Thursday, October 30, 2014

Predicting Difficulty, ROI, and Price of BTC

If you read that title and your first thought was, "Anyone that can do those three things accurately is guaranteed to make a ton of money!" Well, you're absolutely right... and your next thought was probably something along the lines of, "Too bad most of that stuff boils down to pseudo-science and lame charts that are wrong 90% of the time," again, you're right.

One of my recent posts basically had a couple of people call me out and say something to the effect of, "But Jarred, you're not even factoring in the increasing difficulty of BTC mining for your calculations, so they're all wrong!" To which I responded, effectively, "Yes, and I didn't factor in price either."

Of course course the difficulty of mining BTC -- or any other cryptocurrency -- changes the ROI prospects. The price of the target cryptocurrency likewise changes ROI prospects. Factoring in both of these is basically... well, at best it's just pure guesswork, and so I've stopped bothering. At this point, we should all know that difficulty and pricing for cryptocurrencies change regularly, but there's no telling what they'll actually do.

I've said before that difficulty follows price, but that's only part of the equation. Difficulty follows price as well as hardware efficiency, with other less significant factors also playing a role. BTC has had steadily increasing difficulties every cycle for so long that everyone seems to have forgotten that at one point, the difficulty actually plummeted! It did so right after the first big crash from $30 to $2. At some point it will almost certainly happen again, so if you're really smart you'll sell all of your Bitcoin right before the next big crash and then buy back in at the bottom so you can make tons of money. (Good luck doing that, by the way.)

So again: difficulty basically follows price as well as the efficiency of the hardware, and unless you can predict both accurately, any guess at difficulty is just that: a guess. Let me give you some great examples.

If we look at April to October 2013; the average increase in difficulty for BTC was 22% per cycle (a bit less than every 12 days). Then if we look at the next six months, October 2013 to April 2014, the increase per cycle averaged 25% (with a few instances where it jumped more than 40%). Wow, difficulty never stops increasing, right? But then we go the the past six months (April 2014 to October 2014) and the average increase is now only 12.5%. More importantly perhaps, look at just the last month where difficulty only increased 7% per cycle -- or the last two increases of 1% and 3%!

The reason the difficulty increases have fallen is that the price of Bitcoin has trended down lately (about the lowest it's been since a year ago), coupled with the fact that there's not really any more efficient SHA256 ASIC hardware coming online right now. As I've pointed out previously, the best SHA256 ASICs are doing something like 0.5W per GH, and in the not too distant future (~3 months?) we might see 0.25W per GH... but the next bump after could be much further out and eventually we might only get 0.1W per GH before we basically are stuck following Moore's Curves. That means the efficiency will be very difficult to improve without a process technology shrink, those only come every two years or so now, and in many cases a process shrink only improves efficiency by 30% (or maybe 50%).

We might see some other "tricks" where companies focus on making truly efficient ASIC designs and get a boost without a process shrink (e.g. look at NVIDIA's recent GM204 launch, where they increased performance and reduced power use while staying on the same 28nm process technology), but given SHA256 hashing isn't really all that complex I wouldn't expect major breakthroughs going forward.

Short summary: difficulty increases in Bitcoin are going to slow down, and at some point we'll even see difficulty decrease. That will happen when the price and difficulty make it unprofitable to continue mining for a bunch of ASICs, at which point they get shut down (just like my AntMiner S2 ASICs are now resting peacefully). The only thing that will get those ASICs turned back on is higher BTC prices to compensate for their power use. And if we see a massive jump in Bitcoin prices to $10,000 or whatever, you can bet that difficulty will skyrocket as well.

I of course make no claims of being able to accurately predict the future difficulty or price of Bitcoin, so when I say "best-case, the current ROI for buying a Hashlet Prime is 429 days", that means that if you buy a Hashlet Prime at $34 from the Hash Market and Bitcoin stays at $338 with difficulty also staying static (which means the payouts stay at 0.0003 BTC per MH, plus 50% for Double Dipping), you'd need 429 days to break even. If the payouts drop the time to ROI will increase, and if the price of BTC goes up the time will decrease.

Hopefully that clears things up.

Tuesday, October 28, 2014

Hash Profit: Free 200KH/s Test

So here's an interesting one for you: Hash Profit is claiming that through a variety of coin mining algorithms, they're able to pay a whopping 0.00698 BTC per 1000 KH per day. What's more, there's an option to get a free 200 KH/s for seven days as a trial. And since it's free, I figure why not give it a try?

There are a couple options. One is that they've misplaced a decimal point (which would be crazy, since this should be based on running some calculations and automatically generating a figure, not manually updating a field). The other is more likely: they're not talking about Scrypt MH/s or any number of other algorithms, so in fact their 0.00698 "MH/s" rate is some apparently arbitrary number that they've come up with.

