me I shall work for free, place hundreds of rigs by an electricity pole in the open field, provide zero-variance for free, etc.. etc.. etc... I am, frankly a little tired of this and wish there was a moderated business board where likes of you could not get to.

However, "Do you hand out guarantees/contracts/SLAs that include also commitments/penalty payments from your side if a rig goes down?" is a good question, and yes I do hand out such grantees and contracts and moreover I have significant proved track record of delivering on my promises. I will address this in F.A.Q further.

"What are your exact services that are worth ~1/3 of investor's incomes?" This is another good question and I will address it in F.A.Q. I do think however that for anyone with some money to invest the answer is pretty obvious already.

Sukrim, Bitsinmyhead: I would appreciate if you and your kind stop posting noncence in this thread. Please do not reply to this post in this thread. I really do not want another 10 page discussion comparing my business with a kid ruining mining rig in his mom's basement. I also invite you to consider deleting your not so well thought out posts. However, should you wish to ask further specific questions like the two I mentioned above, you are welcome to do so.

When at first I read this post...
I thought it was a pretty funny joke...
A play on SkepsiDyne and all the mining companies...
Now I realize it's just a very bad investment...

I know that maths can be pretty hard...
But when you look to invest 20k+++...
You should take the time to run the numbers...
I'll hold your hand and even do it for you...

Assumption 1: Average difficulty over next year: 1 000 000. (super optimistic)
Assumption 2: Value of mining equipment after one year 50% of new price. (super optimistic)

Alternative A) Invest in this:
Investment in equipment: 1000GBP
Monthly cost: 12*100 = 1200 GBP
Total: 2200GBP

BTC generated at 1Ghps after one year at 1M difficulty: 365
Of these you get to keep 65%: 237
At end of one year your hardware has a value of: 500GBP of which you get to keep 65%: 325

So for a total outlay of GBP: 2200-325= 1875 you get 237 Bitcoins.

Alternative B) Buy bitcoins for GBP 1875 today at USD price 8.5:
You get 361 bitcoins and get to keep all of them...

Even with these very optimistic assumptions...
This investment here is very very bad...
Maybe you hope to find someone...
With 20k+++ and no math skills...

But as I have said before...
Unless the investment is pure genius...
It will always be better to just hold coins...
A mining company is not pure genius...
In any form or way...

Your electricity costs are ~0,14 GBP (0,16 EUR/0,23USD) per hour per rig. Assuming a 1MH/W efficiency (which is quite low as you claim to have an overhead of just 6% for cooling and many AMD GPUs have more like 1,5MH/W or better) this is still higher than the electricity prices where I live, which are already quite high compared to other places.

Also I don't really get the point of paying you to set up hardware, paying for (overpriced?) electricity and THEN paying you 35% or 30% on top of that. This translates to over 100 GH/s (if the full datacenter can be filled) just for your own pocket with 0 expenses. Even if 1 rig fails per day, you still would make profit (currently 100GH/s would be worth nearly 2000 USD per DAY), plus you own 1/3 or that rig too! Do you hand out guarantees/contracts/SLAs that include also commitments/penalty payments from your side if a rig goes down? What are your exact services that are worth ~1/3 of investor's incomes?
I'm also not that happy about the fact that investors pay 100% of the hardware but you own 30/35% of that hardware afterwards just for plugging it together.

What I value though, is that you are at least upfront and tell in advance what to expect, maybe there really are people that see this as an interesting business model/investment?!

Dear filharvey, thank you very much for your interest and for your proposed business model. It is very interesting. I think I will pass on this one at this time, though.

Feel free to run a similar service yourself on the terms you have suggested.

Shouldn't the operator be taking on the running cost (of what u wsay is 100 per machine?) for their 35% of otherwise no investment?

I love it!

It is none of my business what my clients do with their mining capacity, as long as I am not burdened with significant administrative overhead.

Funding it via GLBSE and than distributing 'results of calculations' as dividend might be a great idea for someone. Moreover, it is certain that I will not list on GLBSE myself, because my legal counsel wont let me. Therefore, whoever uses GLBSE for this will not face competition from me directly.