In order to support and extend the crypto mining industry by creating a marketplace for mining contracts that allows contributors and miners to exchange hashpower in an easy, safe, transparent and auditable way.
We suggest to offer a standard ERC20 token[1], called vMine (e.g VMN), which will be the first hashrate-backed cryptocurrency. vMine token allows contributors to benefit from the high profitability of cryptocurrency mining and allows miners to hedge their risks by entering Smart Future Contracts in exchange to harnessing their mining power.
Holding vMine means owning mining cloud with real hashpower without having to deal with physical mining hardware. vMine is also tradable, allowing contributors to easily open/close mining positions and strength the crypto mining industry.
In practice, vMine virtualizes and tokenizes crypto cloud mining and produces high yields that miners currently enjoy due to its intrinsic value of hashrate.
vMine is owned by its token holders and lives on Ether, producing revenues on regular basis and funding the project for eternity. Each vMine holder could receive the mining dividends on a monthly basis, earned coins can be auto traded in the dashboard to Ether, Bitcoin or USDT.
Overview
Cryptocurrencies mining industry have been very profitable with outstanding returns and a very short ROI for crypto miners. On the other hand, miners are exposed to many risks such as new hardware architecture, hashrate increase and high crypto-currencies volatility. These factors make future cash-flow prediction nearly impossible, especially when miners need to trade the mined coins to cover their costs and safely invest in future mining hardware.
Bitcoin Mining
Based on Bitcoin historical prices [2] and hashrate [3] we calculated the actual daily revenues for 1 Bitcoin Terrahash/s.
https://s3-us-west-2.amazonaws.com/vmine/BTC+Prices.png
The green line shows the average revenues of 1 Terrahash of the following 6 months for each specific date. Hardware cost is based on AntMiner prices [4]
We can see that even despite the constant logarithmic rise in hashrate and volatility of Bitcoin price, Bitcoin mining was profitable and had average ROI of 1 year.
Ethereum Mining
Based on Ethereum historical prices and hashrate[5] we calculated the actual daily revenues for 1 Ethereum Megahash.
https://s3-us-west-2.amazonaws.com/vmine/ETH+Hash+rate.png
The blue line shows the average revenues of 1 Megahash of the following 6 months for each specific date. We can see that even despite the constant logarithmic rise in hashrate and volatility of ETH price, mining revenues fluctuated between 5-15 cents, and had average of 10 cents a day.
The following graph shows the ROI period in days:
https://s3-us-west-2.amazonaws.com/vmine/ETH+Prices.png
The yellow line shows the projected ROI calculated by the ETH price and network hashrate at a given time.
The green lines shows the actual ROI for any mining hardware purchase by aggregating the revenues of the next 180 days.
We can see that Ethereum mining have an average actual ROI of 120 days.
Realistic example of hashrate profitability
Short-term loans are considered to be safest investment in the cryptocurrencies world. The average rate is daily interest of 0.05%, which adds up to annual return of 20%.
Currently, mining rig of 168 MH/s (megahash per second) costs USD 2,252 and is expected to generate USD 7,630.04 in its first year[6]. This reflects an annual return of 338%.
Unfortunately, Hashrate changes and volatile prices of cryptocurrencies affects the steadiness of the miner’s cash flow . Therefore, we would like to offer miners hedging that will stabilize their cash flow, while allowing contributors to take part in the profitable mining industry.
We believe the gap between the expected returns of the miners and the contributors will work in two ways:
Motivate contributors to contribute to the profitable mining industry and enjoy its high yields.
Motivate miners to reduce their risks and ensure stable cash flow by selling the hashrate via smart contracts to people who love risk.
Transparency
- vMine is suggested as an open source project.
- vMine miners will use vMine mining pool, whose overall statistics will be presented in a dashboard. Mining wallets will also be visible to everyone, allowing users to confirm coins are mined according to the system’s reported hash rate.
- In order to be financially transparent - vMine’s network addresses, wallets and vaults will be accessible to the public.
Goals
Recent developments in Smart Contracts technology such as Ethereum and Rootstock [7], lays the foundations for trading the hashrate of all cryptocurrencies in a safe manner. We also believe that most currencies which don’t currently support smart contracts would adapt sidechains and smart contracts as well.
Using smart contracts, we would be able to reduce miners’ risks by allowing them to sell their hashrate to contributors, who are willing to take the risk in return for high yields. In order to achieve this goal, vMine Holdings will:
- Create a cloud mining pool that ensures vMine tokens are backed by hashpower by safely holding funds in Smart Contracts until they are used to directly fund miners, allowing contributors to participate in cryptocurrencies mining by investing in Ether or Bitcoin.
- Define “Smart Future Mining Contracts” that secures contributors’ funds and releases them to miners based on proof of providing hashrate (PoPH) to the vMine network for a period of a week, a month or a year, allowing miners to sell their hash power in return to constant income by committing to hashrate supply in a known and predefined term, guaranteed by the smart contract.
