Topic: [closed] Zeta Bitcoin Mining - page 3. (Read 12935 times)

Hi EskimoBob,

I cared not to mention you personally as the inventor of the 'turd' naming for mining-bonds and one of the few very enthusiastic detractor of those, but now since you step ahead and repeated your claims here (like you already did in almost any mining related GLBSE thread), let me please answer shortly.

Yes, I follow your argumentation and also admitted somewhere in this thread that the initial idea to make back the investment within 6-8 months is not achievable any more - it will maybe take 2-3 years. The result is a direct outcome of the broader availability of FPGA based mining rig and the anticipated arrival of ASICs that increased the difficulty in that short time, and put a pressure at existing mining securities, respectively. Now that's the inherent risk for investing in mining in general and in buying mining equipment in particular.

What I do not like in your argumentation are two factors: a) you are calling everyone who is invested in mining more or less idiots for not being able to predict the development that led to the current situation, and b) you are implying that mining is non economical in general. While the former is just impolite towards the folks around that are engaged and believe in Bitcoin (maybe even more than you do), the later is plain wrong and contradicted by the pure existence of Bitcoin.

I claim that investing in mining-bonds is an equivalent of investing in mining rig. When I did my IPO, the price for 1MH/s was about 1.5 times the cost for the mining boards alone. Now take that your boards are not running at 100%PPS (in retrospect, mine are at around 85%) and additional infrastructural investment required, let's assume for a moment the factor is a fair one. If you claim mining-bonds are a guaranteed loss, you equivalently state that buying mining equipment also is. Now, if that was the case, who do you think would buy mining rig to keep Bitcoin alive? Those generous people that have enough spare money to throw it away for just being nice and support the idea? Or those that believe difficulty / price ratio will develop in a way that mining remains profitable in the long run?

I believe in the second. If you personally don't, then you maybe even do not believe in the long term success of Bitcoin as a whole. Do you?


Cheers,
Zefir

If you got in at IPO, so far you have lost 9% (if you sold today, 4 shares @ 0.206206).
You will keep losing until the direction of difficulty is reversed and diff. gets adjusted dramatically.
Right. If you plan to sell, you have to look at the bid wall (or lack of it) and calculate, what the market can take before dropping to laughable price level. Yes, Mh/s has a fair price too   As of today, your minimum loss will be:

If you still do not understand, why perpetual Mh/s mining bonds BBN's (Bitcoin Burning Notes) are bad investment in current market conditions, go and read: Weekly loss of N% guaranteed - Enjoy perpetual loss with fixed Mh/s mining turds

Cheers.

PS! ASIC upgrade is just a temporary fix if difficulty keeps going up and block reward is halved.

Update: successful ASICMINER swaps & recall of bonds


Dear Investors,

I had an enormous feedback on the exchange offers for ZETA-MINING bods, with interests concentrated to swap for ASICMINER shares.

Several investors exercised the offer and I ended up with lots of ZETA-MINING bonds that I currently can not sell for a reasonable price. Now that Pirate went bust and caused most of the high-yield investment opportunities at GLBSE to cease operation, investors might soon realize that 1-1.5% weekly ROI is not too bad - and mining bonds are far from being 'turds'. At current difficulty 1% weekly would match a 1MH/bond price of 0.26BTC, which is around twice as high as mining-bonds are currently rated.

When the market is willing to correct the valuation of mining-bonds, I am open to sell more of mine to finance expansion. For now, I decided to do the opposite and recalled 5000 bonds. With the 1000 I left unsold in the asset account to provide some liquidity, there are 4000 bonds left outstanding. This matches exactly 10% of the physical hashing power I currently have to back them.


As stated in the exchange offer, I am accepting swaps for ASICMINER shares at a 1/1.5 ratio until end of September. Also I need to point to potential takers again that, while it seems a profitable move right now, remember that you are swapping a low-risk low-income investment for a high-risk high-income venture. You might multiply your coins within some weeks, but other ASIC manufacturers popping up might void ASICMINER's plans and profitability forecasts (that's nothing new, friedcat is openly pointing to those risks). Though it should be pretty obvious, I state it here for completeness: the offered swap is a one-way process, i.e. I will not swap back at no time.


Have a nice and successful week,
Zefir

Hi Elraffa,

thanks for your support. Most other mining bonds already provide some sort of 'ASIC ubgrade path' based on BFL's product upgrade offer. My intention is not to offer such a path (hence the limited offer for ASICMINER exchange), but to allow those who see FPGA mining threatened by ASICs an exit opportunity. It still might turn out to be an exchange of the one bird in the hand for the two in the bush, but at least you have a choice.