I'll report back tomorrow with the actual daily returns. It looks like the free 200 KH for seven days will net you about 0.01 BTC by the end of the week at the current rates. So basically, for signing up you get a free $3.50 or so of Bitcoin; I suppose there are worse ways to spend your time. :-)

In the meantime, if you're wondering, the price for 1 MH/s (1000 KH/s) is currently 1.28457 BTC, which explains the apparently crazy returns per MH. See, if you're earning 0.00698 BTC per day off of a 1.28457 BTC investment, you're time to ROI is 184 days. Six months to hit ROI would be great on most investments, but in the world of cryptocurrencies there are far too many companies that don't last that long.

Still, if you're interested in something other than GAW or LTC Gear, you could give Hash Profit a shot.

Introducing HashPool: More HashPoints, Free Genesis Hashlets

There was another pretty interesting announcement last week that may have slipped under the radar for some of you: GAW introduced HashPool, a new mining pool for Hashlet Prime -- and eventually for Zen Hashlets as well. The pool basically works the same as ZenPool, only instead of paying out in BTC it pays out in... HashPoints.

Remember a couple weeks back when the value of HashPoints was redefined from 100 Satoshi to $0.01? Well, that makes it possible to do what GAW is doing today, in that you can choose to mine the HashPoint Pool (or HashPool, depending on where you're looking at the name) and get paid in HashPoints instead of BTC. That in and of itself isn't particularly interesting, but the second aspect of the announcement holds more weight: if you mine on the HashPoint Pool, you will not have to pay maintenance fees!

That might sound a bit too good to be true, and perhaps it is, so let me explain this in more detail. Right now, while HashPoints are defined has having a value of one cent each, the only place you can currently use HashPoints... is nowhere, though presumably in the near future you'll be able to use them on the Hash Market. So, by mining at the HashPoint Pool, you are essentially agreeing to keep all of your "earnings" with GAW, currently in the form of HashPoints (in the hope of these being worth something more tangible in the future).

If you believe GAW will do "amazing things (TM)" with HashPoints in the near future, HashPoint Pool is absolutely awesome. Let me give you some numbers to explain why. Let's say you previously had an auto-buy of Zen Hashlet set up, so you get a 5% discount over the regular price. Based on my results yesterday, ZenPool paid out around 0.000378 BTC per MH (around $0.134 per MH), and then you have to pay a maintenance fee of $0.08 per MH, bringing your income down to $0.054 per MH. That's ROI of about 315 days if you're wondering, including the 5% discount.

Compare that with HashPoints: yesterday I received a payout of around 16 HashPoints per MH, with no maintenance. So in other words, the rate is theoretically three times higher (give or take) than being paid in BTC and using that to buy Hashlets. (Again, you'd be buying them at some time in the future when they're enabled on the Hash Market.)

Okay, let's step back for a minute and point out the other elephant in the corner: with the Hash Market now fully functional (as far as I can tell), no one in their right mind would pay $17.95 for a Zen Hashlet, or even $17.05. The current going rate is around $13.65, so with HashPoints you're looking at being able to buy one Zen Hashlet every 85 days. That's not "ROI" however, as in 85 days there's no guarantee you can sell the Zen Hashlet for your original purchase price. You also can't mine on the HashPoints Pool with a Zen Hashlet ("yet"), so until that happens I wouldn't necessarily recommend funneling your HashPoints into Zen Hashlets.

Hashlet Prime on the other hand is fully working with HashPoints Pool, and the Hash Market has those available in reasonable quantities for around $37 (give or take), plus you can still use the Double Dipping boost. In that case, ROI is in roughly 195 days at the current rates, but perhaps more importantly you can accrue Hashlet Primes for the future, which will likely hold more value as HashBase comes online. I guess we'll see....

To summarize: first we need to be able to use HashPoints for something -- anything! -- and second we need to be able to switch Zen Hashlets to the HashPoint pool.

Also, there's one final interesting tidbit: all new accounts at Zen Miner will receive a free Genesis Hashlet just for signing up. If you need an invite, drop me an email and I'll send you a code. (And if you decide to buy more hardware, I guess I get a commission, so please ask me for a code if you're interested in trying out mining!)

GAW's HashCoin Pre-Announcement

GAW's CEO Josh Garza noted a few weeks back that they were working to create a new coin, but other than that there wasn't much information to go off of. Now, Josh has spilled the beans (or at least, some of them) and while there's definitely some hyperbole it does sound promising. We don't know much about the algorithm(s) behind the coin, but it does have a name: HashCoin. It also has a faux-credit card to go with it, apparently:
There's little to say about whether or not the credit card will be widely accepted, so let's just pass on that for now and assume it's mostly a way to drum up hype and support. More importantly is the discussion of what has been going on in preparation for HashCoin:
HashCoin is what we've been working on for months, under Project Prime. It is, I’m confident to say, the single biggest advancement for cryptocurrency since the original Bitcoin white paper. We are working with some of the largest brands in the world. And, we will serve it up with HashBase. It is the base of the system. It will bring mining, coin management, blockchain explorer, community, and purchasing together.

