Topic: Cloudhashing ASIC mining contracts, UK LTD company - Now Mining & Paying Bitcoin - page 13. (Read 197163 times)

On the RRP:

The Revenue Reinvestment Program has always added an additional one-year reinvestment contract to your account.  Each monthly RRP contract is a new 12-month contract not tied to any existing contract's expiration date.  This means that even if you use the RRP in the very last month of your initial contract, your new RRP contract will not expire a month later, but it will continue for the full year following, even after your original contract has long expired.  We cannot extend RRP's contracts beyond one year because that would drive up the cost per Gigahash for RRP to a level that would make the program too expensive for our customers.  Additionally, if we somehow tied the RRP contract to previous contracts, it would significantly lower our customers' RRP contract ROI each month as the deadline of the original contract approached.

Based on our customers' feedback, we regret not being as clear about this as we would have liked, but please know that we are committed to our customers by always keeping our unique RRP program as affordable and beneficial as we possibly can.

Michael

Shaul,

Yes, I am talking with management about this very concern.  I will let you know as soon as I have a solid answer.  It's Christmas so it may be a couple days.

Michael

I wrote a small review of cloud hashing services in general, and basically concluded they are currently overpriced, and I currently own two contracts of cloudhashing.com.

If you feel like taking a look, I post it here:

https://bitcointalksearch.org/topic/cloud-hashing-review-382046

and one i will update a bit:

http://arielbarreiro.com.ar/en/bitcoin-cloud-hashing-review

Hi cloudhasher,

I too purchased a 2 year contract. I am pleased with your service and am glad that the company is growing. I was however extremely disappointed to see that my RRP contracts expire much earlier than my original contract. This was not made clear anywhere in the T&C, which I read thoroughly before agreeing.
In the mining spirit of meriting early adapters, I hope your management seeks to right this wrong with the early customers who joined your services at a time when all the forums where shouting "scam". We gave our trust in you and where patient when you said you where having issues scaling. We brought our friends as well, after careful calculations of expected returns (done based on 2-year RRP contracts).
I kindly request you extend the RRP contracts of earlier customers to 2 years, as were our original contracts. I expect this will not cost you much as any hashing power you create today from RRP will be very cheap 1 year later, but this will gratify earlier and loyal customers such as myself and 'padrino'.

Best,
Shaul

Looking at the video, cloudhashing is running KnC Jupiters.
This was expected and announced by Emmanuel 2-3 months ago
The 2 million dollar price tag is based on the ebay price for Jupiters, not what they would have paid KnC (especially with knc's buy 10 get 1 free)
I would expect about 100 x 560Gh/s = 56,000Gh/s
At currently difficulty this should mine only 23.85btc/d and not 225btc/d
More likely they started mid-late October (before KnC improved the firmware) and were mining only 70btc/d
ps it has been noted in KnC's thread that running Jupiters sideways raises their running temperature significantly.

Mr abiodun will ROI. The rest, I doubt it.

Petskup,

Thanks for posting.  You beat me to the punch

http://dealbook.nytimes.com/2013/12/21/into-the-bitcoin-mines/?hp&_r=0

Michael

Into the Bitcoin Mines

On the flat lava plain of Reykjanesbaer, Iceland, near the Arctic Circle, you can find the mines of Bitcoin.

To get there, you pass through a fortified gate and enter a featureless yellow building. After checking in with a guard behind bulletproof glass, you face four more security checkpoints, including a so-called man trap that allows passage only after the door behind you has shut. This brings you to the center of the operation, a fluorescent-lit room with more than 100 whirring silver computers, each in a locked cabinet and each cooled by blasts of Arctic air shot up from vents in the floor.
These computers are the laborers of the virtual mines where Bitcoins are unearthed. Instead of swinging pickaxes, these custom-built machines, which are running an open-source Bitcoin program, perform complex algorithms 24 hours a day. If they come up with the right answers before competitors around the world do, they win a block of 25 new Bitcoins from the virtual currency’s decentralized network.

The network is programmed to release 21 million coins eventually. A little more than half are already out in the world, but because the system will release Bitcoins at a progressively slower rate, the work of mining could take more than 100 years.

The scarcity — along with a speculative mania that has grown up around digital money — has made each new Bitcoin worth as much as $1,100 in recent weeks.
Bitcoins are invisible money, backed by no government, useful only as a speculative investment or online currency, but creating them commands a surprisingly hefty real-world infrastructure.

“What we have here are money-printing machines,” said Emmanuel Abiodun, 31, founder of the company that built the Iceland installation, shouting above the din of the computers. “We cannot risk that anyone will get to them.”

