Monday, September 29, 2014

GAW Rolls Back Conversions of Scrypt ASICs to Hashlet Prime (Only on New Orders)

After posting about the ability to convert Scrypt ASICs into Hashlet Prime on Saturday, GAW_CEO actually commented that "This is an oversight with the department that does the site listings. All orders will be canceled and refunded. We apologize for the error." Well, Josh was apparently serious as the four Thunder X6 ASICs that I purchased have been "refunded" -- except by "refunded" I mean they're gone and I have received an email saying I've been refunded, but the funds are nowhere to be found. Here's what I've received (note that there was no other email communication prior to this):


GAW Miners has refunded your order (#XXXX) a total of $449.95 USD for:
1x 18-20 Mh/s - Thunder X6 by Zeusminer - 1 Month of FREE ZenCloud Hosting Service - 24-Hour Activation! (Low-Power Scrypt ASIC Miner)


So, let me get this straight: GAW gave users the ability to convert Scrypt ASICs into Hashlet Prime, and that was an oversight -- but apparently it's not being rolled back. They also forgot that they sold ASICs before creating Hashlets and that they still have an inventory of Zeusminer Thunder X6 ASICs sitting around. That "oversight" on the other hand is being rolled back, so all recent Thunder X6 purchases that were converted into Hashlet Prime (I'm assuming) are void. What's worse, the only notification people get is that they've been "refunded". That's horrible customer service, period.

The proper way to handle this -- well, other than not accidentally enabling a feature, for the second time in as many weeks (remember the "incorrect price of the Hashlet Genesis" last week? Which wasn't actually incorrect; it was just deployed earlier than anticipated I guess) -- is that the first step is to email all of those that ordered and say, "We inadvertently enabled a feature and you used that feature, resulting in a better price than we intended. While we did not intend to allow users to purchase the Thunder X6 ASIC and immediately convert it into Hashlet Prime, we admit that this is purely an error on our part and we would like to offer you [insert some reasonable token of appreciation]." Maybe others got that treatment but I certainly didn't.

Anyway, GAW did issue a public apology of sorts last week for basically releasing shoddy code on a regular basis. They should have done more than that for this case of, "Oops -- our bad." As I've said in the earlier post, Hashlets originally were priced at $14.95, which means GAW did some projections and said, "Yeah, we can make some good money at that price." Except they underestimated demand, supplies were running short, and they got greedy and increased the price by more than 100% to $39.95, adding a variety of other Hashlets in the process. Then the price was increased again to $49.95. Those that got in early were just "lucky" I guess.

The same holds for the Vaultbreaker pre-orders, who received 750MH of Hashlet Prime in place of their ASIC, which is sort of (but not really) like getting $37,500 in Hashlets instead of a $10,000 ASIC ($13.33 per MH). And Vaultbreaker batch #2 is getting their 750 MH at $9.33 per MH now. So really, $22.50 - $25 per MH for Hashlet Prime is not even an exceptional deal; it's just better than the exorbitant $49.95 that no one in their right mind should be paying.

Finally, just last week Josh was going on about dropping the price of Hashlet Prime back to $25 and holding off on some of the extra features they had originally planned to add to Primes. I already said I thought the "Plan B" was a load of manure and that "Plan A" was never going to happen, and I was right: Hashlet Prime is staying at $50. (Shocker!) But that does mean $25 Hashlet Prime is hardly out of the realm of feasibility.

It's sad that Josh/GAW has gone on about "doing the right thing" by their customers on so many other occasions, and now through no fault of their own a bunch of people that took advantage of a good deal are basically being given the shaft, with pretty much zero communication on the matter. And it's probably because those early adopters that paid $14.95 or less per Prime just want to keep the perceived value of their Primes way higher than they should be -- at least until they can sell them and cash out.

That said, I'm far less enamored with GAW after this exchange, and there are certainly other viable options. LTC Gear is one of the better ones I've been eyeing lately, where they currently have the ASIC share1K6X Anniversary that will give you 160 MH of shares for one year for a price of $1805. Yeah, that would be $11.28 per MH, but it doesn't end there. Use the code "anniversary1yr" and you get a final price of $920.55, or only $5.75 per MH. I don't know how much I trust LTC Gear, but that's ROI in about 45 days at the current rate. Food for thought if you're looking for GAW alternatives....

By the way, I still have no idea how I'm being "refunded". I sent about 5 BTC to GAW for the ASIC purchases on Saturday evening, and I now have nothing to show for it. They haven't asked for an address where they can send my missing BTC, but they did disable my "oversight" Hashlet Primes. Again, this is not how you handle customer service, GAW. Hopefully they learn from this sort of mistake, but so far GAW has been playing fast and loose and it's bitten them in the butt on more than one occasion. Keep that up and your competition may end up surpassing you, even if Scrypt mining is "your house".

Update: And how's this -- I got banned (community banned?) on Hashtalk.org thanks apparently to my thread on this topic. It started with me pointing out the option to get Primes at a lower price, and when Josh said it was an oversight (aka, stupidity on the part of his web programmers) I contended that refunding was not very good customer service. Apparently some Hashtalk users downvoted my posts because they didn't like my perspective (or my blog?), so now I'm gone. If you can see the posts that got downvoted, you'd see just how ludicrous this is; my post here is far more negative than anything that I said at Hashtalk, and there's a reason for it: banning a blogger doesn't generally shut him up.

That's a "great community" they have over there; I guess they're more than welcome to it. Why agree to disagree when we can instead just stifle free speech and ban people for voicing opinions? Here's another suggestion, for GAW/Hashtalk: don't let anyone -- mods or regular users -- vote in threads where they have participated. I'm pretty sure the people that downvoted me are users that had already said they disagreed with my view, so they basically say, "you're wrong, and you don't get to respond." I also like the downvotes on the first post: "This guy says he converted ASICs into Primes -- DOWNVOTE for telling the truth!" Well played, Hashtalk users; well played.

UPDATE #2: I'm double-posting this note as it's important to know what you're getting into with GAW. Roughly one week later, my orders (and presumably all orders of new ASICs that were converted into Hashlet Prime) have been canceled. I received email messages saying I was "refunded", but let's be clear: I HAVE NOT BEEN REFUNDED. GAW received my Bitcoin, they activated them on Zenminer, I converted them into Hashlet Prime -- all using the interface they provided. This is not an exploit; it's something they allowed. Now they canceled my miner purchases and Prime conversions, but they did not return my Bitcoins. I opened a ticket on 9/29; three days later the ticket hasn't even received a response. Coupled with the permanent banning from Hashtalk and I have to wonder if accusations of GAW being a ponzi scheme may prove correct.

Sunday, September 28, 2014

Zenminer HashStore -- Coming Soon to Hashlet Solos

Continuing from where I left off yesterday, there are a few items to cover. First and foremost, my last post may have ruffled a few feathers, and GAW_CEO even responded to a thread to say that this loophole was a "glitch" with the following statement:
"This is an oversight with the department that does the site listings. All orders will be canceled and refunded. We apologize for the error."
Now, I'm not sure what orders will be canceled and refunded, as that would mean rolling back orders of Thunder X6 ASICs, but before doing that you'd have to roll back the conversion of the ASIC into a Hashlet Prime, and even if you did both of those items you'd still have to have somewhere to refund the money (BTC) to. At present, my new Hashlet Primes still exist, so let's hope it stays that way.

But let's get to the discussion of new features for the Zenminer cloud, which were announced Saturday. The biggest news other than the ability to convert ASICs into Hashlets (it was supposed to be Bitcoin ASICs into Hashlet Genesis, but somehow it ended up being all hosted ASICs -- sort of an Easter egg) is that there's a new HashStore. Except, there isn't -- at least not yet. But thanks to Hashlet Prime we know what will be present at the HashStore: you can purchase HashBoost, and you can purchase Double Dipping. Oh, and we also don't know the pricing on these boosts, except it will be paid in HashPoints.

To recap, HashBoost gives you a 50% boost in hash rate on an ASIC for 30 minutes. For Hashlet Prime it can be used twice per day (for free), once every 12 hours. It's possible that on Hashlet Solo you can use it more frequently, paying as you go, but again we don't know the cost yet.

Double Dipping on the other hand lets you mine two pools at once, with your full hash rate on each. (I wasn't 100% sure on this yesterday, but after reading more posts I don't see how it could be anything other than effectively doubling your income by mining on two pools.) It lasts 12 hours and at present you can use it once per day on a Hashlet Prime for free. By that token, I'd expect Double Dipping to cost about 48X as much as HashBoost -- it doubles your hash rate for twelve hours compared to boosting by 50% for 30 minutes. So it lasts 24X as long and pays potentially twice as much.

One HashPoint, if you're wondering, is currently worth 100 Satoshi (one Satoshi being 0.00000001 BTC), but about three weeks back GAW CEO announced HashPoints would be converted to being worth one penny each. That conversion doesn't seem to have happened yet, though it shouldn't really matter as they'll do the conversion based on the current value of your HP -- so if you have 15000 HashPoints that are currently worth 0.015 BTC stored up, you'll get 567 HP after the conversion (at the current price of $378 per BTC). Of course, with HashPoints being useful for buying stuff at the HashStore, whenever that's enabled, they might be worth stockpiling for a bit. So if you happen to have auto purchases enabled on Zenminer Cloud right now (to save 5%), well, you're going to use up all your HashPoints and might need to wait to get more for the HashStore.