HashBase will allow you to mine a coin, search for a product, see search results from Target/Walmart/Amazon/Macy’s, and buy on the spot. A few days later, the product shows up at your door. And, in case you’re all wondering. We are having an ICO very soon. Our initial ICO round will happen in the next 2-3 weeks. Our minimum investment floor is 1 million USD, and the line of investors and banks is forming.
Okay, there's still not a lot to go on right now, but GAW does have the potential to back an IPO/ICO-style coin with some serious money and power, and we could finally see some form of PoW/PoS coin that does end up being a giant scam/failure. There's a separate part to this announcement that goes into more detail on HashPoints if you're interested.

Monday, October 20, 2014

GAW Hashlets: New ROI Projections

Among the chaos of the past week, something else sort of slipped by that people only peripherally noticed. Along with the dropping payouts from Multipool (Multi Hashlet), Zen Pool and Zen Hashlet payouts also took a major hit. For a long time they were paying 0.0006 BTC per MH (give or take), which was almost twice the rate from straight LTC mining; starting last week the rates have dropped and can often be around the level of the other Hashlets (or even less on some days).

Yesterday (10/19) for example, the Zen Hashlet rate was 0.00035783 BTC, which is actually less than the rate of Multi Hashlet for the day. LTC Pool is even lower, and is now paying about what you'd expect from straight LTC mining: 0.00028424 BTC per MH for the day. The rates from all of the other Hashlets have fluctuated quite a bit, but up until now Zen Hashlet was pretty constant.

I haven't purchased any of the other Hashlets (I have some Primes from my Lightning X6 conversion, but otherwise all I own is Zen Hashlets), but most of those are publicly available anyway. So let's look at the last week of payouts from Zen Hashlet and the other Solo Hashlets -- this is based on my ~350MH of Zen Hashlets:


The interesting thing is that, based on my own personal results (which may not be the same as others, though I haven't been doing anything with the Zen Hashlets other than mining), it looks like the average profitability of the last week for Zen Pool is 0.00052 BTC/MH. If you're wondering, for the first twelve days of October, the average profitability of the same Hashlets was 0.000659 BTC/MH, so Zen Hashlet profitability dropped 21% this past week. Second place goes to Multipool (0.00033 BTC/MH) and Waffle is basically the same (0.000323 BTC/MH). The least profitable Hashlet right now is Wafflepool (0.000303 BTC/MH), but all three are close enough that I wouldn't draw any long-term conclusions based off just one week of data.

Okay, with the above in mind, let's take a look at ROI based on the seven day average payouts from last week. Note that Hashlet Prime can do Double Dipping, but you're no longer getting 1.5x Zen Hashlet as LTC Pool and Zen Pool have decoupled. If you use Zen as the primary and Multi as the secondary, on average you'll get about 0.00069 BTC/MH. So how do the Hashlets look now?

ASIC Price Daily BTC Daily
USD
Maintenance Daily
Net
Estimated
Days to ROI
CleverHashlet $15.95 0.00030275 $0.12 $0.08 $0.04 444
WaffleHashlet $16.95 0.00032284 $0.12 $0.08 $0.04 388
MultiHashlet $14.95 0.00033006 $0.13 $0.08 $0.05 322
ZenHashlet $17.95 0.00052355 $0.20 $0.08 $0.12 149
HashletPrime $49.95 0.00068858 $0.26 $0.08 $0.18 272
HashletGenesis $7.95 0.0001437 $0.06 $0.02 $0.04 227

Well, I suppose it could be worse. ROI for Zen Hashlet remains at roughly 150 days with the reduced price. Interestingly, Hashlet Genesis actually comes in second place overall, with an ROI of 227 days (though I'd expect profitability to drop a bit more with Genesis compared to the Scrypt ASICs). Third place overall is now Hashlet Prime, which of course can't be purchased through GAW, but you can currently find them for $40-$41 on the Hash Market (which would actually put them into second place with an ROI of 222 days).

Given the similar performance from Multi Hashlet, Waffle Hashlet, and Clever Hashlet, the base price has a big impact on the ROI -- Multi ends up the "best" at 322 days, with Waffle coming in next and Clever placing a distant last. If you buy on the Hash Market, you can get substantially lower prices -- basically a lot of people are pulling out of the Solo Hashlets. Going prices right now are $11.50 for Clever Hashlet, $12.60 for Waffle Hashlet, $10 (sometimes less) for Multi Hashlet, $16.22 for Zen Hashlet, and $6 for Hashlet Genesis.