Mr. Abiodun is one of a number of entrepreneurs who have rushed, gold-fever style, into large-scale Bitcoin mining operations in just the last few months. All of these people are making enormous bets that Bitcoin will not collapse, as it has threatened to do several times.

Just last week, moves by Chinese authorities caused the price of a Bitcoin to drop briefly below $500. If the system did crash, the new computers would be essentially useless because they are custom-built for Bitcoin mining.

Miners, though, are among the virtual-currency faithful, believing that Bitcoin will turn into a new, cheaper way of sending money around the world, leaving behind its current status as a largely speculative commodity.

Most of the new operations popping up guard their secrecy closely, but Mr. Abiodun agreed to show his installation for the first time. An earnest young Briton, with the casual fashion taste of the tech cognoscenti, he was a computer programmer at HSBC in London when he decided to invest in specialized computers that would carry out constant Bitcoin mining.

The computers that do the work eat up so much energy that electricity costs can be the deciding factor in profitability. There are Bitcoin mining installations in Hong Kong and Washington State, among other places, but Mr. Abiodun chose Iceland, where geothermal and hydroelectric energy are plentiful and cheap. And the arctic air is free and piped in to cool the machines, which often overheat when they are pushed to the outer limits of their computing capacity.
The operation can baffle even those entrusted with its care. Helgi Helgason, a burly, bald Icelandic man who oversees the data center that houses the machines, said that when he first heard that a Bitcoin mining operation was moving in he expected something very different. “I thought we’d bring in machines and put bags behind them and the coins would fall into them,” said Mr. Helgason, with a laugh.

Since then, the education he has received about Bitcoins has been enlightening, but only to a point.

“It’s a strange business,” he said, “and I can’t say that I understand it.”

Until just a few months ago, most Bitcoin mining was done on the home computers of digital-money fanatics. But as the value of a single Bitcoin skyrocketed over the last few months, the competition for new coins set off a race that quickly turned mining into an industrial enterprise.

“Even if you had hardware earlier this year, that is becoming obsolete,” said Greg Schvey, a co-founder of Genesis Block, a virtual-currency research firm. “You are talking about order-of-magnitude jumps.”

The work the computers do is akin to guessing at a lottery number. The faster the computers run, the better chance of guessing that right number and winning valuable coins. So mining entrepreneurs are buying chips and computers designed specifically — and only — for this work. The machines in Iceland are worth about $20,000 each on the open market.

The energy required to run these computers is huge, and has led to criticism that Bitcoin mining is wasteful, not to mention socially useless. But Mr. Abiodun prides himself on using renewable power, at least in Iceland.

When Mr. Abiodun first heard about Bitcoin mining in 2010, he thought it was a scam. Begun in 2009 as the imaginative creation of an anonymous programmer (or group of programmers) known as Satoshi Nakamoto, it was initially little more than a tech world curiosity. As early users connected their computers into the network, they became a part of the decentralized infrastructure that hosts Bitcoin’s open-source program. The computers joining the network immediately began capturing virtual coins. The network’s protocol was designed to release a new block of Bitcoins every 10 minutes until all 21 million were released, with the blocks getting smaller as time goes on. If the miners in the network take more than 10 minutes to guess the correct code, the Bitcoin program adapts to make the puzzle easier. If they solve the problems in less than 10 minutes, the code becomes harder.

Mr. Abiodun’s opinion of Bitcoin changed in January, when he saw the price rising. He installed a free application on his home computer that linked him into the Bitcoin network and set it to mining, harnessing the power of his graphics card, which is the part of a normal computer best suited to doing the code work.

Mr. Abiodun’s computer was in the guest room of his house in southeast London. Working at HSBC during the day and tinkering with his Bitcoin system at night, he realized if he wanted to make any money, his computer would have to run around the clock.

The constant computing, however, overheated the graphics card and pushed the computer’s exhaust fans into overdrive. When he added another graphics card, then a new computer, the room became too noisy for guests to sleep, and the windows had to be kept open to release the heat. That did not make his wife, Gloria, who was pregnant at the time, very happy.

“It just created a scenario where there was no way our parents would come over to stay,” he said. “I did offer to put her parents in a hotel, but that didn’t go down well.”

Mr. Abiodun’s wife finally gave him an ultimatum — either the computers had to go, or he did. At the same time, he was making money, and friends were asking if they could invest in his mining operation.