There will be additional boosts available in the future (reduced maintenance, increase payout percentage, and lock in payout rate have been specifically mentioned before). Again, pricing and availability are a bit of an unknown, but I'd guess in two weeks we'll see something. Which is part of the announcement as well: major updates to the Zenminer Cloud are going to come every two weeks instead of every week. That's if Josh sticks to his current plan, which if you've followed him much is a bit of a craps shoot. (See the USD value of HashPoints as an example -- three weeks and it's still not here.)

How Can GAW Afford All These Features and Extras?

Besides all of the above, there's still this nagging question that most people have: how is Josh/GAW paying for all of this stuff? If you buy a 1MH Scrypt Hashlet that should pay around 0.0004-0.0005 BTC according to PoolPicker, and Zenminer's Zen Pool (and LTC Pool) typically pay out 25-50% more, and then on top of that GAW starts offering the ability to Double Dip and get an additional 50% per day for "free"... well, the math wouldn't add up, right? So either it's a ponzi scheme where the system depends on "new blood" coming in to pay existing users, or there's something else going on.

My best guess is that the ASICs Josh/GAW uses are actually far more efficient and powerful than what we can currently buy. Remember that Vaultbreaker Batch 1 is basically supposed to be shipping by now -- see the famous "I will not be beat in my house" quote about Scrypt mining -- and originally I believe Vaultbreaker was going to cost $10,000 for 750 MH. As Hashlet's the "value" of a Vaultbreaker is now at least $11,250 -- that's assuming all 750 MH became MultiHashlets that cost $15 per MH -- and potentially as much as $37,500 -- e.g. if all 750 MH became Hashlet Primes. Obviously at $10,000 GAW was still going to make a decent amount of money, and Batch 2 was dropped to $7000. GAW could have early Vaultbreaker ASICs now up and running and their efficiency would more than pay for the potential 50+% value we're seeing in Hashlets compared to normal Scrypt ASIC mining.

Heck, Josh doesn't even need 750 MH Vaultbreakers to pull this off. Let's say he has data centers loaded up with a reasonably efficient ASIC. The Excalibur ASIC is supposed to do 40MH at 160W, so 4W per MH, and an "inefficient" Vaultbreaker could probably do the same. At $0.08 maintenance fees per MH, GAW is effectively charging around 40W per MH on Hashlets right now. Plus economies of scale means that if GAW is selling tens of thousands of Hashlets, they are ordering thousands of ASICs to power those Hashlets, which means they're going to be getting a very good price compared to someone paying for a single ASIC.

Anyway, bottom line is that so far GAW Miners and their Hashlets are doing fine for me in hitting ROI. When the Hashlet Market officially allows selling of Hashlet Prime, I could in theory sell all my Hashlets and come out with more than I've invested, and there will be others just waiting to snap up a good deal on any Hashlet. Seriously, go look at the Hashlet Market right now -- anything more than about 5% under the normal price gets picked up almost as soon as it's listed.

By that metric, I could cash out of my Zen Hashlets as well and earn a solid 20% over what I invested at the start of the month. So needless to say, I'm feeling pretty good right now. I also felt pretty good when I got in early on Darkcoin and mined 10,000 DRK in one week -- with about 15 consumer CPUs, no less! Too bad I didn't sell all of that when DRK was at $10+, but I still can't complain about netting that much DRK in a week. (For the record, my Darkcoins have largely paid for my Hashlet investment, and then some.) Let's hope lightning strikes twice....

Saturday, September 27, 2014

GAW Miners Now Allows Upgrading Scrypt ASICs to Hashlet Prime

This is actually pretty huge, and I'm not just trying to build up hype, but starting today (whether this is a permanent offer or only something temporary isn't clear), GAW Miners is allowing you to upgrade your ASICs to Hashlets. SHA256 ASICs become Genesis Hashlets, while get this: Scrypt ASICs don't just become any old Hashlet; you get Hashlet Primes (Hashlets Prime?)! What that means for me is that I'm now out of the ASIC market and am now pure Hashlets, but where I used to have just Zen Hashlets I'm not the proud owner of 84MH worth of Hashlets Prime.

This is super cool as it opens up the ability for me to play with the recently launched Hashlet Prime features. Wait, you hadn't heard about those? Oh, that's right: I haven't covered them yet! Well, there's a lot more to cover than I have space for here, because I want to talk about the ASIC upgrades, so if you can't wait go ahead and read Josh's post and I'll provide analysis later.

The short of it is that Hashlet Prime now has the ability to mine two pools for 12 hours each day -- you get to select the second pool -- which means you can play it safe by splitting your hash rate among two pools rather than having all your eggs in one basket (*cough* Zen Pool *cough*). You can also boost the speed of your Hashlet Prime by 50% for some 30 minutes twice per day. There are some other features coming soon to Hashlet Prime as well, but they're not here yet.

Okay, let's get back to talking about this deal of converting ASICs into Hashlet Prime. First, you obviously need to have a hosted ASIC for this to work, and right now other than Hashlets the only Zen Hosted ASIC available from GAW Miners is the Zeusminer Thunder X6. That's a $450 ASIC that will do 18-20MH, so compared to, say, a Zen Hashlet it's not exactly a great deal (at best it's $22.50 per MH, at worst it's $25 per MH). It does include one month of free hosted mining, though, after which you pay $1.10 per day ($0.061 per MH).
Here's the kicker: you can convert that sucker into a Hashlet Prime basically immediately after purchase. [See Update below!] Yes, you give up the month of free hosting, but you gain the extra options like Double Dipping, HashBoost, and other upcoming features. So how does this all pan out? For a straight Hashlet Prime of 18-20 MH, you pay $450 and you can earn about 0.0119 BTC per day after using HashBoost twice daily (0.008 BTC after maintenance fees), compared to 0.0115 BTC per day if you keep the Thunder X6 as a regular ASIC for the first month, and 0.0085 BTC going forward. So that's ROI in 140 days with a Hashlet Prime compared to ROI in about 122 days as a Zeusminer Thunder X6 ASIC.

The thing is, HashBoost isn't all that great as I understand it. The new Double Dipping feature seems like it may effectively double your hash rate for 12 hours, though this isn't entirely clear; do you earn full hash rate payouts at two pools at once, or does it split your hash rate between two pools? If the feature does in fact give you hashing at two pools for the price of one, then the daily income right now mining Zen Pool and LTC Pool via Double Dipping is around 0.0133 BTC per day with a Hashlet Prime, which means ROI is only 85 days! (I've enabled Double Dipping on my new Hashlets Prime, so I'll report back tomorrow with the results.)

Another option is you could just try selling your new Hashlet Prime for 80% of the going rate: $40 per MH. So potentially you can pay less than $25 per MH and then try to sell it for $40 per MH. I'm not sure if there are many Hashlet Prime buyers right now, but it's an interesting loophole you could try using. Except there's a catch: the Hash Market is only for Legendary Hashlets and Hashlet Solo right now, so you have to hold on to your Hashlet Prime for a bit longer.

I suspect one of two things will happen. One is that this current loophole will be closed post-haste. Considering Hashlet Prime was originally a $14.95 Hashlet it's not like GAW doesn't make money regardless, so this isn't necessarily going to happen. The second option -- and what I think is far more likely -- is that we'll see the remaining supply of the hosted ASICs dry up in the next 12-24 hours.
And if you're wondering, yes, I just bought several Zeusminer Thunder X6 ASICs; with this post going up we will probably see the rest of those ASICs vanish. You've been warned -- better act fast as this is the last chance you're likely to get at $22.50 per MH for Hashlet Prime.

UPDATE: The "loophole" has apparently been plugged, so buying ASICs to convert to Hashlet Prime may no longer work. (I'm not going to try it any longer, at any rate.) It's also possible that some orders may be refunded, though we'll have to see on that end.

UPDATE #2: Roughly one week later, my orders (and presumably all orders of new ASICs that were converted into Hashlet Prime) have been canceled. I received email messages saying I was "refunded", but let's be clear: I HAVE NOT BEEN REFUNDED. GAW received my Bitcoin, they activated them on Zenminer, I converted them into Hashlet Prime -- all using the interface they provided. This is not an exploit; it's something they allowed. Now they canceled my miner purchases and Prime conversions, but they did not return my Bitcoins. I opened a ticket on 9/29; three days later the ticket hasn't even received a response (though I did get banned from Hashtalk.org).

Wednesday, September 24, 2014

Does the Bitcoin Network Waste Lots of Power?

One of the big complaints about Bitcoin -- and cryptocurrencies in general -- is that they're using "tons" of power and not really accomplishing any "useful" purpose. While it's certainly true that all of the ASICs out there hashing away to secure the Bitcoin network (and mine coins in the process) use power, it's important to put things in perspective. Let's start with a rough estimate of the power used by all the systems connected to the Bitcoin network.