- Support the liquidity of hashpower in marketplaces by making vMine tradable at all alt exchanges, allowing it be traded against BTC, Ether and USDT. This is done by representing it with an ERC-20 token and allowing it to trade in real time over all exchanges.
- Define Token Distributor Smart Contract which distributes mining profits to token holders, allowing contributors to possess mining power and invest in mining markets without any previous mining skills/knowledge.
Unlike any other currency, vMine is backed by mining power and is expected to yield a profit of 4% per month according to current miners expectations, and therefore we expect vMines’ price to raise until it will reflect an annual yield of 5% which contributors expect.
Part of the revenues will be used to compensate for the decrease in hashrate value over time, giving vMine internal value for eternity.
Design and Features
The vMine smart contracts system is comprised of smart contracts which provide the following features:
- Proof of hashrate supply algorithm
An algorithm to ensure a miner really provides his reported hashrate. In order to keep simplicity this is done in a similar way to current mining pools “shares” algorithm. A miner is granted shares, which can later be used for claiming mining bounties. - Smart contracts
Smart contracts are the beating heart of the vMine system. Hashrate future contracts, bounties and profits logics are managed through smart contracts.
Bounties also use smart contracts and will be locked during the mining period and claimed only after the hashrate was provided, and the smart contracts ensure the miner will be rewarded when reaching the goal. - Tradeable Hashrate
vMine is the first to tokenize hashrate and therefore the first to allow a safe and auditable exchange of hashrate into other tradable assets such as Ethereum and Bitcoin. This will allow public offerings of hashrate during the creation phase and while increasing the resources. - Rev share
Token holders receive a share of the mining cloud profits, proportional to the number of tokens held, in a fair and transparent way
Tokens behaves as any standard ERC-20 token
Main components
- vMine Pool
vMine Pool is the first mining pool that offers miners a fixed price in return for hashrate.
Upon providing proof of hashrate, vMine pool signs the Miner’s Contract and releases funds to the miner at the fixed price, as per the contract’s terms. - vMine Hashrate Exchange
Based on the funds available at Coins Holder, the system will generate hashrate supply contracts and offer them to miners. A miner is identified using his wallet address.
Miner enter ‘hashrate’ smart contract by sending minimum of 0.001 ETH into it. This hardens possible attacks on the exchange and prevents spam.
As long as the miner provides the hashrate, no other miner could enter that contract.
Miner uses vMine mining pool, providing proof of his address and his contract address for identification.
Upon proof of hashrate, vMine pool measures the provided hashrate.
When reaching 1 ETH (can vary), vMine pool adds its signature to the Contract, allowing it to release funds to miner.
The minimum amount will guarantee the miner the contract exclusiveness, thus ensuring the mining reward for that miner when reaching the mining goal.
While in that state other miners cannot attempt to claim the same reward. If the miner stops producing shares for a predefined period (e.g. 2 days), he loses the exclusivity of the contract. - vMine Vault
vMine mined coins will be held in an escrow - in a multi-signature vault on a known exchange (e.g Coinbase, Poloniex). All trading data at that exchange will be publicly available. - Token Distributor Smart Contract
By checking the amount of each vMine holder, the Token Distributor distributes the Ethereum (ETH) to the token holders in an equal manner.
vMine lifecycle
vMine will allow anyone to use the technology in order to exchange hashrate for cryptocurrencies, creating the future market for hashrate.
On top of renting their existing hardware, miners could use vMine in order to crowdfund their mining plan and purchase hardware only after their funding goal is achieved.
New contributors could directly fund the contract, and vMine Pool will return mined coins to the contract’s funding addresses.
New contributors will pay fees to vMine Mining Pool. Just like mining profits, fees profits are gathered in a vault, and equally distributed to token holders using the Token Distributor Smart Contract.
The general system flow is illustrated here:
https://s3-us-west-2.amazonaws.com/vmine/vMine+Flow+Illustration.png
References
- “Bitcoin: A Peer-to-Peer Electronic Cash System” Nakamoto, Satoshi. Web. 16 Nov. 2014 https://bitcoin.org/bitcoin.pdf
- ERC20: https://theethereum.wiki/w/index.php/ERC20_Token_Standard
- Bitcoin prices: https://blockchain.info/charts/market-price
- Bitcoin Mining data: https://blockchain.info/charts/hash-rate
- Bitcoin Mining hardware data: https://en.bitcoin.it/wiki/Mining_hardware_comparison
- Ethereum Prices: https://etherscan.io/chart/etherprice
- Ethereum Mining data: https://etherscan.io/chart/hashrate
- Mining rigs power and money return: https://www.cryptocompare.com/mining/mineshop/ethereum-mining-rig-168mhs/
- Rootstock http://www.rsk.co/