Feel free to PM me if you decide to.


Cheers, Zefir

Thanks for the offer, I really appreciate it. Issuers of other securities should take heed.

I definitely don't want physical hashing power (hey, I buy mining bonds to avoid the noise, heat and hassle) but I will probably take you up on the ASICMINER offer. First need to read through that mother of all threads, though. And collect at least two more dividends. :-) I'll PM you in September.

Update: exchange offer for physical hashing power or ASIC securities


Dear Investors,

With the latest difficulty increase of more than 11%, the earnings per week came down to 0.98% of IPO price. Including the compound earnings of ~22% since the IPO, the time frame to recover the investment got fairly long. If ASICs show up by the end of this year or early 2013, we might even end up with not being able to earn back at all.

This would be the first time that I fail to recover my investment in mining rig, and it makes me really sad that it happened with investors' money. Contractually wise I am not obligated to guarantee a ROI at all - I basically passed a portion of my risk from acquiring mining rig to you, hoping for a quick recovery and a long term profitability. We took a joined risk, and it did not turned out as expected. Please note that my personal involvement in this venture is more than 75%, i.e. I collected less than 10k$ through the IPO, but paid 40k$+ for the mining rig that operates ZETA-MINING. So, while I could refer to the contract, let the bond price deplete continuously, and remain perfectly compliant to the contract, I feel a moral commitment to not let those down that are supporting me.

Last week I already stated that I will pay at least the break-even price denominated in fiat (which for this week is 0.108BTC) for outstanding shares. I plan to keep this offer as long as possible, at the same time I admit that currently I have not enough liquidity to buy back all outstanding shares at once. I considered a variety of different options I could offer to investors and ended up with the following two that address the core criticism towards mining bonds in general and the main mid-term risk existing mining ventures have in common:

1) Bond holders are offered a trade option for physical hashing power. Each share qualifies for the break-even ratio of 1MH/s. Example: after dividend payments for week 34.2012, the break-even price of the bonds issued is 0.23BTC, which is 78% of the IPO price. Therefore, each outstanding share can be traded for 780kH/s of physical hashing power. A CM1 Quad-FPGA currently delivers 840MH/s, which during this week allows you to trade 1077 shares for one CM1 board. Bond holder is paying shipping and taxes. This offer will be always valid, the exchange ratio will be updated each week in the related spreadsheet.

2) At any time before October 2012, each ZETA-MINING share can be exchanged for 1.5 ASICMINER shares. If you believe that ASICs will kill GPU and FPGA-mining and have some confidence in friedcat's venture, this is your chance to participate. If the plan succeeds, each ASICMINER share will represent 30MH/s, allowing you to upgrade 1MH/s physical FPGA-based hashing power to 45MH/s assumed ASIC-based hashing power. I am in no way promoting ASICMINER or claiming the venture will be successful at all. The bond holder willing to swap needs to do so based on his own risk analyses and is fully responsible for the outcome.

If you are interested in one of these options, please contact me via PM. As said above, contractually I am not obligated to offer such an exchange program. I do it solely as a goodwill to thank you for the support I received so far. This implies that I reserve the right to cancel the offer on extreme and / or unforeseen developments.



Thanks for your continuous support and have a nice week,
Zefir

Update: dividends for week 34.2012 paid

Dear Investors,

I just paid the dividends for week 34.2012, and when I compared to last week's payments I noticed I made a mistake. Instead of paying 22.6566 BTC last week, I obviously sent only 22BTC. I must have entered either wrong decimal sign (comma instead of dot), or it was a GLBSE problem.

Whatever, I corrected the mistake and paid the remainder of 0.66BTC today. Please accept my apologies  for the inconvenience.


Cheers, Zefir

Dear Investors,

today ZETA-MINING price hit rock bottom. Someone first sold into my bid wall at 0.12, cleared it, and finally sold 882 shares at 0.00171 for a total of ~1.5BTC.

I can only suspect that either some account got hacked and cleared, or someone placed a wrong order.

If otherwise someone needed to cash out, selling them for any price was a really stupid idea. As promised two posts above, I am willing to buy back shares at any time for the break-even price denominated in fiat, which for this week was 0.12 BTC. Pirate's closing down of BTCS&T currently impairs my ability to liquidate assets I hold for a fast buy-back, so that I might not be able to keep the 72h buy-back deadline. But still, dumping shares for any price is nonsensical by any means.