At present, the total hash rate of the Bitcoin network is around 240,000 TH/s, though of course that changes on almost a daily basis -- you can check the current approximate hash rate any time at BitcoinWisdom (or any number of other sites). The most efficient Bitcoin ASICs right now can do around 3 TH/s while drawing 2000 W (give or take), while upcoming ASICs may be as much as two to four times as efficient (e.g. around 3 TH/s while drawing only 600 W). Obviously not every ASIC currently hashing on the Bitcoin network is going to be the most efficient option (side note: I finally shut down my AntMiner S2 ASICs as their hash rate to power is no longer profitable), but let's just estimate that most ASICs today are averaging a 1:1.5 ratio of TH to power.

What that means is that our 240,000 TH/s of hash rate is using 360,000 kW. (By way of comparison, if every current ASIC was a KnC Neptune doing 3 TH per 2000 W, the Bitcoin network would only use 160,000 kW.) 360,000 kW becomes 360 MW, and 24 hours per day means the Bitcoin network is using around 8640 MWh (Megawatt Hours) each day, and 259,200 MWh per month. So how does that compare with the power used for other tasks?

According to Wikipedia, the total power consumed in the US per month was 2,183 TWh, or 2,183,000,000 MWh. That means the total power used by the entire Bitcoin network is approximately 0.012% of the US energy use. But Bitcoin isn't just a US phenomenon, so we really need to look at the entire world. In 2008 the worldwide approximate power use was 143,851,000,000 MWh, or 11,823,000,000 MWh per month. It's likely power use has increased since then, but let's just stick with that number for now. That means the Bitcoin network "waste" of power accounts for a whopping 0.0022% of all energy consumed in the world.

Let me put that figure in different terms. The average power draw of a US household is 10,837 kWh per year, or 29.7 kWh per day. That's the same as a continual power draw of around 1250W from all the lights, appliances, computers, etc. in your home. 0.0022% of the average power used by an American home would equal 0.0275 W. Or in other words, shutting down all Bitcoin related hardware in the world would be like the average American home cutting their power use by $0.00008 per day.

Now, it's entirely possible I screwed up on the math somewhere. Maybe I'm even off by a factor of 1000, but I'm pretty sure that's not the case. I've checked things multiple times and I think I've got it reasonably close, understanding that this is merely an estimate and I could easily be off by a factor of 2-4X on a few guesses (e.g. maybe the average efficiency of ASICs is much lower than my estimate). Still, if you spot an error, by all means let me know.

The bottom line is that the amount of power being used globally for the Bitcoin network is pretty tiny as a percentage. When you think of all the other things out there consuming power -- lights on empty roads and parking lots, computers that sit idle at large corporations, etc. -- there are far worse ways of using power. Inherently, people and businesses consume power because they find it to be a good use of their money -- cost vs. benefit. There's no need to try and halt the use of power by cryptocurrencies as they'll eventually reach equilibrium on their own.

Bitcoin hashing might be consuming 360 MW (which is still about one fourth of the infamous 1.21 Gigawatts number from Back to the Future), but how much power is consumed by all of our financial institutions? I'm absolutely sure it's far more than 360 MW, so by that token the Bitcoin network is actually a much more efficient way of doing things.

Tuesday, September 23, 2014

PayPal (Finally) Offers Bitcoin Support

The history of PayPal and Bitcoin has been a bit rocky up until now; I remember several years ago when PayPal actively took steps to prevent people from using their service to purchase Bitcoins. Quite a few accounts were banned, some for apparently minor infractions – basically, PayPal didn't want anything to do with Bitcoin, perhaps seeing it as too much of a competitor to their established business practices. Today PayPal has announced that they are partnering with BitPay, Coinbase, and GoCoin to allow merchants to accept Bitcoin, marking a clear change in attitude from their earlier stance. What's more, this comes just a few weeks after an earlier announcement that Braintree users would be able to accept Bitcoin.

So why is PayPal willing to work with Bitcoin now and not last year, or even two or three years ago? I think the inability to roll back purchases made via Bitcoin posed a serious risk, especially for fraud. Just imagine complaints like, "Hey, I bought this $2000 product with Bitcoin and the merchant never shipped it!" PayPal would have been forced to either refund the money from its own pockets, or perhaps worse the user would end up being scammed. With companies like Coinbase and BitPay now providing services that help mitigate some of these risks, plus successful adoptions of Bitcoin by many other resellers, it looks like PayPal is finally ready to hop on the Bitcoin bandwagon. All I can say is that it's about time!

The support for Bitcoin will come via integration into the PayPal Payments Hub, and unfortunately it will only be supported for merchants in North America for the time being. There are other qualifications to using Bitcoin with PayPal as well, as the blog notes: "To be clear, today’s news does not mean that PayPal has added Bitcoin as a currency in our digital wallet or that Bitcoin payments will be processed on our secure payments platform. PayPal has always embraced innovation, but always in ways that make payments safer and more reliable for our customers. Our approach to Bitcoin is no different. That’s why we’re proceeding gradually, supporting Bitcoin in some ways today and holding off on other ways until we see how things develop."

Of note is that this comes at a time when the mining phase of Bitcoins and other virtual currencies has largely moved beyond GPUs and onto dedicated SHA256 and Scrypt ASICs. That's good news for gamers and graphics gurus, though I suspect the GPU vendors may not sell as many new GPUs – and certainly not at such inflated prices – as they did last year. Then again, I really, really want to see what a GeForce GTX 980 (or GeForce GTX 970) can do with mining – not that I'm willing to spend $549 to start mining with one, but given the improvements in efficiency it could actually do okay at mining Cryptonight, X11, X13, etc. Of course I suspect the GPU vendors will also have fewer RMAs over the coming year – I know between myself and a friend, we've had at least two R9 290X GPUs and four HD 7950 cards go out due to the strains of 24/7 cryptocurrency mining (and overclocking certainly didn't help).

Wrapping things up, PayPal also notes that PayPal has worked with merchants selling cryptocurrency mining hardware but refuses to support pre-orders, which is a stance I wholly support having now been more or less burned by Alpha Technologies. And while the announcement today is more of a baby step as opposed to wholesale acceptance of Bitcoin, the closing comments suggest that this is merely the tip of the iceberg: "PayPal is excited about all the innovations taking place in payments these days. More choices in how people create value, share it, buy, sell and trade it – that’s exactly what PayPal is all about. And we believe Bitcoin offers unique opportunities as more people and businesses experiment with it. We are excited to work with businesses and business models that allow us to offer new experiences and the trusted service our customers expect. We hope to do more with Bitcoin as its ecosystem continues to evolve."

I've now successfully used Bitcoin to purchase quite a few goods, from graphics cards on Newegg.com to the games in the latest Humble Bundle, and more and more places are beginning to get onboard. For example TigerDirect and Overstock now accept Bitcoin as a viable method of payment, and you can use services like Gyft or eGifter to purchase a gift card with Bitcoins that can be used at numerous other locations (including Amazon.com). They might be a bit late to the part, but it looks like PayPal has decided to join the club.

While there are still naysayers when it comes to Bitcoins and cryptocurrencies in general, this is great news for Bitcoin proponents. Integration with PayPal literally opens the doors for thousands of small shops to easily begin accepting Bitcoin. It's one small step for PayPal, one giant leap for Bitcoin.

Monday, September 22, 2014

Welcome to the End of GPU Mining

It's been a long, slow decline, but outside of a major jump in cryptocurrency prices we have finally reached the end of the road for GPU mining. That's not to say that people won't continue to mine with GPUs, but based on the cost of electricity and the current price of Bitcoin combined with the alt-coin exchange rates...well, you get the point. GPU mining is "dead". Let's quickly run some figures to give you an idea of where we stand.

The best-case mining opportunity right now (as far as I can tell -- there are so many coins that it's possible I'm missing some "secret" coin that's highly profitable) would be GPU mining of Monero, one of the Cryptonight coins. With the current difficulty, block reward, exchange rate, and price of BTC, a rig with three R9 280X GPUs might mine around 1.5 XMR per day, which would equal about $1.90. That same rig will draw about 450W of power, and at $0.10 per kWh you'd spend $1.08 per day in electricity. Factor in wear and tear on the GPUs and the net profits of $0.80 per day probably isn't worth your time, but that's about the best option for GPUs right now.

Okay, that's XMR and Cryptonight, but what about some of the other proof of work algorithms that can't be run on an ASIC? We have X11, X13, X15, Keccak, and maybe a few others as potential PoW options. There are a few others as well, but let's just stick with those for now.

X11 was made famous with Darkcoin, which is currently averaging a difficulty of around 3300 with a block reward of 4 DRK being typical. If your hash rate is 12000 KH/s for X11 (which is about right for three 280X GPUs), and your power draw is only 450W, you'd still be in the red. You might mine 0.3 DRK per day, worth about $0.90, with a power cost of $1.08. Even R9 290X wouldn't be much better: 16 MH/s for three 290X GPUs and at a power use of 500W you'd basically break even. CANN is about the same right now, so is URO, and basically we're looking at best-case breaking even or making pennies per day per GPU.

Actually, your best bet is often to just go with leasing your hash rates on a service like NiceHash -- let others do the work of figuring out which new alt-coins to mine, let them take the risk, and you just get paid directly in BTC. Or go with a multi-pool like BlackcoinPool, MultiPool, WafflePool, etc. The current best rates for X11 are around 0.0003 BTC per MH per day, so three R9 290X could make about $1.90 per day, with a power cost of $1.25 (give or take). That's "profitable", but not enough that I'd seriously invest time and effort into it. So X11 is out, unless prices go up, difficulty goes down, or hash rates can be increased without using more power.

