Risk vs days to breakeven (ROI in mining lingo)


#1

Right now I’m using scrypt.cc a fair amount. It isn’t that there isn’t risks, it is just that the risk to reward ratio is lower than what I’m seeing in other crypto investments. Some people here are using GH mining, GHX and like to imply it is low risk because of the transparency. However when looking into it I have the transparency is really only about the mining and not about how to be profitable, if that is even possible. I concede that the risk of GHX being a scam is vastly lower than scrypt.cc but the time frame needed to achieve a profit is probably over a year, at least with the GHX batch 2.

How long you have to invest in something to get a profit greatly increases the chances of a bad event forcing one to take a loss. The bad event could be related to the investment or personal. Things happen.

Bad events:

  • Personal
  • Scam
  • Business simply fails
  • BTC price soars which leads to greatly increased mining difficulty
  • BTC price tanks which leads to fees that exceed the income
  • Market risks outside of BTC
  • probably a lot more …

The point is, that these can’t be really planned on, although some can be hedged against.

I like numbers, so I going to assign a numbers.

For scrypt.cc - Risk of major bad event per month is 20% in my mind, it has been in business for over 15 months, but the person that makes it work has already had a liver replaced. ROI is 2 months. That gives me a 44% risk that I don’t break even in two months.
1.2^2 = 1.44

For GHX - Risk of a major bad event per month is probably more like 5%, it is unlikely to be a scam, but all other risks are there. Breakeven time is probably at least 10 months. That gives me a risk of 63% that I don’t break even in 10 months, which is 5 times longer than the other investment. (1.05^10) = 1.6289

Pretty much that simple. With GHX I’m seeing higher risk and I only get one spin to get it right. With scrypt.cc it is lower risk right now and I might get up to 5 spins to get it right. So right now that is why scrypt.cc wins. Realistically this is a temporary situation. Things will change and it might look totally different in a month. I reserve the right to change my view if things change. :wink:

I know some don’t care about profit, but from an investment standpoint profit is the most importing concern.


PONZI - Scrypt.cc [shorted payouts, missing MH, the lot]
#2

I look at return as selling what I have and being even but I guess no one else sees it that way. ROI to me means I get my investment back, no profit. I know that’s not everyone but that’s me. I just aim low.


#3

The term ROI really means Return On Investment. It is misused in the crypto mining world and I have no idea how it took on the breakeven meaning. I think many actually use it the way you look at it.


#4

Totally agree. It’s wrong but that’s how it is. I do 100% agree with you.


#5

@dykask You are pulling these numbers out of your ass.


#6

I’m assigning a risk. As an investor that is a common thing to do. The numbers I’m comfortable with may be different than your numbers. That doesn’t mean that either of us is wrong.

Personally I think the risk of GHX is actually higher now that I see that the primary focus isn’t for profit. I didn’t know that until today.


#7

I don’t see how you think that. Being nice and transparent and guessing pools and ads and staking seems like profit minded to me.


#8

You’re not assigning risk, you’re trolling. You’re borrowing the concept of risk management that I put forward in another message and you’re twisting it to fit your pumping or trolling purposes. It’s not a decent attempt at having a discussion, or to contribute to anything: it’s either a weak attempt at trolling or a confrontational attempt to annoy people.


#9

As I mentioned in another thread, I’d like to start an Investment account to compare everyone. Once my family issues are sorted I’ll do it. Hate to beg but I may need some help. If you are actually interested in how this is possible, colored coins work miracles.


#10

You talked about business risks related to information transparency. That is a risk but it is by far the only type of risk.

My concept is completely different and I’ve mentioned the risk is much greater the longer an investment has to be maintained in my posts even weeks ago.

EDIT: I started a separate thread to avoid derailing a discussion. It is beyond me how that can be considered trolling.


#11

sunmoon on bitcointalk did that type of thing well over a year ago and won a lot of repect doing it. It is more geared to altcoins but he created a tracking website. http://cryp.today/

I think there is lot of room for doing that type of thing.