In February, Mr. Abiodun used the investors’ money to buy machines from a start-up dedicated solely to manufacturing specialized mining computers. The competition for those computers is so intense that he had to pay for them and wait for delivery.

When the delays became lengthy, however, he went on eBay and paid $130,000 for two high-powered machines, which he set up in June in a data center in Kansas City, Kan.

This was the beginning of Mr. Abiodun’s company, Cloud Hashing, which rents out computing power to people who want to mine without buying computers themselves. The term hashing refers to the repetitive code guessing that miners do.

Today, all of the machines dedicated to mining Bitcoin have a computing power about 4,500 times the capacity of the United States government’s mightiest supercomputer, the IBM Sequoia, according to calculations done by Michael B. Taylor, a professor at the University of California, San Diego. The computing capacity of the Bitcoin network has grown by around 30,000 percent since the beginning of the year.

“This whole new kind of machine has come into existence in the last 12 months,” said Professor Taylor, who is studying mining hardware. In the chase for the lucky code that will unlock new Bitcoins, mining computers are also verifying and assigning unique identifying tags to each Bitcoin transaction, acting as accountants for the virtual currency world.

“The network is providing the infrastructure for making sure the currency is being transferred between people according to the rules,” Professor Taylor said, “and making sure people aren’t creating currency illegally.”

Even before Mr. Abiodun’s machines in Kansas City were up and running, it was clear that they wouldn’t be enough. So he ordered about 100 machines from a start-up in Sweden and, in October, had them moved to the facility in Iceland. In just a few months, that installation has generated more than $4 million worth of Bitcoins, at the current value, according to the company’s account on the public Bitcoin network.

At the end of each day, the spoils are divided up and sent to Cloud Hashing’s customers. Last Wednesday, for example, the entire operation unlocked 225 Bitcoins, valued at around $160,000 at recent prices. Cloud Hashing keeps about 20 percent of the capacity for its own mining.
Inside a high-security facility in Iceland, one company’s powerful computers toil nonstop on the project.
The unregulated Bitcoin-mining industry is ripe for abuse, and ventures that sound similar to Cloud Hashing have turned out to be scams. Mr. Abiodun’s company has proved itself real, but it is still unclear if it is a good deal for customers. Cloud Hashing charges $999 to rent a tiny portion of the company’s computing power for one year. That’s an expensive price for the computing capacity they are getting, but Mr. Abiodun argues that it’s a good value because individual miners would not be able to buy his modern machines outright. It’s a little like buying a fractional ownership in a private jet; you might not want responsibility for the jet itself, and it’s out of your price range anyway. He also says he provides the maintenance and keeps away thieves and hackers.

Some Cloud Hashing customers have also complained on Internet forums that it can be hard to get a response from the company when something goes wrong. But this has not stopped new contracts from pouring in. Cloud Hashing now has 4,500 customers, up from 1,000 in September.

Mr. Abiodun acknowledges that the company has not been prepared to deal with its rapid growth. He said he had used $4 million raised from two angel investors to add customer service representatives to offices in Austin, Tex., and London. Cloud Hashing is now preparing to open a mining facility in a data center near Dallas, which will hold more than $3 million worth of new machines being produced by CoinTerra, a Texas start-up run by a former Samsung chip designer.

The higher energy costs — and required air-conditioning — in Texas are worth it for Mr. Abiodun. He wants his operation to be widely distributed in case of power shortages or regulatory issues in one location. But he is also expanding his Icelandic operation, shipping in about 66 machines that have been running for the last few months near their manufacturer in Ukraine.

Mr. Abiodun said that by February, he hopes to have about 15 percent of the entire computing power of the Bitcoin network, significantly more than any other operation.

Inside the Iceland data center, which also hosts servers for large companies like BMW and is guarded and maintained by a company called Verne Global, strapping Icelandic men in black outfits were at work recently setting up the racks for the machines coming from Ukraine. Gazing over his creation, Mr. Abiodun had a look that was somewhere between pride and anxiety, and spoke about the virtues of this Icelandic facility where the power has not gone down once.

“We don’t want downtime — ever, never,” he said. “Not with what we paid. Not with Bitcoin.”
http://dealbook.nytimes.com/2013/12/21/into-the-bitcoin-mines/

Michael,

Thanks for confirming, what I am actually asking is that any RRP last the length of my 2 year contract, not end early. For example right now my contract ends in December of 2015 yet my RRP expires in December of 2014.