X13 and X15 really aren't much different in concept from X11, just with lower hash rates thanks to the additional hashing algorithms. X13 you might make a bit more per MH (currently looking like 0.00037 BTC/MH/day, give or take), but with lower hash rates in general it's less profitable (or more unprofitable). X15 is paying less than X11 and X13 with even lower hash rates, so obviously that's out as well.

If you're after really high hash rates, you could look to Keccak, but just because it has high hash rates (450MH for a 290X?) doesn't mean it's profitable. The going rate is about 0.0000023 BTC/MH/Day, or $1.25 per day for 3x290X. Nist5 is another "faster" hashing PoW, but it's only about three times the hash rate of X11 and it's paying about 10% of X11, so that's a dead end as well.

The net result is that across the current list of coins and PoW algorithms, there's really nothing out there that can even hit a 2:1 ratio for value vs. power. The best I can currently find is Monero, which gives about a 1.7:1 ratio of income vs. electricity. If you were to use a $300 R9 280X GPU, not accounting for the rest of the PC, you would need to mine Monero for over two years straight just to break even. And let me tell you, my personal experience is that running a GPU 24/7 at 100% load (which is what you do with cryptocurrencies) could very well kill the GPU before two years pass -- or at least the GPU fans will likely need to be replaced.

If you're wondering why I've become so pro-ASIC (or pro-Hashlet), this is the answer. All of my GPUs are now powered down, and I for one welcome the blessed silence. Maybe I'll fire them back up to help heat my house as it gets colder, or maybe prices will shoot up again and make GPU mining profitable. Until one of those things happen -- or something else comes along to make me want to mine with GPUs -- I'm going to be investing my time and energy elsewhere. Anyone interested in buying some GPUs?

Sunday, September 21, 2014

GAW Hashlet Prime Plan B?

Yesterday's news apparently caused quite the stir among Hashlet owners... well, Hashlet Prime owners to be more specific. It seems a lot of people didn't like the idea of Hashlet Prime becoming a less premium product and they want to keep the price at $50, and so a "Plan B" has been proposed by the miners, with GAW now offering a poll to see which route is preferred. Before I weigh in on which option I think is best, let's start by quickly dissecting Plan B.

At it's core, Plan B is basically a return of the "advanced features" that were apparently previously part of the Hashlet Prime roadmap. These features include Boost Speed (pay to boost), Double Pool (mine two pools at once), Rapid Pay (instant payout based on yesterday's rate), Hashlet Spawn (random -- what? -- number and type of Hashlet Solos for some amount of time), Delay Pay (earn interest by delaying the payout), Time Stop (lock in the current payout rate for a period of time), Random Boost (Primes boost randomly), Fee Drop (no fees for some number of days), and/or Fee Defer (defer maintenance fee for some number of days). It's not clear when these features would roll out or how they would all work, but they're certainly a way of adding complexity to Primes.

Beyond this list of advanced features, the new $49.95 price of Hashlet Prime would remain, which would mean if you bought in at a lower price you have probably already hit ROI, there would be refund options, and Vaultbreaker batch 2 would get an alternative upgrade path (either temporarily mine on the A2 farm, or get Primes at a 1:1 ratio). There would also be some new features added to Hashlet Solos, though we don't know exactly what those features are at present.

In other words, the Plan B is to not make any major changes to the Prime roadmap -- keep them as a premium product and add new features. Which means that Plan A gets scrapped.

So here's where you can take things in a lot of different ways. At one extreme, you could say that the $25 price drop was a farce -- it was set to be in a few days, with refunds going out to people who bought in to Hashlet Prime at a higher price. Well, if Plan B wins than those refunds don't occur and effectively all we had was some "news" that ended up not being news. Consider also that many (most?) owners of Hashlet Prime bought in at the original $14.95 per Hashlet price, so for those users of course they would want the new price of Primes to be $49.95. They could potentially sell off their $14.95 investment at $39.96 each, all while keeping any BTC mined in the interim!

The other extreme would be that Plan A was terrible (I'm not actually sure why you would think that, unless you happen to own a bunch of Primes that were purchased at $14.95 -- see above), and Plan B is simply GAW listening to their customers. While I would like to think this is likely the case, I'm not ruling about the above "market manipulation" yet. I also think that the customers GAW is listening to are primarily the people who went in early on Hashlets and want to make their investment worth even more by having the price more than triple for Johnny-come-lately buyers.

Without concrete details on the future Prime features, it's impossible to say how good they might be. Doubling your hashing speed is always a nice bonus, but with Primes costing more than twice as much as any Hashlet Solo you could be at the boosted speed almost 24/7 and still take longer to hit ROI. All of the other features basically amount to varying forms of "gambling" in my book, so they're not really all that interesting -- okay, the Delay Pay might be a nice way of earning interest above and beyond the normal amount, but that's about the only truly interesting item I see.

I'm pretty sure any discussion of which way to go is a moot point, as based on what I've read it sounds like there are a lot of users that bought Hashlet Prime when it was just the original Hashlet, and in fact they're a majority of Prime owners. There's no reason any of them would want to see the price of Primes decrease, so they'll all likely vote for Plan B and that will be the way things go. Which is unfortunate, as I'd love to have Prime available as a reasonable option that doesn't take more than twice as long to hit ROI. Not surprisingly, Plan B is currently leading by a vote of 68% to 32%.

Something else to remember: Vaultbreaker is in theory showing up with GAW any time now, and of course the "I will beat KnC to market no matter what" stuff is now meaningless as the people that pre-ordered Vaultbreaker Batch 1 will instead get Hashlet Prime, right? But Hashlet Prime could be running on a bunch of less efficient hardware! So this is all potentially a big smokescreen to hide the fact that Vaultbreaker might not be doing 750 MH at 1000-1500W. Even at $25 each, 750 MH of Primes would be worth $18750, or nearly twice the cost of a Batch 1 pre-order. On the other hand, 19 ZeusMiner X6 Lightning ASICs would be the same performance as a Vaultbreaker, only with power use being much higher (by a factor of almost 20x), which would make the $25 per MH price a lot more "reasonable".

What do you think, is my "worst-case" just a conspiracy theory; was this just a way to drum up news coverage? Or is all of this real, and GAW was actually about ready to refund any late Prime purchases a bunch of money and drop the price of Prime to $25? Does Vaultbreaker actually exist, or is GAW simply hiding their lack of highly efficient ASICs behind Hashlet? Either way, I'm still on track to hit ROI in under four months, which is nice to see. Let's hope BTC takes a ride on the holiday rocket again and come Christmas we're all sitting on $2000 Bitcoins!

Saturday, September 20, 2014

Hashlet Prime Price Drop and Updates, Plus Vaultbreaker News

Hashlet Prime has been an odd duck in my book -- or put another way, Hashlets in general have had a bit of a complicated history. When GAW Miners first announced their Hashlets, the price was $14.95 per MH. They sold so quickly that the price was updated, and then updated again, and then the original Hashlet was converted into Hashlet Prime and the price was changed to $39.95, while a bunch of alternative Solo Hashlets were also created with prices ranging from $15.95 to $21.95. Then Hashlet Prime had its price increased to $49.95, which was really odd considering it was basically the same level of profitability as a Zen Hashlet (maybe a bit higher) at over twice the price.

Well, either Hashlet Prime has stopped selling and GAW Miners recognizes the need to adjust pricing, or they're just being really nice, because Hashlet Prime is getting a price cut to $25 (perhaps $24.95?), currently scheduled to take place on September 24. What's more, anyone who paid more than that for a Hashlet Prime will be compensated with the difference.

That's not the only change coming: Hashlet Prime will finally get the ability to mine SHA256 instead of Scrypt, and it will do so at 40 GH/s. That means the maintenance fee will likely still be $0.08 per Hashlet Prime, but 40 GH/s of SHA256 is going to be pretty close to 1 MH/s of Scrypt in terms of income per day, and it at least opens up another option. Oh, and you know that price cut on Hashlet Genesis that ended up not happening? Obviously it's going to take place at some point, as $24.95 for 40 GH/s with a Hashlet Prime would be a far better deal than $39.80 for 40 GH/s of Hashlet Genesis -- in fact, the $7.95 price is also too high, and I'd expect it to be no more than $6.00 or there's really no point in buying Haslet Genesis when you can buy Primes at $24.95 and get the equivalent of four Genesis.

Along with the above news, GAW Miners also announced that all pre-orders of Vaultbreaker Batch 2 will receive Hashlet Primes at a 1:1 ratio. The interesting aspect is that Vaultbreaker Batch 2 was $6995 for 750 MH/s, and instead you're going to get 750 MH/s of Primes, which would otherwise cost $18712.50 at the new $24.95 per MH price. Of course, I suspect you'll also be paying the $0.08 per MH maintenance fee, which works out to $60 per day. Even if Vaultbreaker uses 2000W (it's supposed to use 1000-1500W), the actual power cost of running the Vaultbreaker would be $4.80 per day. Heck, Vaultbreaker could use 10000W and you'd still only pay $24 per day (at $0.10 per kWh).