Cheers,
Zefir

Dividends for week 33.2012 paid early.

Due to RL issues I paid some hours early. I will seek to transfer at the scheduled time to keep a constant payment interval, but reserve the right to pay early when I am not online at that time.


Have a nice week,
Zefir

Update: dividends for week 32.2012 paid, operational status, market situation

Dear Investors,

with the dividend payment for week 32.2012 it is time to give a sign of life, even if there are no relevant news to spread.


Operational Status
Since Enterpoint staff left for holiday season or is occupied with other projects, the community was basically left alone to help ourselves. Some enthusiastic developers were quite successful isolating the problems the boards initially faced, while the affected CM1 operators pledged a bounty to at least partially compensate their efforts (with 195BTC collected so far).

The outcome of this community work are FPGA bitstreams that allow the CM1 boards to operate at around 800MHps, at least with those boards being delivered lately. The risk I took buying the first large bulk of boards did not pay off for me this time, since almost 40% of my boards are not stable for mining. Nevertheless, my FPGA based hashrate reached 27GHps. Since the current market is not willing to pay reasonable prices for mining bonds and I am not willing to sell bonds at any price (I got almost zero interest for more bonds), I'll postpone further expansion until investors regain their confidence in the profitability of mining. For you as investor the relevant fact is: each 1MHps bond you hold is backed by almost 4MHps physical hashing power.

Another fact for successful long term operation is the achieved efficiency. For those 27GHps a total of 1.3kW is pulled from the wall. With my electricity cost of 0.12$/kWh and current exchange rates, I mine 1BTC for 0.03BTC operational costs - I will remain profitable until (difficulty / exchange rate) ratio increases by factor 30 from today's values.


Market Situation
After a longer period of steady (and by design depleting) price well over 0.2BTC, this week it was hit by strong and irrational movements. In a sharp downturn it fell down to below 0.1, to just come back to the 0.16 range. With other mining bonds already going down the road to ~0.14BTC/MHps, this reflects the current market valuation and was inevitable for ZETA-MINING to reach, too. Still, the only fundamental underlying for the bond price is the difficulty, and while it raised significantly with the recent updates, daily price swings of 100+% are irrational and harmful for the long-term investor.

I can't and won't participate in the secondary market, but I set up the following walls to prevent similar exaggerating price-swings in the future:

• at the ask side, I placed an order for 950 bonds at the 'break-even price', i.e. the initial IPO price of 0.295BTC reduced by the compound earnings received so far (as calculated in the online spreadsheet). Those bonds were issued during IPO and never sold. I'm not expecting the order to be intentionally executed, but it will prevent swings caused by fat-finger-trades.
• at the bid side, there is an order at the break-even price denominated in fiat, i.e. divided by 11.6$/5$. I hear your claims that it is nonsensical to mix fiat rate into the formula, but fact is: I converted the collected coins to fiat to buy mining HW - to return it to you, I need to reverse that conversion. Again, I do not expect this wall to be hit with regular trades, but it should prevent erroneous orders. If otherwise someone has to cash out at any price and the wall is not high enough, please PM me, I guarantee that I will buy any outstanding share at this price within a 72h period.

Those walls will be adapted weekly after the dividend payments and will hopefully prevent those irrational movements we saw.


Thats for now. Have a nice and successful week,
Zefir

Update: dividends for week 29.2012 paid, external mining contracts terminated

Dear Investors,

the dividends for week 28.2012 were paid in time with no significant news to be told. With today's payment for week 29.2012, ZETA-MINING is independent again: the external mining contracts that backed the hashing power until the Cairnsmore1 boards arrived were canceled effectively by mid of July.

The current hashing power is around 20GHps:

• the 5 BFLS still provide 4GHps (so far, summer in Switzerland is cold )
• 30 CM1 boards work stable in Icarus mode with a constant 0.38GHps, providing another 11.4GHps
• the remaining 20 CM1 are unstable with various problems (e.g. only one FPGA pair mining, low hashrate, no valid shares, etc.) and deliver a combined hashrate between 3 and 5 GHps; they will be soon returned to Enterpoint for further inspection.

Note that the given hashrate is provided in Icarus mode, which means that
 a) only half of the FPGAs are used for mining
 b) the bitstream is not optimized for the CM1 HW

An Icarus based bitstream working on all four FPGAs will be available soon and double the hashrate per board, while a dedicated CM1 bitstream is supposed to unleash the full power and provide up to 1GHps per board, but will take longer to get finalized. The week I first see ZETA-MINING total hashing power exceeds 50GHps, I will add a one time 100% bonus and double that week's dividend payments. Stay tuned!