Ultimately, even at the lower market prices Clever and Waffle Hashlets have an ROI of close to a year (at current rates), which is more than I'd trust any of the Bitcoin companies to stay in business to be frank. Some will of course stick around, but there's a reason so many Bitcoin startups have folded in the past couple of years, and with a track record of less than six months and numerous bugs still cropping up, GAW certainly isn't a "sure thing" right now.

So if now GAW then who would be the best bet? Honestly, I don't know. LTCGear had a great sale, so good that it was temporarily out of stock; the ASIC share1K6X is back now, but the coupon is gone so you're looking at $1805 for 160MH for one year. It's a bit better ROI than Zen Hashlet (about 105 days best-case), so it's probably your best bet. Zeushash meanwhile is charging $15.99 per Scrypt MH, so slightly more than GAW, with maintenance fees of $0.059 per MH (slightly less than GAW). As far as I can tell they're just paying out straight LTC mining rates, so ROI is currently looking at 330 days.

GAW and ZenMiner: Creating and Fixing Bugs

In case you've missed it, there's been a ton of ZenMiner/GAW craziness the past week. The short summary is that GAW rolled out an update that allowed the selling of Hashlet Prime (finally), along with a few other modifications. In the process, Hashlet Prime was also made available for purchase again ("Oops! It was a bug!" -- never mind the winking smiley face from jmordica and talk earlier that day saying Primes would be brought back on the market for a short time), but more importantly there was a glitch where buyers would sometimes get a 5MH or 25MH Prime instead of a 1MH Prime.

Some people figured out how to work the system to buy these "discounted" Primes, and they flooded the market with low-cost Primes, purchased more of the glitched codes, etc. The result was that they ended up shutting down ZenMiner along with Hashtalk while they worked through everything in order to roll back purchases -- and there were plenty of locked user accounts and such to go along with the mayhem. It looks like things are mostly back to "normal" now, and for many users (including me) the impact wasn't too significant. Still, this is part of the bigger problem GAW faces.

In short, the schedule of releases and the testing of the software continues to be far too chaotic. When you say you're removing a product from the market and then it comes back, that creates confusion and unhappy customers. Quite a few users for instance bought $70 Primes after the "no more Primes" announcement, only to find that twelve hours later $50 Primes were back -- maybe only temporarily, but still, that's a horrible form of "service".

There's talk of better testing going forward, with community members becoming part of a closed beta, but that's not really a proper solution. The fact that so many bugs have slipped through simply means there are not enough paid developers and testers to keep up the schedule GAW is trying to enforce, and adding more users and features only exacerbates the problem.

It reminds me of a horrible software developer position I had for a couple years back in the late 90s; the CEO would come visit our office about once a month, and every time he stopped by he had some awesome new "vision" of what sort of software we needed to make. He would give us a rough outline that we'd spend two or three weeks trying to formalize, then we'd start working on some early prototypes, and a week or two later he'd look at the prototypes and say, effectively, "That looks great; now let's add some other cool features...." It was developer hell, and nothing ever got finished. Over the course of a year the products we were working on became increasingly buggy and unstable, our working hours skyrocketed, and by the end of my time there people were ready to leave in a mass exodus. Oh, and the company never actually shipped a single piece of working software.

GAW has the benefit of working in the web space and selling something that people are already using, but rather than continually promising new features it would be of great benefit to actually get all of the current features working properly, and then slowly add one or two items at a time, thoroughly testing each one. And make sure when things are supposed to be deactivated, they don't come back -- or things that should be activated stay working. Otherwise, in another year the whole platform powering "HashBase" or whatever will be a complete mess, hackers will make off with tons of Bitcoins, and the company will fade into the annals of Bitcoin oblivion.

Tuesday, October 14, 2014

Farewell, MintPal? The Alt-Coin Apocalypse Continues

I haven't been doing much on most of the exchanges lately. With the alt-coin apocalypse, so many of the coins that have been traded quickly became more or less "worthless", so I consolidated all of my holdings primarily into BTC and called it a day. I'm also basically done with GPU mining, as the best returns only just pay for power and may a bit extra.

Anyway, I just saw today that MintPal, one of the more well-known cryptocurrency exchanges (and by no means one of the best, as they've had hacks/problems in the past) is apparently going away. Well, maybe not quite, but the managing company is filing for bankruptcy and they've "sourced a new management team" for the site. There have apparently been some additional problems with missing/lost balances over at MintPal, and if that's the true I can see how that could quickly lead to closing shop at this stage.

On that note, with so many alt-coins basically dying and becoming worthless, I suspect we'll see something similar happen with many of the exchanges that primarily deal in alt-coins. Again, I've pulled my coins off of all of the exchanges (well, except for coins that are basically worthless -- the exchanges can keep those if they'd like), and I'd strongly suggest others do likewise.