Zen Pool is still paying way more than you'd get by mining any other Scrypt coin/pool, but at the current rate of roughly 0.0006 per MH 750 Hashlet Primes would get you 0.45 BTC per day while 750 MH/s on some other Scrypt coin could net you nearly the same rate with 10% of the daily maintenance cost.

If I had a choice, I'd have to say right now I'd much rather have an actual Vaultbreaker rather than getting a bunch of Hashlet Primes, but at the same time if it's a question of waiting a few months for a Vaultbreaker vs. getting the Hashlet Primes right now, it's a no brainer. The ROI time for $7000 at 750 MH/s is less than two months at the current price of Bitcoin, which of course I expect to go up way above $412 (hopefully sooner than later).

Bitcoin Prices: Deja Vu All Over Again

Newcomers to the world of Bitcoin and cryptocurrencies might be wetting their pants right about now, depending on when they decided to get on the bus. We've gone from a high of around $660 in July to the current price of just over $400, with dips as low as $375 (give or take). The early hype stages of Bitcoin are now clearly over and it's time for things to slide into oblivion... or at least that's the pessimistic view of things. But you know what's interesting about pessimists? They've been predicting the demise of Bitcoin for well over three years now, and so far they've been wrong every time.

Yes, we've had ups and downs, some bigger than others, and there have been a variety of reasons for the spikes and valleys. Major accounts have been hacked and dumped, exchanges and other services have evaporated into thin air with large numbers of Bitcoin, China has jumped on -- and then been pushed off -- Bitcoin. But even without some of those events, Bitcoin like all markets is going to have upward and downward trends. And right now, we're clearly in a downward trend, but here's the question: how low will we go, and when the inevitable rebound occurs, how high will we climb?

2013 was, by all accounts, a very exciting year for Bitcoin. It took a while, but we finally eclipsed the previous high of June 2011... and kept on going! Around early April, Bitcoin reached a then unheard of high of around $260, at which point there was a major sell-off and some other stuff like the MtGox fiasco that caused a crash back to the $50 range. Then we went back to $170, down to $80, up to $130, and then there was a downward trend to about $66 again. The naysayers were out in full force, as you might guess, and then things started to pick up around August.

Bitcoin went up to $130 or so again, and basically hovered around that mark for a bit. There was a big dump to $85 in late September (I think that might have been an exchange getting hacked or something similar), and then we started to jump up in prices. The first plateau was back to $200, and I'll admit I cashed out of quite a few Bitcoins at that point. Over the next month I just had to shake my head as we repeatedly set new highs, eventually topping at over $1150.

After such a rapid climb, the fall-off was almost as dramatic, but it was far more seesaw in nature. Slowly but surely we've been heading down again, but we're still at more than three times the prices of last September.

Now, I'm not going to guarantee anything with Bitcoin right now, especially not on any short-term time frame, but what I will say is that this downward slump is nothing new. I suspect we'll even go as low as $300 or even $200, though that's a gamble if you're going to sell now and try to buy back in, but mark my words: Bitcoin is going to go back up again.

My take is that the holiday season is about to kick into full swing, and when people start buying lots of gifts and other products, companies start looking like they're doing well and stocks go up. Bitcoin most definitely isn't a stock, but there are many investors that play the stock market and they're now playing Bitcoin, so it's often treated like a stock. That being the case, the end of this year and the start of 2015 could be as exciting as last year, perhaps even more so.

Personally, I'm hanging onto all the Bitcoins I can get my grubby little hands on right now, and my Zen Hashlets are helping me accumulate more at a nice steady rate. Long-term, I think the next major spike in Bitcoin prices will eclipse $2000, and possibly go as high as $5000, and then we'll see the usual collapse again as prices consolidate around a new high that will very likely be over the $1000 mark. If you sell now, you might become yet another one of those "weak hands being shaken out", though as long as you're not selling at a loss I suppose that's fine. Just remember: the real winners are the people that successfully play the long ball.

Come talk to me again in 2015 and let's see how my prediction pans out. Again, no guarantees, but I think we're going to see a major upswing some time between now and January 2015. That's where I'd place my bets at least, if I were a betting man. And since Bitcoin is almost like gambling, maybe in this sense I am a betting man.

Wednesday, September 17, 2014

Hashlet Genesis Now $7.95 in ZenMiner Portal - New ROI (Updated: Never Mind!)

There's a lot of news to cover today with Bitcoin ASICs, and one piece is leading into another. Take the Hashlet Genesis, which is apparently due for a price drop. If you follow that link right now, it's still showing the original price of $9.95 per 10GH, but on the ZenMiner Portal (registration required) the price has dropped to $7.95 per 10GH.

This is hardly surprising considering the initial ROI estimate at $9.95 was previously four months, more likely six after difficulty adjustments. The price of Bitcoin has currently dropped 10% in the past couple of weeks, however, and with difficulty still increasing that means the forecast for Genesis got worse. The price cut is thus not just a good thing to offer customers; it's pretty much required if GAW hopes to sell any more Genesis Hashlets -- and we're probably due for a drop in the maintenance fees to $0.01 as well. Here's why:

Let's start with a worst-case scenario. If the Genesis continues to sell at $7.95 per 10GH and has a $0.02 per day maintenance fee, with a 15% rate of difficulty increase it would become unprofitable to run in about four months, and even at $7.95 you'd still lose $5 or more on the purchase. So this is a losing proposition.

Next up, let's go optimistic and use 5% difficulty increases. A $7.95 Genesis actually earns money this way, but just barely -- you'd get a profit of nearly $0.05 in about 11 months. Oops, that's not good either. Can you see why Genesis isn't looking too hot right now? Even at $0.01 per day per Genesis, you'd still need over six months to break even and you'd be down to earning pennies a month of "profit" -- with a final net income of $4.60 in about 18 months.

Okay, try this on for size: let's say it was free to run the Genesis Hashlets as a best-case option. It still would require four months to hit ROI with a 5% difficulty adjustment, or over six months at 10%. Either Bitcoin mining hardware is going to need to get a whole lot more efficient, or we're quickly approaching the point where Bitcoin difficulty reaches a maximum value and either or holds steady or starts dropping. Or maybe price jumps up to $1000+ again and everyone goes crazy.

The bottom line is that Bitcoin ASICs are becoming a highly questionable proposition for miners, and even manufacturers are likely starting to worry about margins. No one sane is going to take a risk on thousands of dollars of pre-order hardware anymore, and really they shouldn't have to. We're also fast approaching the point where more powerful ASICs become unlikely. We'll probably see 10TH ASICs next year that use 1000W, and maybe even 20TH ASICs that use 1500W, but we're not likely to see triple digit TH rates from a single piece of mining hardware any time soon.

Update: GAW has apparently decided not to drop the price of the Genesis Hashlet, at least not at this time. ("It was a mistake. Oops, sorry.") So, umm... don't buy any unless you have faith that GAW will do something else to make these worthwhile in the long run.

BitMain AntMiner S4 - 2TH Coming Soon, ROI Estimates

I mentioned this in the last post, so I suppose it's worth going into a bit more detail on the upcoming AntMiner S4 from BitMain. The long and short of it is that we really don't know much about the AntMiner S4, but it will apparently be on sale this week and will ship before the end of the month. That means the hardware must already be validated and running, so that's good to hear, but there are two major things we're still missing.

First, we need to know roughly how much power the AntMiner S4 will use. The previous generation AntMiner S3 is a 28nm chip, but it's only moderately efficient -- 441GH at 340W, or 0.77 W/GH. The AntMiner S4 might simply be the equivalent of five of S3 blades slapped into a single chassis, clocked lower and running at a lower voltage to improve efficiency. If that's the case, we might see 0.6 or even 0.5 W/GH.

The other item we don't know is the price, and given the above speculation I'd say it's likely we'll see the price in the neighborhood of $2000. Anything higher than that is obviously a bad investment -- you can buy a 10GH Hashlet Genesis for $8, basically, so that's the starting point I'm working off. Maybe BitMain will be kind to their customers and drop the price as low as $1500, but that's about the minimum I'd expect to see. We also need to know if it includes a power supply or if you need to provide your own, but the image at least suggests it will be a fully "plug and play" affair.

ROI Estimates and Early Forecasts

Considering we have a reasonable idea of the hardware and price, I can at least do a quick estimate of ROI potential. Let's start with the worst-case estimate: you pay $2000, it uses 1000W, and BTC difficulty increases an average of 20% every two weeks; power cost will be a reasonable $0.10 per kWh. We'll guess that you get the hardware in 14 days and start mining immediately. If this "worst-case" happens to be anywhere close to reality, you'd basically spend $2000 and your new ASIC would be too power hungry to keep running in about a third of a year (115 days, give or take). Assuming BTC price stays where it's at, the forecast would be pretty bleak: you'd lose around $1550 (with free shipping no less)!

Okay, that's too grim a proposal, as I think 20% difficulty increase is way too high. But if we take the same core values for price, power draw, and start date we can figure out what the average rate of increase needs to be for you to break even... and it's no less grim! If BTC difficulty only goes up 5.29% each cycle, a 2000GH ASIC for $2000 starting mining in two weeks will basically break even, but that won't happen until early 2016.

