Saturday, August 30, 2014

Alpha Technologies and KnC Titan: RIP?

Sadly, what happened with the rush to Bitcoin ASICs has repeated itself with Scrypt ASICs. It's not really surprising, but simply saying you have a company that is going to build a high performance ASIC is an entirely different story from actually shipping the ASICs on time. Butterfly Labs was notoriously late with their original ASICs, to the point where by the time mass shipments actually started the Jalapenos and other products began, you were lucky to earn back your initial investment. The Alpha Technologies Viper now belongs to that same family.

I've posted quite a bit lately about GAW Miners, and the reason is simple: they're kicking the tar out of everyone else! When others were trying to sell the various Zeusminer ASICs for $1500, GAW had them for about half that price. Now, they've introduced the Hashlet, a cloud-mining ASIC at a reasonable price. I said in my last post that the $0.08 per MH for maintenance was a bit high, and it is, but it's still better than waiting for hardware that might not show up for a week, month... or ever. And with their new Hashlet options, they've basically killed off any hope of the Alpha Technologies and KnC Titan ASICs making a significant profit...and in fact, it's somewhat doubtful that those ASICs will even make ROI!

What that means is that I'm calling my $3000 preorder of the Viper a loss. I still owe $7000, but even if I pay that what will I get? At best, I'll receive a 250MH Viper. The $3000 is a sunk cost -- I've lost it -- but the $7000 is a different matter. Let's call the price of the Viper $7000, then. Is it worth it at this point? The answer is a resounding "No!" And the reason is simple math, and GAW Miners' Hashlets.

The best offering right now appears to be the new Zen Hashlet, which is locked into mining on the ZenPool. And it just so happens that there's a 250MH Zen Hashlet avaialble, which will get you up and hashing at 250MH within seconds. Yes, you read that right: SECONDS! And what's more, the cost for a 250MH Zen Hashlet is only $5,487.50, which by my math is $1500 less than the $7000 to complete my Viper pre-order. The KnC Titan isn't looking much better, as the second batch is supposed to be 400MH for $7000, but it won't ship until one month after the first batch, which of course still hasn't shipped so you're looking at minimum two months from now before you can have your 400MH Titan.

I just did the math in my previous post, but of course with the Solo Hashlets, prices changed a bit. Right now you pay $21.95 per 1MH on the Zen Hashlet, and even though there's no first month of "free" hashing -- you start paying for maintenance from day one -- it still works out to be the best ROI. If you continue to average 0.0006 BTC per MH on ZenPool (which is slightly below the current rate), that means you make around $6.60 per month (after the $0.08 per MH maintenance fee), yielding an ROI time frame of just over three months. So, order a Zen Hashlet today, and you could be in the black (i.e. profitable) within three months, and I'd say four at worst.

Best-case if your Titan arrives in a month you'll be doing 300MH, and since I can't find anything that pays more than ZenPool you're likely to get around 0.00045 BTC per MH, or 0.135 BTC per day (minus power costs). If you're lucky, you might hit ROI four months after you're up and hashing with a first batch Titan. And the Alpha Technologies Viper is even worse: 250MH, let's say it arrives in a month, and not even accounting for the power cost (which will be around $130 per month for $0.10 per kWh) you might make back your $10,000 investment in six months!

Obviously the GAW Hashlets are not guaranteed to earn money, as prices could still take a dive, but again: simple math. Three months to hit ROI on a Hashlet, four months to hit ROI on Titan, and six months to hit ROI on the Viper. Which one would you buy? The only thing missing with Hashlets is flexibility, so if you wan to go out and try mining every new Scrypt alt-coin, you can't do that with a Hashlet. But if you want to do that, you could just go rent hashing power on Nicehash or some other rig rental service, pay less than the going rate of returns from ZenPool, and still come out ahead.

The real winner here is obviously GAW Miners. I suspect if they haven't arrived already, the Vaultbreaker hardware is coming online very soon. GAW was selling the pre-orders for $9000 at the start, and with 750MH available the going rate now is about $15,000. The actual cost of the hardware (not counting R&D) is probably around $2500, so once mass production starts GAW can make a killing. Let's just hope we can all avoid killing the goose that lays our golden Bitcoin eggs.

RIP Viper Pre-Order. It was a risk from the start, and like many risks it proved to be a "mistake". The only good news is that I cashed out of some Darkcoin to pay for the pre-order back with DRK was trading at about three times the present value. Thank goodness I didn't pay for the outstanding $7000 back in June. I'll be pretty surprised if Alpha Technologies ever ships anything at this point, as we're nearing the end of Q3 and all they're showing is a case and some pre-rendered images. Not good, guys, not good.