Have a nice and successful week,
Zefir

Thx for the update!

Update: dividends for week 27.2012 paid & Cairnsmore1 Quads arrived & Expansion Planning

Dear investors,

with the payment of the dividends for week 27.2012 I added a calculation of total ROI since IPO in the Google Doc spreadsheet. Investors holding the bonds since IPO made 11.5% of their investment back after 8 weeks.

The 50 Cairnsmore1 Quad boards arrived 10 days ago. I definitely underestimated the effort required to set up such a high number of FPGA units and it took me all of my spare time to get some of the boards up and running. Since at the current stage the Cairnsmore1s are basically development boards that Enterpoint is still engineering with us pre-orderers acting as testers, they can not yet be set up to reliably mine. You'll find my problem reports and claims in the related thread. The most reliable operation I was able to install is with 25 boards running as Icarus (i.e. with only one active FPGA pair) generating about 11GHps (you should now find zeta-mining always in Ozcoin's top-20).

With updates on controller FW and bitstream the projected hashrate for the complete array is at least 36GHps. As soon as a stable configuration is achieved and the numbers are confirmed, I am going to offer more bonds to investors if there should be enough demand. With the investment volume of 37k$ I spent and the projected expenses for a minimum mining operation of two years, with current exchange rate of 7$/BTC I will be able to offer 1MHps bonds at or below latest market value.

Investing further in non BFL mining operations clearly comes down to whether you believe that ASICs will show up by the end of this year and wipe out any other mining technology. Since you are still reading, you might at least have some doubts. I will not dump additional bonds to the market without knowing that there is demand - either by creating a motion or by collecting positive feedback. Feel free to PM me with your interest and/or suggestions.


Have a nice week,
Zefir

Hi IIOII,

thank you for the remainder.

I stated earlier somewhere in this thread that I am not a fried of hyping public with pseudo-updates to remain in the news. I am confident that in the long run going the understatement route will be more profitable. So while I understand your concern and agree that ZETA-MINING could stand more attention from the investment community, I think a handful conscientious and loyal investors holding the majority of the shares will be more profitable in the end than having traders involved.

As for the news: yes, in fact there are some FPGA related updates. I have been holding them back from publication for some time now to present them when everything is up and running. But since you imply interest, I'll post some intermediate status update ASAP. Thanks for your confidence and patience.

How about an update?

While dividends are flowing nicely, investors still might be interested in the current status of the FPGA mining.

Moreover I think this quality asset deserves more attention from the investment community.

Update: dividends for week 25.2012 paid & Cairnsmore1 Quad shipped

Dear investors,

dividend payments for the past week were processed. With a return of 4.2456 mBTC/bond and today's 5-day average price of 235 mBTC this week's yield is 1.8%.

The 50 Cairnsmore1 Quads I ordered for expansion has been shipped last week and will be at my company early next week. Currently, a modified Icarus bitstream can be used to operate the Quads in dual-FPGA mode at 360+ MHps per board, while a dedicated bitstream (being currently worked on by Enterpoint and community developers) should push it more to the 800 MHps range. At the final performance level and the resulting efficiency gain along with the recent increase of BTC/fiat exchange rates I will be able to offer new bonds worth 30 GHps at a very competitive price to the public.

Those who are not convinced that FPGA mining becomes obsolete by October and also do not believe in the world's Armageddon by the end of 2012: stay tuned for a promising investment offer.


Have a nice week,
Zefir

Update: dividends for week 24.2012 paid & clarification on ASIC upgrade

Dear investors,

with yesterday's payment of dividends for week 23.2012 we had a row of relatively constant weekly returns of around 1.5%. I wish I could promise that this will continue and allow us to recover our investments within less then a year. But while I hope for the best, there's no room for promises. The decline in mining bond prices that started last week is continuing and brought back some of them for almost 40%. One component of this decline is clearly the rise in BTC-to-fiat exchange rate, since a given amount of Bitcoins buys you more mining rig and consequently the price per MH/s should be less. While this almost always is only half the truth (coins collected from investors are put in pre-orders or converted to fiat to prepare rig payments), there is an evidence that market is currently behaving irrational: the top five mining bonds (which I do not count Zeta in) are issued by highly respected and trustworthy community members - but the market price for their bonds normalized to 1MH/s differs significantly. Ideally all face the same risk (assuming all are evenly trustworthy) and offer identical returns - still some are 60% more expensive than others. Heads up for more glitches to come until mining bonds consolidate in the long run.