EDIT: I didn’t comment about the color coins. I know GH uses those that does sound really interesting. I just don’t have any experience to draw on.


#12

I have seen that but it is pool based. Cloud Mining that switches pools doesn’t reflect that doesn’t work. And I’d like to add projections.


#13

@dykask cool thread topic :smiley:

So I think perhaps we should look at a break-down of how we determine risk? Perhaps assign a risk factor to multiple items, then just add up the factors that apply for each site? Or perhaps we could make a risk sum then multiply it by a time to break-even to account for the risk of different time periods? Let’s brainstorm, here’s my first take:

  • Operator Failure
  • Bitcoin tanking (always possible)
  • altcoin tanking (single alt)
  • Altcoins tanking (all alts)
  • Scam (ponzi) Risk (classic transparency)
  • Hack/Security Risk (prior incidents could serve as rankings)
  • Equipment Failure (A single DC? Relying on new hardware not on market yet?)
  • New Service (no numbers available)

What else? This may be a better method than just arbitrarily assigning percentages


#14

For scrypt.cc - Risk of major bad event per day is 95% in my mind. I am of the opinion that it could stop paying out and vanish at any second.

For GHX - Risk of a major bad event per month is probably more like 5%. Fair enough I agree with this and is the reason the majority of my BTC is invested here.

For me here are the major points. Any site in which someone is making ROI in 2 months (hell any site making ROI in under 5 months) I figure is shady. This is not to say that a person can not make good on such sites but that there is a significant risk factor inherent while investing in them.

I have invested large sums of BTC at Gethashing and Hashnest since I trust those two sites not to simple vanish and that even if there were to be a “bad event” I expect those sites to do be fair and honest in their attempts to mitigate any bad event and payout what they can. Let me put it this way if I have 100 BTC at sites like Gethashing and Hashnest and things go badly I trust that I will get back a significant portion of that BTC if not all of it. Conversely if I had 100 BTC invested at Scrypt.cc or cloudminr.io and a “bad event” were to occur I expect them to vanish with little to no hope of ever seeing any of the BTC.

In my own investment strategy I put sites into two categories high trust and low trust. Get Hashing and Hashnest are currently my only High trust sites that I am willing to park large sums of BTC at. Hashnest because they are a large manufacturer and have shown time and again to be fair and honest in there dealings with their different investment vehicles. GetHashing because I have been dealing with and have been around most of the GHTeam for a year now which has allowed me to get a feel for how they would morally and ethically act, as well they show a significant knowledge base and technical expertise in both computers and Crypto, The transparency helps a great deal as well :slight_smile: .

Now all that said I have dipped my toe (less than 10 BTC at any one time) into various places like Cloudminr.io and Scrypt.cc as well as other places but they are to my mind risky investments that I go into knowing full well I could lose all if my timing is wrong. I will say Scrypt.cc is better than some places like Cloudminr.io in that you can sell your position on a whim which is some comfort but every time I go in I keep in mind that it could vanish 5 seconds after I throw any BTC in.

Just my two cents on the differences and how I treat these sites where my BTC is concerned.


#15

I think this is a good idea. I’ll be in the mountains this weekend but I would like to see others contributions too. Here is a few before I head to bed.

  • Mining difficultly growing to high
  • Internal market risks where there are markets. (Getting caught on the wrong side of market manipulation)
  • Software Bugs related to a site
  • Natural disasters (Earthquake, typhoon, etc.)
  • Crime unrelated to the crypto business that impacts the business
  • Embezzlement of customers coins
  • False news (misinformation) causing one to make a bad choice
  • Personal factors forcing untimely withdraw
  • Large organizational infighting or slower adaption
  • Small operation too dependent on one person
  • Power contracts/prices changing
  • New technology changing the value of the investment
  • Movement of altcoins to algorithms ASICs can’t mine
  • Government regulations becoming unfavorable

Some of these may seem strange, but I think crime is a major concern in a place like Brazil, probably war breaking out isn’t. In Japan we often have multiple earthquakes in a week although they are typically small.