I am asking for some help from you and management because when I purchased in November, 2 year contracts were the offer (purchased 10x 20GH/s contracts), they came with RRP yet it didn't indicate anywhere that any RRP applied to my contract expires earlier than the contract itself, spent a couple of days combing through all of the T&Cs, and site to make sure all was good across the board. That would definitely have tripped me up and run counter to the sales pitch for RRP on contracts.

Reasonably happy to date expect for the confusion over RRP.

Padrino,

Let me make sure I understand.  In your example, let's say on your 23rd month of the contract you did RRP, your saying that you would actually prefer it to only last one more month?  I just want to make sure I understand your point.  I will ask management about it, but I just want to make sure I am saying it correctly.

Thanks!
Michael

Thanks for the reply.. I understand your explanation and with respect to it being listed separate for flexibility is fine but you overlooked my primary points... When I purchased two year contracts were on the table and they came with RRP. No where on the site was there any mention that RRP runs for a different period of time then the primary contract, actually the discussion on RRP actually implies pretty directly it runs the length of your contract as that is one of the marketing tools to help with the ROI.

Given the situation I would ask management to take a look at how to rectify this since I don't think there is any question it was misleading at that time.

IMHO cloudhashing is abusing the trust of its customers as they made no attempt to justify their charges.

There is a group buy thread here: https://bitcointalk.org/index.php?board=137.0

Search for DZ Miners. Their very worst deal stacks up way better than cloudhashing IMHO.

David,

That entire section is only used for people using their own mining equipment on our pool.  It's kind of in beta testing right now.  You do not have to worry about it at all.

Michael

Lloydie,

I wouldn't claim anyone makes or doesn't make ROI.  There are too many variables, and this is a personal financial estimation that each of us have to make for ourselves.  I have no idea what will happen a year from now with Bitcoin.  Perhaps it shoots to the moon and even a thousand dollars per gigahash would make ROI.  Or perhaps it gets banned everywhere and nobody makes ROI.  There are too many variables for me to give you anything but a guess.  I would just compare our cost per gigahash on tap to say something you can buy on Ebay or from a different company and make your decision based on that.  You don't have to use our service, but we sure would like you to as a business.  

Michael

Padrino,

RRP is a new contract that runs one year.  You don't want to tie it to the existing contract because you would then only use maybe the first year doing RRP, but it would make no sense to do RRP only to have it cancelled in a couple months when your contract ends.  By doing it as a new contract, it still adds to your hashing power but isn't directly tied to another contract.  I understand what you're saying about wishing it were two years or longer, but all of our contracts are now just one year.

I'm sorry you feel like RRP is not what you had wished for.  It's completely optional, and you don't have to participate.  A lot of our customers do participate, but many also choose not to.  We'd rather leave this kind of decision to you.  

Michael

What is the worker section for on the dashboard  - can you mine directly on your site with your gear  - i have a platinum contract but i never see anything under the workers other than the default worker name

So how do you justify charging $80 per ghs for your "gold" contracts? And $60 per ghs for the platinum contracts?

On tap or not, please explain how that will ROI? Thanks.

Hoak,

The RRP is completely optional, and if you don't want to participate you don't have to.  Currently the price per gigahash $15-$20 is competitive for a turnkey service mining bitcoin immediately etc.  But if you feel you can get a better deal elsewhere, just set your RRP to 0%.  Keep in mind that there are many companies offering a lower advertised price per gigahash, but it's basically for future timeframes and not "on the tap" like we have.  But we want you to make the best decision for yourself and your situation, so please feel free to use RRP or not.

Michael

Streetuff,

MANY of the expiration dates for contracts in our system aren't accurate.  Evidently there was an issue in the system we use when people bought contracts, and it led to many having erroneous expiration dates.  Not all, but quite a few.  We know this and will fix it before anything "expires".  It'll be part of some re-coding we do.  As previously mentioned, I hate when companies promise crap in the future, so I will not promise that this will be done by such and such date.  But once it's actually fixed I'll announce it, and then you can check your individual account to verify that it's been corrected properly, and if it has not been for some reason, then we'll have to look into your individual account and see what's up. 

Michael

cloudhasher,

Glad to see you on the forums..

Read through everything before signing up in November and RRP put it over the top however in hindsight I am concerned on two counts..

1. The RRP does not run the same length as my contract, I read through all of the documentation and FAQs and this wasn't mentioned anywhere. Having the RRP turn off before my contract ends really undermines the entire sales pitch you have for RRP.

2. At the price you are using for RRP all users will fall further and further behind, the case made for RRP modeled it in an entirely different way than how it's coming together and frankly could be considered misleading... I think as you the principals of the company have the best intentions however they made statements that aren't mirroring reality.