Topic: Diablo Mining Company - page 22. (Read 96370 times)

Its not that I refused, I would have loved to have been the technical cofounder of this and let someone else take on the full time job of Chief Ego Officer, but the community simply doesn't have such people, and there have been wildly successful businesses that have been ran by technical solo founders.

The community is going to have to figure out how to run a successful company, but destroying DMC in the name of greed isn't going to help things.

Buying shares in s.dice will take 10 years to payoff.

Look into s.mpoe, s.dice etc. There's plenty of real businesses making 100s and k's of bitcoins every month.

From the sound of it his biggest mistake was to issue his shares on a platform that forces everything to be denominated in, and traded in, bitcoins.

His goal seems to be to build something of real actual usefulness type of value, not to play exchange-rate games to make things look useful by looking at them only from the viewpoint of the bottom lin e of one single currency's accounting of the venture.

Bitcoin seems to be a particularly bad unit of account to be using in fact, because it is itself an investment that is likely to out-perform most markets. It is quite likely that simply buying and holding bitcoins is better than almost any investment other than ones in which someone has been talked, convinced, fooled or suckered into using bitcoins as a unit of account thus ends up owing the investors more bitcoins than were invested rather than merely more buying power than was invested.

In fact his overall operation seems like the kind of thing where the "sysbucks" I used in my Internet Provider Utilities toolkit could be useful, as the "sysbucks" serve as a currency specific to the range of goods and services provided by the provider independent of how many of some other currency the sales staff manage to sell "sysbucks" for at any particular point in time.

-MarkM-

I remember one of the very first posts when he brought this idea up being to get someone more business savvy to help him out, which he declined. Probably would've been a good idea.

No, he's an example on why you do not let "technical guys" run a business, no matter how brilliant they are in their field of expertise.

Diablo may be a genius when it comes to building miners and optimizing them for various GPUs, but he's not a businessman.

And I'm not even talking about the destruction of value showcased here, but the real reason why this could happen at all: a severe lack of communication skills.

I dont believe he made it on purpose too. But getting warnings over and over and still doing wrong things is hard on the edge.

Diablo is just an idiot and highly incompetent. I wouldn't give him the prestige of a scammer.

How do you know that? Until we get to see the full logs of what he did, you are left with the choice between unbelievably incompetent and corrupt. Possibly both. Since he has been caught lying and blatantly refuses to show the logs which should exonerate him if he didnt do anything wrong (only incredibly stupid) , Im going to have assume there is at least some corruption involved.

How in the world could you rationally accuse Diablo of scamming? Do you know what the word "scam" means?

"Scam: Noun. A confidence game or other fraudulent scheme, especially for making a quick profit; swindle."

Has he been fraudulent to make a quick profit? No. He's caused DMC to lose value. Nobody wins in that situation, so I can't imagine he'd ever do that on purpose.

The point is that for a bit-coin mining operation (what Diablo claims to be) your revenues are produced in BTC not US$.  Each block mined produces the same number of coins irrespective of the exchange rate.

When the exchange rate changes, the cost of mining (the electricity element) also changes.

If, at the current exchange rate, the cost in electricity to generate 1 BTC is X BTC (X would be less than 1) then were the exchange rate to double (twice as many US$ per BTC) then the new cost in electricty to generate 1 BTC would be X/2 BTC.  This is a simplfication - ignoring the impact rising difficulty has.

YES - you still DO save money by having cheaper electricity.  But it's less of a saving.  If you're saving less per unit mined the time needed to reach break-even obviously also increases.

Further unless mining is inherently unprofitable (i.e. even with free electricty you couldn't make a profit) then there MUST be an elecricity price (expressed in BTC) where it's more profitable to invest in more mining gear than to invest in cheaper electricty costs. 

This is indisputable - just consider the extreme where electricty were free (or as near free as made no difference).  Hopefully you can see that at point there'd be zero value investing in cheaper power.  Now there's also the other extreme - if the electrical cost of generating 1 BTC WAS 1 BTC then there'd be no way to make a profit UNLESS you invested in (or otherwise obtained) cheaper power.