Friday, August 29, 2014

ZenMiner Hashlet ROI Analysis

At times it can be sort of funny to look at the cost of mining hardware compared to the estimated time for the hardware to pay for itself. While we've had occasions where hardware has hit ROI in under a month (e.g. last December you could buy a $500 AMD GPU and it would have mined enough LTC to break even in just a few week!), in general the target tends to be more like 3-4 months these days, and that's mostly speaking of ASICs.

Yes, in case you haven't figured it out yet, GPU mining is essentially dead right now. Perhaps we'll see some new coin with a different PoW algorithm that will revitalize GPU mining, but the best you can expect on X11/X13/X15/Keccak/Cryptonight/etc. is maybe a 2:1 ratio for gross income to power cost. So if you have a setup that consumes 500W of power it will cost around $1.20 per day to run that system, and you might earn $2.50 per day. A 2:1 ratio actually doesn't look that bad if you have already paid off the hardware, but if you're looking at buying $810 of R9 280X GPUs right now, which would earn about $1 per day combined profit, that's 2-3 years before you'd even break even!

So let's forget about GPUs and get back to talking about ASICs, and since I've beaten this horse to death several times already I'm going to talk specifically about GAWminer's Hashlets and compare them with other ASIC alternatives. For this discussion, note that the Hashlet is for Scrypt mining.

On the surface, the Hashlet isn't priced all that well. Initially going for $15.99 per MH, the price was increased to $19.99 and is now at $24.99 per MH. I actually thought about snagging 100 MH when the Hashlet was first announced, and I'm sort of sad I didn't, but the price per MH for running a Hashlet is $0.08. If you were to purchase 100 MH, there's no "first month of hosting for free" (which is what GAW does with ASICs), so you're looking at $8.00 per day in hosting fees. Given the current returns for Scrypt mining at most places are around 0.0004 BTC, at the initial price of $15.99 it would be $1599 to earn around $20 per day, so $360 per month after power -- assuming prices stay constant, which is of course not guaranteed. Basically, you'd hit ROI on a Hashlet in five or six months, so buying a different ASIC was a better option.

For example, the Lightning X6 ASICs that I bought were $774 and have a maintenance cost of $0.053 per HM, with a price of $18.88 per MH. The first Hashlet price was obviously lower, but again maintenance meant the break-even point would have been later. But there's a catch, right?

Here's where things become interesting: ZenMiner allows you to mine at one of several multipools (CleverminingMultipool.usNicehashTradeMyBit, and Wafflepool), and profitability on those as I mentioned is currently averaging about 0.0004 BTC per MH, give or take. If you buy a Hashlet, ZenMiner adds one more pool option: the ZenPool. I don't know where ZenPool is mining that they're getting better returns, but right now they're claiming an average payout of 0.00065 BTC per MH -- over 50% higher than the next best pool! So if you bought a Hashlet at the initial price of $15.99, for the first month you'd make nearly $10, and the second month you'd make $7.35, meaning you'd hit ROI in less than two months.

Of course, as I said at the start, it's funny how prices on ASICs fluctuate with the approximate rate of returns. Last year around this time for example, you could find one of the USB Block Eruptor Bitcoin ASICs for as little as $10, but when Bitcoin prices shot up from $150 to $1000, the price of the same hardware shot up to $80 as well. The people selling the ASICs are basically holding out a carrot (ROI) that's always 3-4 months away at the current price/difficulty ratio. The same thing has happened with GAWMiners' Hashlets.

When Hashlets were $15.99 per MH, the company was sort of giving away long-term earning for short-term gain, and while they no doubt made money on the sales regardless, like most businesses they want to make more money! So they increased the price to $19.99, which would result in hitting ROI at the current 0.00065 BTC/MH in 2.5 months. Since that's still pretty fast they bumped the price up again to $24.99, and now you'll hit ROI in three months. Again, this is all done with calculations at the current price/difficulty, which has been somewhat static for the past month but could drop again. Realistically, I'd guess you'll hit ROI in about four months with a Hashlet.

There's the other factor we haven't mentioned as well: GAW's Vaultbreaker ASIC. That ASIC will reportedly do 750MH at 1500W or something, which means the power costs to run the Vaultbreaker would be $0.005 per MH. Since GAW will obviously be the first company to have any Vaultbreakers up and running, we can expect a few things. First, they'll make more money off of maintenance fees for a bit, and second, the price and maintenance cost of Hashlets will undoubtedly go down. But if the market suddenly has thousands of new ASICs hashing at 0.5 cents per MH, it's likely we'll see prices and/or returns for Scrypt pools drop quite a bit as well, maybe by as much as 5-10X.