If you look a scams there are many different types of scams other than just Ponzi schemes. My largest concern would be fractional mining, Hashie claimed all cloud mining sites were doing that. I do agree that transparency that GH mining is uses greatly reduces the likelihood of those types of scams.

As for weights that need some thought. My personal weights would be meaningless to others. However having a good list makes sense.


#16

You are free to assign whatever risk you want, however unrealistic. It is your BTC, your choice.

I’m not sure why you think that, maybe I don’t understand by what you mean if things go badly. I have heard that a lot of people have lost at hashnest with little hope of recovery. That is related to claims that the markets there were being manipulated.

As for scrypt.cc, I have never viewed it as 100% safe and have already banked a significant portion of my BTC invested there. I’ve been banking 3% to 10% a week of my investment and some others are much more aggressive. When there is high return that is possible without too much harm to the amount invested. I think that is a valid tradeoff. Scams don’t allow you to do that, they have a high fee or lock-in or some other nonsense.

I applaud that. That is valid risk management in my book.


#17

Badly in my opinion is the site indefinably freezing accounts, site going down for “maintenance” and never coming back up or simple vanishing. That is my biggest concern with any site really. Loosing value due to bad trades can happen anywhere including Srcypt.cc. When I talk about long term trust investment in Hashnest I refer to buying quite a few S5’s and letting them run paying out X per day versus daytrading in the hash market. I trust that my S5’s will not simple vanish and that I will be able to sell the Hash or get the miner shipped to me thereby getting some value out of my investment.

[quote=“dykask, post:16, topic:3315”]
When there is high return that is possible without too much harm to the amount invested. I think that is a valid tradeoff. Scams don’t allow you to do that, they have a high fee or lock-in or some other nonsense.
[/quote] Depends on the Scam - Bernie Madoff’s investment was a ponzi scheme but if you were in early and pulled out before the wheels came off you would have done extremely well. Hell Gaw and hashlets where the same if you invested early and pulled profits instead of reinvesting and or sold at the peak you would have done extremely well.

I think you and @astro are on a good track with what are risks to investments. Scams, schemes, Shadiness or just plain incompetence as well as acts of god, and other failures are good ways to look at different investment sites.

I can see a future in crypto with some sort of credit rating agency or group valuing different investment vehicles/mining trading sites giving some sort of value or rating to

  • trust level
  • ease of liquidation
  • transparency
  • some sort of Risk factor rating? to include things like area of operation/chance of acts of God, things like that.
  • Hash trading availability/volume
  • past average rate of return on pure mining investment
  • Risk mitigation (insurance on equipment/hacking/acts of God or distributed data centers or partnerships with other sites)

I could see one day the industry getting fairly predictable (at least with the major actors) with fairly predictable returns and rate of growth that would possible allow for Insurance against loss and the like.

just as ROI means different things to different people within this space, “Risk” or “bad things” mean different things to different people or even different investment levels. Like i said earlier for me putting in 100 BTC into Scrypt.cc is horrible risky but putting in 3 or 4 BTC in that site is an acceptable risk for me. now some one else might feel complete different on those amounts and what they consider risky.

Then there is the whole time frame short term versus long term investments and what people mean by them.

the more I think about this thread the more I think this is a great topic of discussion


#18

Getting tired of your continued Scrypt.cc and GHX comparison. Seems to be the only two sites you ever compare and you’re still missing the basics.

So let’s look at GHX.

GetHashing is NOT a cloud mining company. It’s a community driven “crowd” mining project for members of this community. Basically we decided to take the mining in our own hands because we got sick of all the scams in 2014 and when we decided to do so we also decided that we will offer people (the members of our community) to get involved by purchasing some of our power.