I don't think anyone would be willing to buy the S4 at that price, so let's try again and be more optimistic. Let's guess that they can get power draw down to 750W instead of 1000W, and the price is only $1500. Using our more than generous estimates from above (5.29% difficulty increase) you would hit ROI in about six months. A less optimistic forecast of difficulty going up 7.9% on average would leave you with a break even investment in one year.

That's still not looking very good, so let's try once more. What if the AntMiner S4 only costs $1000 and uses 500W? Now we're talking: at 5.29% you'd make ROI in just three months (~95 days), and long-term you could end up earning $1665 off of your $1000, though it would still take the better part of two years. 60% (or more) annual interest would be pretty awesome, so at these (nearly fantasy land) estimates the S4 would be worth buying. Of course a more likely 10% average increase in Bitcoin difficulty would drop you to hitting ROI in four months (~130 days) and after a year your total profit would only be $343.

If you can't tell, we're getting awfully close to the end of the road for Bitcoin ASIC mining investments. If you have one already and it's still profitable, you keep running it, but buying new hardware is looking sketchy at best. The days of purchasing a $500 GPU and having it pay for itself in just a month or so of mining are long past, so short of a major spike in BTC prices we're likely hitting a BTC difficulty plateau that will last a long time and only inch upward slowly as new process technology is developed.

BitFury Group's Upcoming ASIC: More Efficient SHA256 Hashing

Earlier this week, the BitFury Group issued a technology roadmap update for their ASICs. What's interesting about BitFury is that unlike many of their competitors, they've apparently put a lot more work into designing a custom ASIC. I'll get to what this means in a moment, but first we need to take a step back and discuss general microprocessor design principles.

Designing a CPU, GPU, SoC, ASIC, etc. can be done in many ways, but from a high level there are two general approaches. One is to use machine algorithms to optimize and lay out the transistors, and the other is to basically design the logic circuits and do the layout "by hand". There are pros and cons to either approach, of course.

The machine algorithms can do a great job of testing and validating the design and basically get you up and running a lot faster than if you were to have a human (many humans) perform the same work. What's more, there are many companies that now sell functional blocks of compute logic, so you can integrate these functional blocks into your chip a lot easier if you let the machines do the legwork. The drawbacks to machine layouts are that they typically use more area and they tend to be less power efficient. These aren't necessarily inviolate rules, but that's the basic idea.

Doing the layout by hand is basically the reverse of the above: it can take much longer to complete the design, validation, testing, etc. However, a human can generally see the big picture better than a machine and so they can optimize better for die area as well as power. This can in turn lead to potentially higher performance, which can be very important for high performance (or low power) microprocessors.

The above is a low-level discussion of processor design, but one of the interesting ideas is the use of ready made functional blocks. If you've ever wondered why it took a while to see the first SHA256 (Bitcoin) ASICs and then suddenly there was an explosion of competing designs from several companies, it's because once there was a tested and validated solution available, many other companies were able to license/buy the basic design and then just place more chips on a board to improve performance.

There are still multiple Bitcoin ASIC designs of course. The earliest ASICs were built on 90nm or even 130nm process technology (because it was cheap, mature, readily available, and easier to use), but as the competition heated up things shifted to newer and smaller process nodes. Today, the fastest and most efficient ASICs are manufactured on 28nm process technology, and 20nm designs will probably come out within the next year (the 20nm fabrication facilities are busy making things like Apple's A8 and the new Qualcomm Snapdragon cores, so they would cost a lot more to use). However, even 55nm ASICs can still be efficient enough to earn a profit -- or at least, the power cost of running them is lower than the value of BTC they generate.

BitFury is a prime example of this last case, as up until now they have been using 55nm process technology. The key to staying competitive even with an older process node is that BitFury uses their own custom logic (i.e. it's not licensed from another company), and they apparently put a bit more effort into optimizing for power and efficiency. Or more likely, they run at lower clocks and they're not really performance competitive right now -- the current BitFury ASICs can hit 3.5 TH/s at 2800W (give or take), but the power use is likely the limiting factor.

The latest announcement is basically BitFury Group saying that their 28nm custom logic ASIC is nearly ready. With the smaller process node and additional time spent optimizing for power efficiency, BitFury is claiming that they will have ASICs capable of running at 0.2 J/GH (essentially 0.2 W/GH) by the end of 2014, most likely late December. They're also working on an even more efficient design that will use 0.1 J/GH (W/GH, assuming 0.1 J/s) in mid-2015. That doesn't really tell us a lot in a vacuum, though, so let's compare those power numbers with some existing ASICs.

BitFury's own 3500BF I mentioned above delivers 3500 GH/s at 2800W, so it's doing about 0.8 W/GH. It also uses 1320 BF864C55 chips, which can run at a voltage range of 0.5V to 1.2V depending on your desired efficiency, with 0.5 J/GH being the maximum efficiency while 3.8 GH/s is the maximum performance -- but you have to choose one or the other. (Ever wonder why you can overclock ASICs? It's because you're just trading efficiency for higher performance, so if you have an older ASIC that's pulling 420W at the wall and you drop the clocks 10%, you'll likely end up improving efficiency by more than 10%.)

The KnC Neptune is currently targeting 3500 GH/s at 1950W, so it's slightly more efficient than the 3500BF (0.56 W/GH), but it's already on 28nm. Butterfly Labs' Monarch is more like existing chips, as it's capable of 700 GH/s at 490W (0.7 W/GH). Bitmain has their AntMiner S3 that's also around 0.78 W/GH, though the Antminer S4 is "coming soon". Looking at a list of other ASICs, those figures are pretty similar to the other "state of the art" designs.

Since I've been on a Hashlet's kick, I might as well toss out the Hashlet Genesis as well. GAW isn't saying how much power the Genesis actually uses, but the cost to run it (hosting included) is $0.02 per 10 GH. Doing the math at $0.10 per kWh, that would mean GAW is basically charging you at a rate equivalent to roughly 0.83 W/GH.

Basically, if we look at most of the currently shipping Bitcoin ASICs, the best you might get out of them is 0.5 W/GH, so BitFury Group is claiming they will more than double the hashing efficiency, and by the middle of next year they'll double it again. It's not just about efficiency of course -- the initial price will also largely determine whether or not a new ASIC is worth buying, so keep that in mind.

As I've said in the past, the real money makers in the whole Bitcoin Gold Rush are the people selling the mining hardware -- or other services as the case may be. You can't expect them to give the stuff away, obviously, but they're taking a healthy profit in most cases and hitting ROI is sometimes difficult (especially when the manufacturers mine with the hardware for a month or two before shipping to customers). Hopefully the 28nm BitFury parts get to end customers sooner rather than later, as we're getting close to the point where many of the current ASICs are going to have to be retired. Anything worse than about 3 W/GH is now breaking even on power, but really you'd want to be below 1.5 W/GH to keep mining viable -- and if you pay more for electricity (like $0.30 per kWh), you'd be breaking even at just 1 W/GH!

Anyway, for those thinking the current levels of efficiency were the end of the road for Bitcoin ASICs, there's still plenty of room left for optimizations. The first wave is now over (and probably the second and third as well), and the focus is now on refining designs rather than just getting them out the door. It's going to be interesting to see what sort of pricing we get on the next generation of ASICs, but we're still a few months away it looks like.

Monday, September 15, 2014

ZeusMiner Volcano ASIC Pre-Order Analysis

Given the current state of affairs, short of GAW Miners turning into a complete scam and evaporating into the annals of cryptocurrency history, it's difficult to imagine anyone really taking the risk on yet another ASIC pre-order. Will we never learn? Well, maybe we can learn a few things, but for now ZeusMiner is still trying to do the pre-order tango. Here's what we know about their next-generation hardware.

ZeusMiner has announced their third generation Scrypt ASIC, the ZeusMiner III, and along with it comes their next generation of hardware. The star of the show is the Volcano, and they're taking pre-orders for the device right now. The specs are at least good on paper, with a promise of 300 MH/s and a power draw of only 1000W. The price is actually pretty good as well: $1699 per ASIC -- and if you're one of the first 500, you'll get another $100 off the price and only pay $1599 (plus shipping, I would assume.) You also get 5MH of "free" mining on the ZeusMiner Cloud.

If you do the math, that works out to $5.33 per MH ($5.66 per MH if you aren't part of the first 500 orders), and you can do whatever you want with the device when it arrives -- you're not locked into cloud mining on a set list of pools. Obviously this would be an awesome product to own today, as it would pay for itself in about a month. The problem is that the current target shipping date is the end of Q4 2014, which means you're looking at late December -- assuming it doesn't slip by a few months, which has happened so many times with cryptocurrency ASICs that it hardly bears mention at this point.

What will things look like come January 2015, which is likely closer to the start date for mining? Predicting the future is always sketchy at best, but let's quickly check the past few months. The difficulty of LTC mining increased about 13% since last month (August 15 at 29290 to September 15 at 33030), but the previous several months saw a far faster ramp: July 15 was 20233 (a 45% increase to August), June was 10886 (86% increase that month), and May was 7740 (40% during the next month). That means the average rate of increase per month is about 44%, but that's perhaps not very meaningful as LTC changes difficulty every ~3.5 days. That means on average the rate of change is "only" 4.3% every adjustment period, so let's take that as a "worst-case" scenario.