The other large disruption we had the past week was BFL's announcement of their 'soon to come' ASIC based mining rig. The related forum threads are long and entertaining enough for an enjoying weekend reading - no need to add more to the ongoing speculation. But I've been contacted by investors who are asking for some free upgrade to ASIC based mining bonds that other issuers are offering. That gimmick would imply that when the issuer upgrades his existing rig to ASICs, the issued 1MH/s bonds become 20MH/s ones... As you'd already guessed by my choice of the word for this 'instrument', there will be no such free upgrade feature for ZETA-MINING.

The first and practical reason for that is that most of my mining rig is not from BFL - my inventory is 5 BFLS and 50 Cairnsmore1 Quads. The Quads are, as soon as Enterpoint provides fully operational bitstream, the most efficient mining devices around (maybe the MiniRigs are comparable). Consequently, all today's mining rig needs to be wiped out first before I need to pull the plug due to negative mining ROI. Needless to say that I will upgrade to ASICs as soon as they are available to remain competitive, but until then lots of blocks are to be mined.

The other reason I see such upgrade program will fail is its inherent lack of transparency. How do I as a bond issuer prove or disprove that I already traded my BFLS for SC Singles? Fact is, bonds are traded per MH/s, not as MH/s generated by GPU or FPGA - the rig used to mine is completely irrelevant and therefore renders any upgrade or exchange program useless.


Now what does all this ASIC hype mean to you as an investor? It comes down to exactly the same as it does to me: will it allow me to get back my investment and earn some profit before the next generation mining rig pushes me out of the market? If you do not believe in that, you should bail out from any mining investment (bonds or mining equipment) right away. But think further: if the majority is scared off and stops investing in mining, the difficulty remains the same and helps ROI of existing miners. The self stabilization of difficulty to give miners enough incentive to mine worked so far and I personally think this was Satoshi's most ingenious idea.



Have a nice week,
Zefir

No, I don't feel you are babbling - you're just telling the obvious. Two things I'd like to comment:

1) Pirate's business and its impact on mining
True, everyone who is willing to take the risk would be just stupid to not put his money into BTCS&T and instead invest in mining business. My own money is with Pirate while I am waiting to pay the mining rig I ordered and guess what - I earn 5 times more from BTCS&T payouts per week than I do with mining. Now while this is a great opportunity, we all know that there is a mathematical necessity that this will not work for too long. From the number of direct and indirect investments of lenders, PPT bonds and other pass-through businesses I'd assume that Pirate manages 250kBTC. Now 7% weekly means factor 33 per year - how long can this work before all existing coins are held by Pirate? It is inevitable that the system either collapses if Pirate had dishonest intentions (which I do not believe), or he will adjust his rates to more realistic values. Still your argument is valid: if he came down to say 2% weekly, there's still no incentive to invest in mining for less than 1.5% Time will tell...

2) Inner value of mining bonds
Just stating mining bonds are generally overpriced and should consolidate at 0.2 per 1MH is shortsighted. You can't just take the current price of a BFLS and its hashing rate to calculate the supposed fair value. This would currently result in ~0.135 BTC per 1MH and since BFLS are price wise the current optimal choice this is the absolute minimum inner value. Add on top of that taxes (VAT), fees (shipping) and infrastructural investments (PSU, cooling) and you're approaching the 0.2 range. Now take into consideration that your rig is mining at 95% of its lifetime on average (service, downtime, network issues) but you are paying 100%, plus add the energy cost you as operator pay from your pockets, 0.2BTC per 1MH today would mean loss to the bond issuer. Based on my initial calculations (based on 5$/BTC), I'm able to guarantee mining for a bond issued at 0.27 for two years. With the recent rate increase I see the par line at 0.25 - not 0.2 if you do serious business.

Competition is good, since it forces operators to head for the most energy efficient devices. But if someone is offering GPU based 1MH/s bonds for 0.2BTC, it should be obvious that this won't survive for too long.


Cheers, zefir

If Germany beats Portugal I am going to pay the bonus. I am supporting the weaker one, which I think is Portugal here (might be wrong, since I am really not interested in soccer generally). So bets are good for the extra 10% maybe.

OTOH: Denmark just kicked Netherlands' ass some minutes ago! Favorites often fall, let's see