Somewhere in between is the point at which investing in cheaper electricty makes more sense than investing in additional hardware and buying the higher electricty rate. 

Now here's where you're going wrong:

1.  Nowhere in this thread have you made any effort to calculate where that cross-over point is - yet the only possible financial justification for investing in generating power rather than using the same cash to invest in more mining gear is that there's some non-trivial chance that it's actually more profitable to do.
2.  You don't seem able to grasp that the exchange-rate has a huge impact on where that crossover point is.

Let me explain point 2 for you.

Let's say we'd bought our hardware and were mining.  We'd worked out that the point at which investing in  cheaper power was better than buying more mining hardware was X BTC (X<1) to mine 1 BTC.  Your power currently costs X*1.5 BTC to mine 1 BTC - so all looks rosy.  But now the exchange rate doubles.  Suddenly the cost to mine 1 BTC has dropped to X*0.75 BTC - and we're in territory where we're now making less profit (or more loss) than if we'd just spent all the capital on mining gear.

And if the exchange rate rises further then each rise just makes even worse the loss of value gained.

All I'm trying to prove to you here is that IF you denominate the investment in BTC then exchange-rate fluctuations can have a huge impact on profitability.  I can't see why anyone would invest when you've produced no calculations or figures that address this at all.

There's even the theoretical possibility that exchange-rate fluctuation could make investing in solar-power completely unprofitable (expreseed in BTC) even if it ran for the whole 30 years life-span and all power was sold off at market rate.

 You're selling shares denominated in BTC - so the base-point for calculation of profit is "how well would investing do, compared to leaving the BTC sitting in my wallet".  Whenever you invest in something that generates product valued in US$ then the answer will ALWAYS be "that depends very much on how the exchange-rate fluctuates." 

And when you're considering investing in two different things (mining and generating power) it's not a bad idea to work out how profitable each of them is - then you may well see you could make way more money (and have less complication) just doing twice as much of one of them with the same capital.

I've only referred to mining here - not to running a data-centre.  That's because this apaprently is (or was supposed to be) a mining company.

After reading through this thread, I think Diablo deserves a "SCAMMER" tag. Anybody want to start a thread over in scam accusations?

See, I said it was a red herring, and you just demonstrated why. Don't worry, I fell for this early on too.

Let me repeat something, the electricity costs USD no matter what. If electricity is our largest operating cost, it doesn't matter if it costs thousands of dollars or dozens of Bitcoins... if I can cut that the whole way down to 1/5th of it, we save thousands, or we save dozens. That operating cost doesn't go away because we calculated the math in a different currency.

BTC prices since its inception have been rather random. Without an actual economy to back Bitcoin, it will continue to be unstable. Your example of BTC doubling is just as possible as BTC halving. We pay electricity in dollars, hell, we pay every cost in dollars, it simply doesn't matter what the price of BTC is now or what it will be in the future, we must pay those costs.

@MoinCoin... youre right that the energy in germany does cost more now. But one reason is because the high energy companies doesnt need to pay the fee for the new energies. Made by the government. That means all normal people have to pay their share of this cost.
But thats not the only one. In fact the power price is way too high. The much solarpower made the price of energy at the energy exchange drop. But the companies take this win in their own pocket. So they can pretend that the new energies are bad and that their own atomic power is best.

Here some infos. Unfortunately only in german.
Der zweite Link ist eine Grafik wo aus einer Studie heraus die echten Kosten des Stroms gezeigt werden. Weil Atomstrom usw immer auch staatliche Zuschüsse bedeutet:

"Der preissenkende Effekt (der „Merit-Order-Regelung*) wird mit zunehmender Einspeisung erneuerbarer Energien größer als der preiserhöhende Umlage-Effekt (durch die Einspeisevergütungen) , wird aber von den Versorgern nicht an die Verbraucher weitergegeben, sondern in die eigene Tasche gesteckt. Seit Jahren wird lediglich der preiserhöhende Effekt auf den Stromrechnungen als „EEG-Differenzkosten“ für erneuerbare Energien ausgewiesen. Die Stromkunden glauben dann, Strom aus erneuerbaren Energien würde sie um diesen Betrag finanziell stärker belasten als Strom aus fossiler Energie und Atomenergie. Doch das ist ein Irrtum, der durch das Bundeswirtschaftsministerium und die Stromwirtschaft zu Lasten der erneuerbaren Energien gerne gepflegt wird."
Von: http://www.nachdenkseiten.de/?p=14101