Alternatively, we might see concentration of Scrypt hashing power into the hands of fewer people result in fewer coins (e.g. LTC) being dumped at market prices, so we could see an uptick in value as well, but that's the optimistic viewpoint and I'm not sure it's very realistic at this point. BTC isn't going anywhere, and LTC will stick around as well, but I don't think LTC is going to go up 10X in value any time soon. The alt-coin apocalypse has done a lot to destroy the credibility of any coins other than BTC, so I suggest you hash accordingly.

As far as the Hashlets are concerned, they're still a reasonable venture, and with no Lightning X6 ASICs available at this point at a price I can recommend, I don't see any other good options. (The Thunder X6 is about half of a Lightning for $450, so $100 extra for the same 40MH from a few weeks ago.) I do wonder if GAW might already be getting some of the first Vaultbreakers up and running, though. Think of that: $25 per MH with 750 MH available would mean $18,750 per Vaultbreaker, a far cry from the $9000 initial pre-order price. Lesson to be learned: ASICs are a business, and most of us small fries are lining the pockets of the big whales. So, nothing new under the sun in that respect.

Friday, August 8, 2014

GAW Miners Buys BTC.com and Controlling Equity in ZenMiner

It's been a busy week for GAW Miners' CEO Josh, as there have been two major announcements. First was the $1 million purchase of BTC.com, which could pay off in a big way over the coming years -- or if nothing else, he could probably sell it during the next BTC bubble for two or three times what he paid on Monday! Today's announcement is perhaps a bit less of a shock, but GAW has acquired a controlling equity in ZenMiner. It's a good fit, considering most of the current GAW purchases are ending up there.

While BTC.com is more of a long-term play, taking control of ZenMiner has more immediate ramifications. Josh is teasing people with a pre-announcement of big new features, and some of the first changes should roll out by the morning. In the near-term, he's also promising some big changes: pool monitoring that automatically switches your pools to the the highest ROI targets in ream-time, instant miner activation, and the ability to buy/sell/exchange mining hardware. Some of those sound a bit like what you can already do on CEX.io, which isn't a bad thing for GAW considering how much money CEX.io has made over the past year or so.

Update: I'm not sure if everyone that was an existing customer received the same gift, but my ZenMiner account now has an "Appreciation Fury" ASIC added to the list. The Fury is a 45W 1.3MH ASIC from GAW Miners that normally costs $50, and as long is it stays active I'm making an extra $0.25 per day. I suspect there are a lot of extra Fury miners floating around at this point, but it's still a nice little extra so I won't complain.

On the other hand, some of these announcements might be a bit alarming. Bitcoin mining (which in turn secures the block chain) has become increasingly centralized over the past year, with large ASIC farms now accounting for much of the global hash rate. ZenMiner is yet one more large mining farm to add to the list, and if GAW continues on their current path to Scrypt mining domination with their Vaultbreaker ASIC, they'll only get bigger.

But is all of this bad for cryptocurrencies? I don't think so. There are many libertarians and anarchists that love the idea of a decentralized cryptocurrency, but when push comes to shove Bitcoin is really worth something because the big fish (and lots of little fish like me) have taken an interest. If your dream is to see cryptocurrencies stay free and unfettered, sure, this isn't the way you want to see things go. But anything successful will always attract attention from big business. In the words of Mr. Smith: "That is the sound of inevitability."

I for one welcome our new cryptocurrency overlords.

Setting Up ZenMiner

I discussed GAW Miners in the last post, and I mentioned buying two of their Scrypt miners -- specifically, I purchased two of the Lightning X6 Zeusminer ASICs, rated at 40-42MH/s each. There's a 24-hour activation guarantee, and in my case it took around six hours or so before the miners were available. Since I didn't have access to the actual mining interface before, I couldn't say precisely how the setup and mining worked, but now that my ASICs are live I can shed some additional light on the subject. Let's start from the top, though.

First, GAW Miners naturally accepts Bitcoin as a payment method; it's seems like a no-brainer, but it's still worth pointing out. Their prices are based on the current sell rate at Coinbase.com, which is more than fair in my book, and you have 10 minutes after electing to pay via BTC to complete the order. They also accept major credit cards if you prefer that method of payment, though I'm not sure if they charge the same amount or not.