If we continue to see such a fast ramp in LTC (Scrypt) difficulty, we're looking at a potential starting LTC difficulty around Christmas of 111,000. At the current prices, your $1600 investment would end up losing $1000 before the ASIC is no longer worth running. Of course, this is pretty much not going to happen, as 300MH per 1000W is far more efficient than a lot of Scrypt ASICs and many older/slower ASICs will have to stop mining before we get to a difficulty of 100K or more. Even the GAW Vaultbreaker is only looking at 750MH per 1500W or so, which means it's about 66% more efficient -- assuming of course that both ASICs hit their targets.

So let's go with a more conservative rate of increase, like maybe just 2% per cycle on average. In that case you're looking at about 1.5 years before the hardware is no longer profitable to run, and you could turn a $1600 investment into a $1600 gain ($3200 total), give or take. The problem of course is that you still have to take the risk and invest $1600, and there are other alternatives.

Right now, $1600 will buy you 76MH worth of Zen Hashlets from GAW Miners. At today's rate, you'd make around $16.50 per day. That could mean you'd have the Hashlets paid off right around the time (best-case) that the Volcano launches, but it would be foolish to expect the Zen Pool to continue paying anywhere near 0.000625 BTC per MH. The problem is that we don't really know what to predict for Zen Pool, as it's "secret", but maybe it's just LTC plus a 50% subsidy from some source. If that's the case, we can actually use the above rate of difficulty increase to estimate how much a Zen Hashlet will make during the coming three months.

Let's assume that instead of 50 LTC per block, a Hashlet gets you the equivalent of 75 LTC per block (to account for the Zen Pool "bonus"). 76 MH will cost $6.08 per day in maintenance fees, and unfortunately at a 2% rate of increase the Zen Hashlet would still be dead (worthless) in 189 days, give or take. But GAW has gone on record as saying that they will ensure Hashlets are always profitable to run, which means at some point they will have to lower the maintenance fees. At $0.06 per MH, you could "profitably" run Zen Hashlets for 245 days or so before they become too expensive to use, but you still wouldn't break even with a 2% per cycle rate of LTC difficulty increase. No, you would need a cost of $0.04 or less per MH to hit ROI -- but basically GAW is again promising exactly that (and more).

Ultimately, the above is all just guesswork. LTC difficulty won't increase at a constant rate, just like BTC difficulty. New hardware will continue to be developed as long as it's profitable to do so, and that may or may not be the case in another year or two. If it becomes unprofitable to develop new hardware, you can also expect difficulty to stabilize, or even take a dive. Basically, it's all one big mess of inter-related variables. Miners will stick with a cryptocurrency and secure the network as long as it's worth their time to do so, and if it's not they'll seek greener pastures and difficulty will drop until it becomes worth mining again.

My general advice then is this: if you don't like GAW Miners for whatever reason (and there are a few options, including the "too good to be true" attitude), what you should try to get is the most efficient ASIC possible for the lowest price possible. Alpha Technologies and KnC are both promising decent efficiency, but neither one has successfully launched a Scrypt ASIC so far, and their prices are far higher. ZeusMiner on the other hand already has two generations of Scrypt ASICs, with a third now in development, so I'd expect their forecast to be reasonably accurate. 300MH at 1000W by December is definitely achievable, and 3.3W per MH should stay profitable on Scrypt mining for a long time. If nothing else, it might be worth hedging your bets by purchasing a Volcano, but that would mean you have $1600 available for such ventures. Personally, I think I'll sit this one out, mostly because the theft of several thousand dollars worth of BTC still stings.

Saturday, September 13, 2014

GAW Miner Updates: Hashlet Prime Gets HashBoost, Legendary Hashlets

This is my final update on GAW Miners / ZenMiner for the day, I promise! Along with the new Hashlet Exchange and the removal of the NiceHash Pool/Hashlets, there are two more items to cover. First is a new feature for Hashlet Prime, and second is the introduction of Legendary Hashlets. (GAW's CEO must be a gamer or something for that one... "Dude, I got me some epic Hashlets!")

For Hashlet Prime, GAW has introduced HashBoost, a feature that allows you to double the hash rate on your Hashlet Prime for a small amount of time. How long is a "small amount of time"? Apparently it's 30 minutes, but "sometimes it may be able to Boost for much longer" and you can do it twice per day. On the one hand that means you have to go check your account at ZenMiner twice per day, but at the same time I think most of us do that at least once per day, and it's certainly not going to hurt to have this extra feature.

Along with enabling HashBoost, it's also worth pointing out that the cost of Hashlet Prime has increased yet again. Seriously, this is getting a bit ridiculous! The original Hashlet was $14.95 and then Hashlet was changed into Hashlet Solo and the price for Hashlet Prime wen't up to $39.95. At that price, you could have 24/7 boost and it would basically only equal the profitability of mining with a Zen Hashlet. With the normal rate of returns it used to take about six months to hit ROI on the Hashlet Prime, and now we're looking at more like seven or eight months. If you had an original Hashlet that was converted into Prime, great, but for everyone else I just don't see the draw of Prime. Sorry....

Getting on to the second item, Legendary Hashlets are an interesting idea that might see some friendly competition/collection creating higher prices for certain Hashlets over time. The first Legendary Hashlet was available until yesterday, the Remember Hashlet. The price and features of Remember are identical to the regular Zen Hashlet, but it has a different logo and there were only 500 MH worth of Hashlets available. With the announcement of the Hashlet market (which maybe isn't actually live yet), I could see some people potentially paying a lot of money to collect these rare "Legendary" Hashlets. In fact, I'm a little sad I didn't have the guts to jump on the offer when I saw it yesterday morning.

I logged in to check my balance as usual after getting up, and I saw the new Remember Hashlet for sale. My first thought was "What is this?" I then read about it and I had about 1 BTC sitting in my account that I could have used to buy 25 MH. But I thought, "No, I don't need to worry about some silly collectible Hashlet" and went off to breakfast. While eating I changed my mind, but by the time I returned to my PC an hour or so later the Remember Hashlet was no longer available. It's going to be interesting to see what happens to the pricing on Legendary Hashlets over time, and I definitely think limiting each to 500 MH is a great way to increase the trading value. Will that be enough? Time will tell.

Anyway, the breakdown of the Hashlets right now is still pretty much the same as before: Zen Hashlet (and the LTC Pool, though that's for ASICs and not for Hashlets) is the top paying option. After maintenance fees it's currently earning about $0.22 per day. The current price is $20.95 per MH with ROI estimated at three months (95 days), give or take -- and if the price of BTC or the pay rate of Zen Pool drops, the time goes up, obviously. The other Solo Hashlets are far more prone to variation. Let's quickly take each one in turn.

Clever Hashlet costs $16.95 and is averaging around 0.00045 BTC per MH for the past week and 0.00041 for the past two weeks. That's equal to $0.117-$0.136 per day after fees, so ROI at that rate is 125-145 days. Multi Hashlet costs $15.95 and is averaging around 0.00039 BTC per MH for the past week (and the same for two weeks). That's equal to $0.107 per day after fees, so ROI at that rate is 149 days. Last but not least, Waffle Hashlet costs $17.95 and is averaging around 0.00037 BTC per MH for the past week and 0.00040 for the past two weeks, It's clearly the riskiest of the lot and right now it's not paying off, at only $0.098-$0.112 per day after fees. ROI ends up being 160-183 days (including the $0.08 in maintenance fees per MH).

For non-Scrypt people, Hashlet Genesis costs $9.95 and is averaging around 0.00018 BTC per 10 GH, which after the $0.02 per 10 GH in fees works out to just $0.066 per day. That's still better than the some of the Solo Scrypt Hashlets, though, as ROI at that rate is 150 days, and BTC tends to be a bit more predictable than Scrypt in my opinion.

And hey, let's not leave out Hashlet Prime. Assuming you actually log in and use HashBoost twice per day for one hour of increased hashing rate total, you basically get about 4.2% more BTC per day than before HashBoost was introduced. Since Zen Pool is currently the highest paying option, you're looking at 0.00066 BTC per day per MH, or around $0.237 after fees. Now that the price is $49.95, though, it's looking like 211 days to hit ROI. I can pretty much guarantee that prices and difficulty and such will fluctuate enough that you won't get 0.00066 BTC per day for that long. On the other hand, perhaps GAW will add other features to Hashlet Prime that will enable it to hit ROI faster; I don't have enough confidence that I'm buying any Primes, but it could happen.

By the way, GAW also continues to sell Cloud Hosting enabled ASICs, though the only one left at this point is the ZeusMiner Thunder X6. That's now priced at $449.95 for 18-20 MH, so if you're wondering the best you could do with that ASIC is about $22.49 per MH. The maintenance fee is lower, however -- $0.055 per MH if you actually average 20 MH -- and if you put that on Zen / LTC Pool right now you'd get $0.247 per day after fees, and the first month would be no fees ($0.302 per day). ROI estimate is 84-90 days depending on whether the ASIC does closer to 18 or closer to 20 MH, but the net result is that it's a bit more flexible than a Hashlet in some ways and can basically match the ROI time frame of Zen Hashlet, but it's only available in larger chunks and there's less of a long-term guarantee. I'm still pretty please overall with my Lightning X6 purchase, but that was obviously a better deal at 40-42 MH for $775, with maintenance fees of ~$0.06 per MH.