Now, GHX is backed by actual hardware and by buying GHX our members own a share in the farm. In the event that we have to decide to discontinue GH the GHX owners will be able to redeem their GHX for physical hardware. Where else do you get this apart from HashNest? Certainly not with scrypt.cc.

GetHashing is also not just focused around mining but we’re actively working on adding additional revenue streams to support GHX payouts. Where else do you get this?

As for transparency, I don’t even know what to say since you can’t compare our Poe wiht scrypt.cc or any other provicer for that matter. All our records and transactions as well as the overall hasrate and the pools we’re mining are publicly accessible. So please stop questioning the transparency but instead ask questions or make suggestions if you feel that we’re lacking transparency.

Finally profitability. Now before we go into details let me tell you that GH is not about being not profitable or that we (GHX) owners don’t want to make profit from mining. Saying so would be a lie. Nobody invests over $250,000 into mining hardware for it to look pretty.

Your main concern is the days to break even or the ROI. Fair enough and yes you wont break even in 90 days with GHX, more like 180-200 days or whatever days you reckon. What you won’t get with scrypt.cc is the guarantee that the farm will sustain for X days to come. Well I can personally guarantee you that batch 1 and batch 2 won’t be going anywhere in the next 90 days to come and B2 won’t be going anywhere for another 90 days to come. Thus B2 will definitely not go anywhere for the next 6 months. Do you have that guarantee with scrypt.cc? I don’t think so.

Another point you keep ignoring (which goes back to the above) is that we pay our hosting and maintenance fees for 90 day terms in advance. That’s the reason why we know exactly what we can guarantee and what we can’t. By paying our fees in advance we have one advantage which a lot of our members keep missing…

Let’s assume that S5’s would near their EOL 6 months down the road. We can then basically declare EOL on a batch, enter the hardware redemption phase for that batch and DROP THE MAINTENANCE FEE for the remaining hosting terms since it wont be extended. Thus those batches will instantly receive 100% of the mining revenue for the remaining hosting terms. Let’s assume the remaining days on the hosting is 60 days mining without fees = 120 days cutting the remaining “days to break even” in half.

When declaring a batch EOL the bag holders might even decide to buy out the remaining 30% of GHX owners on those batches, fork those batches into a new asset and (in our own consent) redeem some of that hardware, sell some and then mine the rest of the units until they turn obsolete.

This is a factor not only you but also others should stop ignoring when making comparisons of GetHashing with other “providers” especially when comparing us with someone like scrypt.cc,

Finally let me get back to the GHX “distribution of wealth” or in other words the GHX owners and who actually owns the majority of the GH hashing power. it’s us, the GHteam and the top 20 GHX owners on the list. Those 20 people own 70% of the GetHashing mining operation. Since you mentioned risk pretty often, do you think that those 20 people (10 of them being members of the GHteam) have any incentive of scamming themselves?

So please stop comparing GetHashing to scrypt.cc until you understood the GH concept and how it “actually” works. Comparing GH with scrypt.cc is like comparing black with white.


#19

Yea I put scrypt.cc aboot the same level of trustworthiness as things like cryptodouble and the like. It is without a doubt very high risk and high reward, but the reward won’t mean jack if it is gone before you can get to it. Most likely going to let my stash roll in a month, take out initial investment, plus maybe 20% and go from there.


#20

In the current bitcoin mining market, margin is pretty low. Anything with crazy ROI numbers is scam ( 90days stuffs ). Can’t make sense how you can do better ROI compare to Bitmain S5 Hashrate / efficiency ratio. Do your math here https://bitcoinwisdom.com/bitcoin/difficulty

I have a little S5 farm ( 4 units ) at home.
I pay a little less in electricity but my numbers are really close from GHX returns.

Anything with better ROI need to have free electricity and/or secret super efficient miners and/or magic PNG.
Scrypt mining is way worse. First gen miners or KNC unreliable hardware, can’t make big profits really …