Na und den "billigen Strom" kann man sich ja hier mal anschauen: http://www.greenpeace-energy.de/uploads/pics/Stromkostenstudie_Pressegrafik_1.jpg
Von: http://www.greenpeace-energy.de/presse/pressedetails/article/verbraucher-zahlen-versteckte-konventionelle-energien-umlage-fuer-kohle-und-atomstrom.html

http://www.handelsblatt.com/politik/deutschland/studie-zu-strompreisen-kohle-und-atom-teurer-als-oekostrom/7059298.html

Oops - though it doesn't change anything about the principle involved.  Originally had the costs 1/10th the size but then increased them just in case Diablo started talking about how my figures proved what a huge return the equipment gave.  Of course forgot to also amend the BTC values up by a factor of 10.

missed zeros, even though missed, still has value.

The more you post, the more obvious it becomes you really don't have any clue whatsoever.

If investors invest BTC then profit/loss needs to be measured primarily in BTC.  VERY simple example using small round numbers.  These figures ONLY demonstrate the effect exchange rate has  and have NOTHING to do with how long it would take to break even.

We'll say current exchange rate is $10=1 BTC
WEll say equipment costs $1000 (10 BTC)
We'll say your electric costs/week are $5 and your equipment reduces that to $1
So your equipment is saving you $4 = 0.4 BTC per week and is worth $1000 (10 BTC)

Now let's say at some point later the exchange rate is now $20=1 BTC
Your equipment is still worth $1000 - but that's now only 5 BTC
And you're still saving $4 per week in electic costs - but that's now only 0.2 BTC

Electricty being sold in US$ does NOT cancel out the impact of exchange-rate fluctuations on the value of the actual equipment.  It actually ADDS to the impact of exchange-rate fluctuations.

When you're talking about a mining operation that is cancelled out to some extent by the increased value of mined coins.  If you're talking about a data-centre which sells its services in US$ then the exchange rate also has huge impact on profitability (expressed in BTC).

Put very simply, even if everything else works out as good about your plan, your plan is doomed to utter and complete failure (when expressed in BTC) if BTC continues to gain strength vs the dollar.

At best your plan could be considered as shorting BTC (or at least betting that it wont rise against the dollar) - until, of course, we consider the utterly pathetic rate of return it would give even if all your optimistic expectations proved true.

I'd agree with you this extent:

If you aren't able to get a .csv file of your transactions yourself (due to being locked out of your account), nefario should generate one and send it to you.  Then you can get whoever you want to examine it and compare it to whatever nefario's auditor(s) produce.

If you're genuinely concerned about transparency then all you have to do is authorise nefario to release the .csv to all.  Your strawman about protecting the identity of others you traded with has already been blown away.

Yes, that does not include maintenance costs.

Dragging BTC/USD exchange prices into this is a red herring. It doesn't matter what the price of BTC is because the power company charges us in USD. Power usage is the largest operating cost of a data center, more so than anything else by a huge margin, and this operating cost can only be measured in USD.

Solar power, as I demonstrated, can reduce this operational cost by up to 1/5th. Let me repeat what I just said: our largest operational cost, a smart investment early on can reduce this to 1/5th. This is an economically driven decision, and it is not a tiny return on investment whatsoever.

Insurance cannot be applied solely to the solar panels, such insurance would apply to everything, and would be a separate operational cost, thus obviously not included here in these calculations.

Additionally, small scale solar panel installations are surprisingly low maintenance if they don't have sun trackers (no moving parts). Maintenance will obviously only cost a fraction of what we paid for the panels no matter how difficult the maintenance is.