For that matter, if you're in Bitcoin for the long haul, you might want to just move your coins into cold storage rather than trusting Coinbase or any of the other big names with your holdings. I haven't gone that far yet, mostly because I still do things with my Bitcoins (like buying HashletsASICs and other goods), but better safe than sorry. And if a company you're doing business with seems to be acting a bit crazy, perhaps it's because they are?

GAW Post-Vegas Wrap-Up: HashPoints, Multi Hashlet, Vegas Legendary, etc.

This is an addendum to yesterday's post, as I apparently missed this note from GAW. It seems to suggest that some of the "missing" items I listed yesterday are actually implemented, but I'm not sure how everything works. I'll be investigating a bit more, but here's the short scoop:
  1. HashPoints are now worth $0.01 each (and existing HashPoints were converted based on that rate, so if you had 15,000 HashPoints worth 100 Satoshi each, you received around 600 of the "new" HashPoints in exchange). I can confirm this happened, as I'm now the proud owner of 705 HashPoints in place of the 17K+ I previously had. This also means upvotes in the Hashtalk community are worth $0.01 (and downvotes also cost you $0.01), so if you're super helpful over there you could potentially make... pennies per day! Or if you're like me you might lose $0.04 per day. My advice is to go upvote everyone you can. Hahaha.... And then watch as the ability to upvote gets taken away or at least limited, unless you're a mod.
  2. In order to keep Multi Hashlet profitable, GAW is increasing the payouts "temporarily". They are guaranteeing a minimum $0.01 per MH payout, so obviously this isn't going to suddenly make ROI a done deal but at least if they do the same thing on all Hashlets you will eventually break even. At $0.01 per day, it will take 1495 days to hit ROI on Multi Hashlet, so worst-case GAW needs to stay in business for four years for you to hit ROI. That also means you're looking at "guaranteed" returns of at least 20% (give or take) per year.
  3. GAW is working on a permanent solution to the Multi Hashlet problem, and I suspect there's a real chance Multi Hashlet could be converted into a different Hashlet at some point. If you're interested in taking a chance on that, it's possible GAW will just convert them into Zen Hashlets (e.g. the most profitable Hashlet Solo), so you could potentially buy Multi Hashlet at $14.95 and see if it gets upgraded to something worth $19.95, but there's no telling exactly what will happen until it actually happens.
  4. Just to be clear, the "always profitable" mantra applies to all Hashlets, so I'd assume the Zen, Waffle, and Clever Hashlets now have the same "earn at least $0.01 per MH per day" policy in effect. Which means GAW is essentially drawing a line in the sand at 0.0002 BTC per day per MH on Hashlets, at least with the current price of $400 for Bitcoins and $0.08 per MH maintenance.
  5. Hashlet Genesis can now be sold on the Hash Market. It wasn't there last night when I looked, but there are now a bunch listed for sale. The lowest price is currently $0.54 per GH for up to 900GH, where Genesis normally costs $0.895 per GH; there are also a bunch more at less than $0.70 per GH. Bottom line is that at the current rates you can earn about 3.7 cents per day in profit for every 10GH of Genesis, or 0.37 cents per GH. That's 146 days to hit ROI at the lowest price of 54 cents per GH, which at least partially explains why Genesis owners are apparently leaving in droves. Oh, and unlike the Zen Pool, the payout rates for the SHA256 pools are pretty much directly correlating with BTC difficulty, so your payouts drop every two weeks on a consistent basis.
  6. Primes are supposed to be able to mine SHA256 now, at a rate of 40GH per 1MH. I'd assume the Amps are also available, which means you can do about 0.0009 BTC per day mining Scrypt coins, or you can switch to SHA256 and mine at a rate of 0.0008622 BTC per day. I don't know how you actually switch (I tried dragging a SHA256 pool onto my Prime and got a "wrong pool type" message, but I'm also currently Double Dipping so that may explain things), but given Scrypt is still more profitable there's not a huge incentive to switch. If this had happened a month ago when BTC difficulty was quite a bit lower, we'd be looking at a very different situation.
  7. Finally, the Vegas Legendary Hashlet was apparently launched, but only 100 were made available. If you thought Remember Hashlets at a price of $90-$100 was rough, well, I suspect Vegas Hashlets will be priced substantially higher. And yes, they do indeed have the same features as Primes. "Gotta catch 'em all!"
I think that's about it for the post-Vegas announcements. The most exciting thing is the talk of Hashlet Primes being allowed on the open market (finally), but we've been hearing about that for more than a month so I'm not holding my breath. Maybe in another two or four weeks that will finally happen, and of course there's still HashBase to look forward to. It's a nice little trail of breadcrumbs from GAW.