Anyway, I mentioned the coupons at the end of the last post, and in case you missed it, there's a $10 off coupon for orders of $150 or more there's a $25 off coupon GAW25, which gives you $25 off orders over $200. The next coupon is for 3% off orders of $3000, which is a lot of money to spend. Since I wanted two of the $800 ASICs, I did the smart thing and placed two separate orders, getting $25 off each order, which actually works out to a 3.125% discount. [Update: The GAW25 coupon has been discontinued, probably thanks to guys like me.]

It's too bad -- but not really surprising -- that there aren't any super attractive $200-$250 ASICs at the site, right? The Hurricane X6 is basically one fourth of the Lightning X6 that I purchased, but it costs $310. Even with the $25 coupon, you're still paying $285 for 9-10MH, or $1140 if you wanted to more or less match the performance of the Lightning X6.

Incidentally, the other Scrypt miners that are currently available are all substantially more expensive compared to the Lightning X6. The War Machine for example is 54MH for $1075, which works out to $19.91 per MH (after the $25 off coupon); by comparison the Lightning X6 is $18.90 per MH. More importantly, for the extra 32% increase in hashing rate that the War Machine offers, it requires 84% more power. The net result is that you pay more per MH and you pay more for power, so you're less likely to earn a profit long-term.

If you want another comparison, the Innosilicon ASICs are currently the best efficiency offered by GAW Miners, but you pay through the nose for the improvements. Consider the A2 Innosilicon model, which provides 80+ MH while using 630W. That's about three times the efficiency of the Lightning X6, but even with the 3% discount code you're paying roughly $43 per MH -- more the twice the price per MH! Where you might hit ROI in 2-3 months with the Lightning X6, you're looking at 4-6 months to hit ROI with the A2. And that's why I bought two of the Lightning X6 ASICs instead of one of the other options.

After the order goes through, though, you're probably wondering how the actual cloud mining works. First, it's again worth pointing out that GAW will ship your ASIC to you at any time if that's what you want, but as I noted before they're basically only charging $0.10 per kWh for power, cooling, and networking and you don't have a noisy ASIC in your house, so unless you have really cheap power it's likely more effective to keep the ASIC at the cloud hosting service -- and you get a free month of hosting regardless, so remember to factor that into the cost as well (basically $72 of power is going to be used by the Lightning X6 in a month).

Anyway, once your ASIC purchase goes through, you get a code for Zenminer that lets you activate your ASIC. You'll need to create an account at Zenminer first, at which point you can input the activation code. Do that in about five seconds later you're presented with control of the new ASIC. It looks like this:
You can see that I have two ASICs, both doing 40-42MH, and I've pointed them both at Nicehash. Right now, the choice for Scrypt pools consists of six options: Coinking, Clevermining, Multipool.us, Nicehash, TradeMyBit, and Wafflepool -- straight LTC mining isn't even an option. I'm sure you can already guess which of those I think is best, but feel free to check out PoolPicker for a second opinion. This is one of the things that you might find a bit surprising: there is very limited control over where your ASIC is hashing. Now you might say that's because GAW has done the research for you and feels your best bet is to mine at one of a few selected pools, but if you were hoping to try mining the latest Scrypt alt-coins you're going to be disappointed -- or you're going to need your ASIC shipped to you.

And really, that's all there is to it. You get paid (into your Zencloud account) once per day, I believe around 11PM Eastern US time. Right now my estimated returns are around 0.04BTC per day, or $23.60 per day. If I manage to maintain that exact rate (which is unlikely), I will break even in about 66 days, though it's worth noting that the 14 day average rate for Scrypt mining at Nicehash would actually put me at 0.056 BTC per day -- or break even in 47 days. This is about as close to a "sure thing" as I've ever seen in the world of Cryptocurrencies, so if you're tired of GPU mining I'd give GAW Miners serious consideration -- and you international folks that pay the equivalent of $0.30 per kWh can finally join in on the fun again.

Thursday, August 7, 2014

GAW Miner: an Alternative to Waiting for Scrypt ASICs

Those who have been following my blog for any amount of time know that I went in on a pre-order for an Alpha Technologies ASIC back in January. Seven months later, they still haven't delivered, but on the bright side the hash rates have been bumped up quite a bit. At present, 250MH for Scrypt mining with a power draw of 1875W (which may or may not be higher than what will ship) would net around $70 per day mining Litecoin, or if you mine something else you might make 10% to 100% more than that (depending on the coin/luck). That means you could hit ROI (Return On Investment) in 2.5 to 5 months, depending on what you choose to mine.