GAW Miners / ZenMiner Drops NiceHash, Adds LTC Pool

Coming up next in my list of updates for GAW Miners and following on the news of the new Hashlet Exchange, GAW has decided to drop NiceHash from their list of supported pools. I'm not sure of the exact reasons behind the change (variability in payouts and not having enough work available are the two most likely reasons), but NiceHash was my choice of pool for my ZeusMiner Lightning X6 ASICs that I bought a bit over a month ago, and next to the Zen Pool it has been the highest average pay rate as far as I can tell.

With the removal of NiceHash, GAW has chosen to convert Nice Hashlets over to Zen Hashlets for free -- which means a higher payout rate and the Zen Hashlet is normally $2 more than the Nice Hashlet, so it's a double bonus. Well, the goodness didn't end there apparently, as my X6 Lightning ASICs are also now on Zen Pool. I can change them to other pools if I want, but I'm not sure I can change them back so I'm leaving them on ZenPool. (It's paying about 50% more than NiceHash most of the time, which is...nice.)

Besides the removal of the NiceHash pool, GAW also added a new pool: LTC Pool. I'm not sure which pool this is supposed to be, but the pay rate oddly enough is the same as for mining on ZenPool. What confuses me here is that it's simple to calculate the pay rate for mining LTC, and it's nowhere near 0.0006 BTC as far as I can tell. Maybe there are some merge-mining coin out there and combined with LTC the rate can get up to 0.00063 BTC, or maybe LTC Pool isn't actually mining LTC.

Either way, I'm quite happy to now have an extra 84 MH of "free" mining on ZenPool instead of NiceHash. So far the GAW Miners experiment has been a real success from my end, and what I'm learning is that the more that time passes, the happier I am to have bought in sooner rather than later. I keep expecting a big change to come where I think, "Dang -- if only I had waited!" But it hasn't happened yet, and -- knock on wood -- hopefully it never does. Combined with the ability to sell Hashlets for 80% of their current price, things are looking pretty good.

ZenMiner Changes: Buying and Selling Hashlets

I have a couple updates on the ZenMiner/GAW Hashlet situation, but rather than combining them into one post I wanted to take them in turn. The first and potentially biggest news is that ZenMiner now supports the buying and selling of Hashlets. Along with this change is the ability to split a Hashlet in two (e.g. so you don't have to sell all of your Hashlets at once, assuming you have one big Hashlet). It's a nice feature to have, but there are many elements to discuss.

First, it obviously wouldn't make much sense for someone to pay more for a Hashlet than the going rate on GAWMiners (or the ZenMiner Cloud), so that's effectively the highest price anyone would want to pay. But if you could sell at any price it might be bad for GAW's business. The result is that if you want to sell a Hashlet (at least through the ZenMiner Cloud), you don't actually get to name your price: it's 80% of the going rate as far as I can tell. GAW_CEO has a post on the subject if you're interested.

Now one of the points I want to make is that there's a suggestion from Josh (CEO of GAW) that they're taking a hit to their bottom line by offering this feature. Well, that's only sort of true. You see, as far as I can tell you can't actually buy Hashlets at the lower prices -- that or there's just no one selling? It's not like you can open up the Hashlet Exchange and see buy/sell offers, since there's apparently only one price. Thus, if you sell a Hashlet for 80% of the current price -- which you can apparently do at any time -- when someone actually buys that Hashlet they would be paying the normal price and GAW would get 20%.

I'm not saying this is bad, but unless I'm missing something this doesn't appear to be the normal trading service people might think it should be. Again, it's entirely possible that the problem is no one is selling Hashlets right now (I know I'm not!), but maybe that will change in a few weeks. Right now the rate of returns is about 30% ROI per month, so potentially you can just go buy a Hashlet, mine for a month, then sell it and you've pulled in 10% earnings in a "safe" manner. Of course if you hold the Hashlet and mine for another month (assuming the price doesn't tank), you'd earn ~40% in two months, ~70% in three months, or ~100% in four months....

You're also free to sell your Hashlets through other means I believe -- worst-case you'd have to give someone your ZenMiner account for this to work, but you could certainly do so. Maybe there's a way to assign a Hashlet to another user, but if so I don't know where that feature is. If you've bought into Hashlets, though, I'm not sure what would cause you to suddenly change your outlooks so drastically that you decide to "cut your losses" right now.

Friday, September 5, 2014

GAW Genesis Hashlet: ROI and Analysis

In a move that should surprise pretty much nobody, GAW Miners has added a new Hashlet: the Genesis Hashlet. What might surprise you is the pricing, which is actually better than pretty much any other SHA256 ASIC right now. The cost is $9.95 per 10GH, so if you do the math that works out to less than $3000 for 3000 GH/s. Exactly how cheap is that? Well, KnC is offering pre-orders for their third batch Neptune ASICs for $5995 per Neptune, and each Neptune will do around 3000 GH. You'll also need to wait months to get that Neptune up and running, so you're basically paying half what KnC is charging and getting immediate hashing power. Wow, just wow.

That leaves you now with the choice of seven different Hashlets now: five for the Scrypt multi-pools, Hashlet Prime, and now the first SHA256 Hashlet. Interestingly, Hashlet Prime is now showing the option to mine Scrypt and SHA256. It's not enabled yet, but basically a Hashlet Prime can be switched between Scrypt and SHA256 starting next week. Which sounds nice and all, but come one: twice the price of the regular Zen Hashlet means you could buy two Genesis Hashlets and one Zen Hashlet for the cost of a Hashlet Prime.

GAW has made a few other noteworthy updates today as well: for one, you can finally merge Hashlets (which is great, because I'm tired of having five Hashlets ranging from 1MH up to 100MH). And you now get a 5% discount on purchases made through the auto-buy program. But here's where things are a bit odd again: did you know that buying a Zen Hashlet at ZenMiner actually cost $21.95 yesterday, but it was $20.95 if you bought it through GAW? Oops. At least they fixed that problem. So now you can buy Hashlets at ZenMiner, and if you use the "auto-purchase" feature you can actually get the Zen Hashlet for around $19.90 per MH.

Let's quickly end with ROI. The Genesis Hashlets will do 10GH with a cost of $0.02 per day, so at the current difficulty you're looking at around $0.07 in profit per day per 10GH. Over a month, that works out to $2.38 in profit, though of course difficulty isn't going to stay where it's at for more than two weeks. That means the ROI for a Genesis Hashlet isn't actually that great: it's over four months (probably closer to six with difficulty increases, unless BTC prices go up) to break even.

And that, my dear readers, is why no one in their right mind is gobbling up Bitcoin ASICs these days. Even the best price that you can find is still only a moderately safe investment. Certainly GAW deserves kudos for breaking the stranglehold that other ASIC manufacturers have held on the market, and they're apparently not out there mining for months on equipment that people have paid for before shipping it to the customer. Even so, the Scrypt Hashlets are still a better bet. Or really, the Zen Hashlet is the one you want, as $20.95 per 1MH (or $19.90 if you make the purchase through ZenMiner using auto-purchase) will net you $0.225 per day in profit, which means if the current returns continue you'll hit ROI in just over three months.

Of course if you want to put it another way, for your investment in a Genesis Hashlet, you will generate returns of around 0.8% per day (declining over time). How's that for crazy talk? Could you imagine someone coming up to you and saying, "I can honestly give you returns of 0.8% per day on any money you give me. You don't get the principle back, but you'll basically break even in four months, and get around a 100% increase at the end of a year." And as good as that sounds (almost "too good to be true", right?), for your investment in a Zen Hashlet you receive returns of around 1.07% per day, which means potentially a 200% return on the year. Maybe that's "pie in the sky" talk, but if I don't make ROI on my Zen Hashlets in four months I will be shocked (and dismayed).

In other news, I should also mention that not only did I not finish paying for that Alpha Technologies 250MH ASIC that may or may not ship this month, but I just bought the same amount of hashing power in Zen Hashlets for about half the total price of a Viper, and I'm already hashing away. Plus, the payout rate on ZenPool is frequently 50% higher than any other multi-pool, and I don't have to try and figure out which Scrypt coin/pool to mine all the time. It's awesome.

But there's actually a sad story to relate as well. I had given a friend 6 BTC to complete our purchase of the Viper back in late June or early July. Well, he hadn't returned the BTC yet, and then yesterday someone apparently hacked into his computer, got on Bittrex, and cashed out of both his and my BTC for the Viper. Damn hacker scum -- looks like they did it through TeamViewer, which he had running. How they got his ID and password I don't know, but I'm no longer leaving TeamViewer running 24/7 on my PCs that have access to my cryptocurrency information. Thank goodness I'm still way ahead on Bitcoin/cryptocurrencies overall, but Alpha Technologies ended up being a $10,000 loss for my friend and me. This is 100% the last time I ever do a pre-order of an ASIC.

And yes, I am a GAW Affiliate, so if you use my links to buy any Hashlets at GAW I'll get a small commission. If you're interested in Hashlets, please consider supporting me by shopping via my links!