Monday, October 13, 2014

GAW to Introduce HashBase, No More New Primes

It's Monday, and GAW is finally done with their big conference. That means all the big names in the company should be back to work, which means we should finally get our refunds for that Thunder X6 snafu from two weeks ago, right? Um, wrong! (Edit: Hey, what do you know -- I got my refund right as I posted this. Hallelujah!) What it actually means is that GAW's CEO is full of more talk and hype for their latest new project, HashBase.

So exactly what is HashBase? As usual, Josh isn't really saying much. It's going to be huge, it will be the best thing ever, and it will put everyone else to shame. Okay, I've heard this sort of talk quite a few times, and what's more, their customer service is a joke. But my Hashlets do continue to pay out a decent number of Bitcoin and they're still set to reach ROI in about three months, so it's not all bad. In fact, as long as you're not waiting for support (or an affiliate payment), and you're not trying to post constructive criticism on Hashtalk, GAW is okay. (Posts like this would definitely get me banned from Hashtalk... again.) That's quite a few caveats, I know, but anyway, back to HashBase.

It will be a new platform that will absorb the current ZenCloud (or if you prefer, the ZenMiner Cloud) platform. It will also initially launch for Hashlet Primes only. There's a ton more hyperbole, but GAW does mention that their new hardware is coming online (yeah, the hardware that should cost something like $0.005 per day per MH in electricity compared to the current stuff that's around $0.06 per MH per day), there are more data centers coming online, and as such they're going to be reducing maintenance fees. When and how much are the two major questions, and my bet is that the answer is "not until we absolutely have to, and not by as much as you'd like."

Other features that will likely come at a later date include X11 mining and mining of other "ASIC proof" algorithms, more HashAmps (e.g. no maintenance Amp will probably launch with HashBase), multiple coin mining, a new coin apparently mineable exclusively via HashBase (Note to GAW: there are already way too many coins!), and "the ability to earn money offering Primes as collateral for loans while still mining with them". Yeah, I have no idea what that last one means, but loans and debt in general are almost never your friends, so tread carefully or you might find that you've lost your Primes that were being held as collateral. You've been warned....

Along with the announcement of HashBase, which is clearly intended to bolster the flagging value of Hashlet Primes, GAW has pulled Hashlet Prime from the market -- no more new Primes. Now the only way to get Primes will be to buy them on the Hash Market. Except, you can't actually do that still, so really there's no way to buy Hashlet Prime right now. But with all the hyperbole, I suspect anyone that previously wanted to sell their Primes will now be taking a "wait and see" approach -- because maybe, just maybe HashBase will be worthy of all the hype. Oh, and at some point Hashlet Prime will also get first access to BTC.com -- and again, we have no idea what will be there.

While we're here, let's also quickly list some of the things that are currently missing:
  1. Still no HashAmps for Solo Hashlets.
  2. Hashlet Prime still can't mine SHA256.
  3. Can't buy/sell Hashlet Prime on the Hash Market.
  4. The new Vegas Legendary Hashlet. (Maybe this is already out there; there are apparently only 100 Vegas Hashlets.)
  5. Remove Shadow banning from Hashtalk (and ban any user that tries to downvote too frequently -- here's a thought: your reputation takes a hit as well for every five downvotes).
  6. Fix the existing code (and test the fixes!) before implementing the "next great thing".
  7. Customer support and refunds.
To be fair, many of the cryptocurrency companies are far worse than GAW when it comes to customer support, warranties, refunds, etc. I should also note that Alpha Technologies is offering to pay out 50% of our investment for missing their ship date of Q3 2014 (and I'm going to take that because 50% is better than nothing). But just because "everyone else" is doing it wrong doesn't make it okay. If you want to build a successful company that will stand the test of time, the first thing you absolutely have to get right is customer support; a great product with terrible support will fail eventually. Oh, you still need a good product as well (great support of a crappy product won't work), but a good product with excellent support trumps a great product with mediocre support almost every time.

Let me just end with a final comment on Hashlet Primes, to put things in proper perspective. Let's say the maintenance fee was just killed completely. It would still require 208 days at the current rate of 0.0006 BTC per MH to break even, or 139 days if you remember to use the Double Dip every single day. Meanwhile, a Zen Hashlet at the current rate can break even in 125 days, with maintenance fees and without any HashAmps. Will we actually see something in HashBase that makes Hashlet Prime truly worth the current $50 per MH price? I think the only way that happens is if at some point GAW does a 2-for-1 split on Primes, which of course isn't going to happen or they'd make all of their Prime owners really mad. Primes will likely hit ROI within the next seven months, at least the $50 Primes will, but there's no way to sustain a $50 price per MH when ASICs that can do 500+ MH are coming online.