Unfortunately, the best hope right now is that Alpha Technologies will manage to ship their ASICs by the end of September, which is still nearly two months away. Their competition in the meantime continues to grow, the difficulty of mining Scrypt coins likewise continues to increase, and there's a real question on whether or not you can make a decent profit on the venture. As a point of reference, the difficulty of Litecoin mining has nearly tripled in the past two months; if that happens again, the chance of breaking even on an Alpha Technologies ASIC is going to drop quite severely (though it's more likely we'll see difficulty start to stabilize before it becomes unprofitable).

The good news is that the current specs for the Viper and mini-Viper are still quite promising, assuming of course that Alpha Technologies can deliver. If you run the numbers the Viper will do 1MH per 7.5W; doing the same 1MH with a GPU would require at least 300W in my experience, so that's a great improvement in efficiency. There's more good news as well: KnC's Titan miner is still not yet shipping, and considering their Neptune (which was available for pre-order about a year ago) has only recently shipped it might be 4-6 months before any Titan ASICs are running.

The problem is that while these two behemoth Scypt ASICs are still trying to reach production, other companies are not standing still. I've mentioned various alternative Scrypt ASICs in the past, but the estimated ROI for buying any of them was at best four months, which means six months ROI is more likely. And if difficulty skyrockets in the interim, you might only break even or come out with a 10% gain. That's not bad as far as investments go, but the risk of a pre-order is still huge so the reward should be commensurate.

There are of course other alternatives for buying mining hardware. One of the most popular places to go for Scrypt ASICs (or Bitcoin ASICs, even) is GAW Miners. One of the features that sets GAW apart from other operations is that they now support cloud-hosted mining, which isn't necessarily all that remarkable until you see their pricing for the hosting service. Many cloud mining services charge you so much that it's virtually impossible to hit ROI, but I've run the numbers for GAW's cloud-mining and they're basically charging what I already pay for electricity (around $0.10 per kWh).
As an example, take their Bitmain Antminer S3 Bitcoin ASIC. It will cost you $500, you'll be up and running within 24 hours, you get one month of free cloud mining, and after the month is up you only pay $0.90 per day. Considering the ASIC is using 366W according to the specs, that works out to 8.8 kWh per day, which means I'd be paying $0.88 per day to have that at my home. Now add on the fact that you get to remove that noise and heat source from your home (which is a major problem for me during the summer months) and it's basically a no-brainer. Of course, an Antminer S3 isn't the most profitable option right now, as it's less than 0.5TH. It earns around $6 per day, which means you could hit ROI in about three months (probably four with difficulty increases).

If that's not the best option right now, then what is? Assuming you don't want to fool around with pre-orders (the 4.5TH Spondoolies BTC ASIC for $3900 is supposed to ship in September if you're okay with pre-orders -- ROI estimate on that one is about two or three months right now), my pick would be one of the Zeusminer Scrypt ASICs. Wait, aren't those supposed to be some of the least power efficient Scrypt ASICs? Well, yes, but they're also substantially cheaper than the competition. The model I'd specifically recommend is the Lightning X6 40-42MH ASIC, currently priced at $800.
The cost for cloud hosting of this particular ASIC is $2.40 per day, and it draws around 980W, so again you're basically paying $0.10 per kWh. Mining straight LTC, you should hit ROI in under three months, and if you go with other Scrypt coins/pools you could very likely hit ROI in two months or less. In fact, it's a tempting enough offer that I've decided to purchase a couple myself! I'm not sure I can give a better recommendation than that.

I do wish I could have jumped on their Vaultbreaker offer, but with money tied up in Alpha Technologies I had to sit that one out. 500MH for $7000 on 1500W is crazy to think about, and now it's been bumped to 750MH! If GAW manages to deliver on their promise of beating KnC's Titan to market -- "Scrypt Mining is my house, and I will not be beat in my own house!" -- well, KnC might have a few (more) unhappy pre-orders on their hands. Personally, I'm just going to take a wait and see approach. A lot of major promises have been made -- and broken -- by the ASIC companies, but GAW seems to be on a roll right now. Let's hope for the sake of my Lightning X6 ASICs that they continue.

Oh, and don't forget the coupons:
WELCOMETOGAW - $10 off orders over $150
GAW25 - $25 off orders over $200
GAW3FOR3000 - 3% off orders over $3000
GAW4FOR4000 - 4% off orders over $4000
GAW5FOR5000 - 5% off orders over $5000