Oh, and one final prediction: all future Legendary Hashlets will eventually become equivalent to Primes, if they aren't that way at the start, so "no more new Primes" doesn't really mean "no more Prime equivalents". If you're looking for a Prime, it might be better to just buy as many Legendary Hashlets as you can afford. Then again, if they only release batches of 100 every couple of months, you're not going to have much of a chance to do that.

PS: You can still get Primes on a couple of the GAW reseller pages, specifically HashPros.net and PrimeHashlets; they're now $69.95 per MH (yeah, milk it baby). And if you want to know what's wrong with Hashtalk.org, that right there is your answer. You see, both of those sites are run not just by GAW resellers, but by Hashtalk moderators. Anyone talking negatively about Hashlets on those forums (or perhaps finding a loophole) is just asking for the various moderators/resellers to ban their accounts.

Let me also put it this way: if Primes are going to be so absolutely amazing once HashBase launches, why would these companies be selling at $69.95? That's 3.5 times the price of a Zen Hashlet; does anyone actually think Primes will make 3.5X as much BTC when all is said and done? It's profiteering, plain and simple: let GAW create some hype, then buy low and sell high. At $69.95, these Primes are going for roughly the same cost as a 140MH ASIC selling for $10,000. Would you buy that? Maybe if it shipped this past June, but certainly not today!

Saturday, October 11, 2014

Hashlet Solo Sale and ROI - October 11, 2014

Yesterday was interesting for a couple of reasons; first, GAW announced a sale on the price of Hashlets (it might last a day, or the weekend, or maybe longer -- we'll see), and second the MultiHashlet actually posted negative income over at ZenMiner/GAW.

Starting with the second item, I'm not sure who would really want to mine with one of the other Hashlets, considering the cost and average payout compared to the Zen Hashlet. Of course, that's in a large part due to the overly high payouts from Zen Pool (or LTC Pool). Where is GAW mining that they can possibly do basically twice the pay rate of mining LTC? No one knows, and I for one think GAW may simply be mining with different (more efficient) hardware and paying extra to make Zen Pool look better than the competition. By my estimate, they're paying exactly twice the going rate of LTC mining (give or take a few percent) -- so maybe GAW is stockpiling LTC and hoping the price goes back up to its former high of nearly $50? Anyway, that's a different story; let's talk about the GAW response.

The short of it is that GAW is saying they're going to put "safeguards in place" to prevent negative results in the future. How do they do that? How about this pseudo-code: "if dailypayout < dailymaintenance then dailypayout = dailymaintenance * 1.01". Or in English, they could stick in some code that say "always pay people at least 1% more than the daily maintenance fees". The fix hasn't been implemented yet as far as I can tell, but since GAW is saying we'll always own Hashlets and they'll always be worth mining, they either need to cut the maintenance fees across the line or find a way to at least make them not generate negative income.

Moving on to the other topic, GAW_CEO announced a sale on Hashlets as part of the post-convention hype. To be clear, this is on all Solo Hashlets, not Hashlet Prime, so if you were hoping to pick up the most expensive Hashlet at a discount, sorry to burst your bubble. Anyway, the prices right now at ZenMiner are as follows:

Hashlet Genesis: $8.95 per 10GH ($0.02 maintenance)
Multi Hashlet: $12.95 per 1MH ($0.08 maintenance)
Clever Hashlet: $13.95 per 1MH ($0.08 maintenance)
Waffle Hashlet: $14.95 per 1MH ($0.08 maintenance)
Zen Hashlet: $17.95 per 1MH ($0.08 maintenance)
Hashlet Prime: $49.95 per 1MH ($0.08 maintenance)

Hashlet Genesis and Hashlet Prime are both at their normal prices, but the Hashlet Solos are all being discounted a flat rate of $3. Keep in mind that this is only if you purchase through the ZenMiner Cloud, however, which sucks for those that want to buy with a credit card or some other form of money. And that's about par for the course from GAW. Also, the price for auto-purchase of Hashlets is 5% off, so the actual prices are more like $1-$2 less than normal. But what about earnings potential and ROI?

ZenHashlet has been holding pretty steady at around 0.0006 BTC per MH (give or take a couple percent), and it's by far the top earner. There have been a few occasions where one of the other pools has slightly surpassed Zen Pool for a day, but on average they're nowhere near as profitable. Looking at PoolPicker, the average payout per MH for the past week is:

CleverMining: 0.000336
WafflePool: 0.00032355
Multipool: 0.00031
Straight LTC: 0.00031

How does that work out for daily income and ROI, with and without the sale prices? I've tossed in a reference to LTCGear's annivesary1yr offering as well, just for kicks:

ASIC Price Daily BTC Daily
USD
Maintenance Daily
Net
Estimated
Days to ROI
Clever Hashlet $13.95 0.000336 $0.12 $0.08 $0.04 341
Waffle Hashlet $14.95 0.00032355 $0.12 $0.08 $0.04 410
Multi Hashlet $12.95 0.00031 $0.11 $0.08 $0.03 410
Zen Hashlet $17.95 0.0006 $0.22 $0.08 $0.14 132
Hashlet Prime $49.95 0.0009 $0.32 $0.08 $0.24 205
Hashlet Genesis $8.95 0.0001366 $0.05 $0.02 $0.03 307
LTC Gear $925.00 0.04517 $16.26 $0.00 $16.26 57

So, if you jumped on the awesome LTC Gear sale I mentioned a week or so back, ROI is looking great. If you didn't (for instance, if your BTC was all tied up in missing BTC from X6 ASIC to Hashlet Primes that got "refunded"), you can be sad with me. Outside of that, however, it's pretty clear that only Zen Hashlet and Hashlet Prime are even moderately "safe" investments. I'm giving Prime a 50% payout advantage on the assumption you use Double Dip ever day, which is actually a bit more than you'll really see, but whatever.

And if you're wondering about the Multi Hashlet issues noted earlier, if the maintenance fee was dropped to $0.06, ROI would drop to 225-265 days for the lesser Hashlets, Zen would only go to 115 days, and Prime would be 190 days. I'd say that would be a reasonable deal, but that's not what you can buy right now so basically only Zen Hashlet is even worth considering, and even that is a risk.

Monday, October 6, 2014

Bitcoin Price "Crash" ROI Analysis

Bitcoin's downward slide has continued this week, and we are now hovering around $300. If you thought the ROI analysis for some ASICs and Hashlets was something of a risk before, things are really getting sketchy right now. I'm still bullish long-term, and many companies have invested a lot of money into the Bitcoin block chain this past year, but until buyers decide "now is the time" we're going to continue the current trend. What does that mean for miners? Simply put: it's not good.

When Bitcoin was up around $500, the Zen Hashlet was earning about $0.22 per day after maintenance, which meant it would hit ROI in about 95 days (maybe a bit longer, depending on daily returns from Zen Pool). When the price of Bitcoin dropped to $400, the ROI target naturally moved out: around 131 days at the current rates. Now that we're down to $300, ROI is being pushed out even farther, to 210 days. Seven months to break even on the purchase of a Zen Hashlet? Yeah, that's a bit rough.

And as bad as things are with Zen Hashlet, it's even worse with Hashlet Prime. Even assuming you remember to Double Dip every day (which basically increases your payouts by 50%), the best-case for Prime at $500 per BTC was 135 days to break even ROI. At $400, the target time for ROI gets pushed out to 178 days, and now that we're at $300 per BTC it's way out at 263 days. And that's assuming the 0.0006 BTC per MH per day (plus 50% for Double Dipping) holds, which is more than a little optimistic. Almost nine months to break even with Hashlet Prime makes me wonder who on earth would buy one of these right now.

However, there's an interesting effect due to free Double Dipping on Primes. Let's say things go even farther south and Bitcoin hits $200 again. Zen Hashlet's ROI at that point is 524 days, but Hashlet Prime would actually be better with a target of 500 days. And if you're wondering, the point where Zen Hashlet isn't earning enough to be worth running is a Bitcoin price of around $133.50, whereas Hashlet Prime's halt point would be around $89 -- assuming of course that you always remember to Double Dip, which is unlikely.

Of course GAW's CEO Josh Garza has gone on record many times saying that Hashlets will "always" be profitable -- "Buy it once, own it forever!" If he wants to have ROI for Zen Hashlets stay at less than six months (which is probably a good starting point, since anything longer than that will scare potential customers away considering the risk factor), we're going to have to see either an upturn in Bitcoin prices or a big reduction in maintenance costs for Hashlets.

$0.08 per MH isn't too bad if you're running a Zeusminer X6 that uses about 25W per MH, but even the "failed" Alpha Technologies Viper is looking to be around 8W per MH. If GAW can get enough power efficient ASICs in their data centers to help with mining, they could potentially cut maintenance fees in half -- and in fact, I'd bet they're already averaging more like 10W per MH -- but anything more than that would be dangerous territory. If maintenance fees were to drop to $0.04 per MH, ROI would still be about five months on Zen Hashlet and over seven months on Hashlet Prime.

Not surprisingly, the ROI on other mining options isn't really looking much better. KnC's Titan batch #2 at $7000 for 400 MH would hit ROI in about 160 days (if you could start mining right now). However, if Bitcoin prices dropped to $200 (and Scrypt mining stayed steady at 0.0004 BTC per MH), you could still hit ROI in 250 days. That's about the best-case scenario for next generation Scrypt ASICs, however, so basically if Bitcoin prices don't rebound soon there are going to be a lot of companies and miners going belly up. If that happens, I suspect we'll see even more consolidation of coins and hash rate into the hands of a few major companies that manage to weather the storm.