Mining Pools

Ponzis, Scams, Theft and The Price Of Bitcoin

Christmas 2014 will go down in history as a time when hackers, thieves and ponzis changed everything. As I write this post BTC has sunk to $186 (and was considerably lower earlier in the day), major cloud mining operations have powered down their farms (cex.io and hashnest) and unless the price recovers the whole BTC landscape will irreversibly change.

What has caused the current issues?

Around Christmas Eve several cloud mining operations including PB Mining, Hashie, Hashprofit and LTC Gear suffered hacks or operational issues with a net effect of halting payments to customers. The circumstances and validity of each issue no doubt vary but the consensus seems to be that PB mining could well have been a ponzi although the operators claim the closure was a result of blackmail and personal threats. Hashie claimed a hack although the way they dealt with the aftermath screamed incompetance or ponzi. Hashprofit claimed a db breach although in hindsight this looks like a solid ponzi and finally LTC Gear more believably claimed a hack but the jury is still out as the website has still to recover and they are several weeks behind with payments.

To compound matters, the large exchange Bitstamp had a major breach/hack involving the theft of $5 million worth of Bitcoin. Clearly evoking memories of the Mt. Gox situation, the markets reacted badly to an already depressed value.

So what next?

Some are predicting a crash of epic proportions and the death of bitcoin (many of these doommongers are from traditional financial institutions who are threatened in the extreme by cryptocurrency). Their insecurity is manifesting itself into unprecedented attacks during the ongoing slump. Witness this Guardian article (very naive in it’s assumption that Bitcoin has no use)

Our View

Cryptocurrency is in an embryonic stage similar to the birth of the internet. Such great ideas will always prosper even though the naysayers will do their utmost to put a ‘spanner in the works’. Our philosophy is to sit tight, buy bitcoin and ride out the slump.

 

Show Me The Josh! Garza Lays Out His Blueprint For Paycoin

Fast growing cloud mining site zen miners have been hit by a number of issues over the past 30 days.

All was looking hunky dory in August when Gaw took an $8 million stake in the cloud mining company. It looked like a match made in heaven – the most successful asic mining hardware company jumping into bed with a progressive cloud hashing operation. Coupled with the $1 million purchase of the coveted BTC.com domain it was no wonder that CEO Josh Garza was being touted in some quarters as the next Steve Jobs!.

Josh Garza
Garza has been making all the right noises. Almost evangelical and philanthropic (not unlike Jobs) with his public announcements of new features and a customer first policy.

Customers lapped it up, and why wouldn’t they. The company were innovating cloud mining with ‘Hashlets’ – virtual miners that you could buy through Gaw or Zen and instantly activate into pools that were paying handsome daily amounts of BTC.

Then things started to go ever so slightly wrong. Just after announcing a ton of new features Josh and the team went to a BTC conference in Vegas. At around the same time – the platform (and new features) were hit with a host of new bugs. It was unfortunate for many reasons. Being short staffed back at base, the zen support team were struggling to cope with an increasing number of support tickets and the lack of any ‘announcements’ or updates was causing a PR meltdown.

As soon as the Vegas trip ended, Garza continued with the compulsively premature announcements. Seemingly following the Mark Zuckerberg mantra of ‘move fast, break things’ the CEO made apologies for ongoing bugs at the same time as announcing a raft of new features under his own self titled slogan ‘ignore them and innovate’.

The hashlet marketplace, new prime hashlet features, double dipping all sounded like adventurous but welcome features to the zen cloud. Then the world fell in. Zen suffered a double wammy.

First the market leading mining pool Zenpool was hit by falling daily payouts. This was rationalized by Garza as an issue concerning contract negotiations with a large company leasing hashing power from them. Speculation on some bitcoin forums alleged that Zen/Gaw may have lost a large contract. Miners on the zencloud were less than impressed with a daily reward that almost overnight fell from 0.0006 BTC per MH to 0.0003 BTC per MH.

A few days later the company was hit by an even bigger issue. Resellers of the flagship Prime Hashlets were selling 1MH prime hashlets at around the $50 mark. When buyers activated some of these prime hashlet codes they actually received 25MH instead of 1MH (around $1250 worth). Some users were successful in exploiting the issue by buying more primes and/or splitting the prime into 1MH chunks and quickly selling on the marketplace.

It is unclear how much money Zen lost during the exploit but we can safely assume it was ‘significant’ if the reply and explanation that Garza posted on the hashtalk forum is anything to go by.

Legal action was announced against any miners that had taken part in the exploit unless all monies/hashlets were returned. It is unclear how much of the missing BTC was recovered although Garza claimed that over half the people involved had been traced in his statement.

It was a difficult period for innocent users as the site went offline and withdrawals were frozen for a short time.

In true Maverick spirit, Garza and Zen continued with their plans for Project Prime and Hashbase. A Hashpool was introduced where users could mine Hashpoints instead of Bitcoins. Garza promised that these hashpoints would more than make up for the drop in the Zenpool payouts. A new ‘Hashcoin’ was mooted and speculation began to grow that Gaw’s new coin would be the foundation of Project Prime and Hashbase.

hashcoin.com
The Hashcoin (latterly Paycoin XPY) ICO was finally announced after widespread rumours that companies like Amazon and Walmart were already on board as partners and that the coin would be the biggest crypto coin launch of all time. A coin that would be relatively immune to severe price fluctuations and would have ‘near instant’ transaction confirmations.

So let’s have a look at the details that were included in the launch

Partners

Conspicuous by their absence in the announcement, the rumoured big hitters were not named. it’s possible that negotiations are ongoing and the ‘why hashcoin’ section has a statement reading ‘HashCoin launches with more merchant acceptance than any other cryptocurrency in history.

Transactional Immutability

Yeah, i had to look that up too! This is the explanation behind the near instant confirmation of transactions. The mathematical formulae behind this innovation are beyond the scope of this blog but i’m sure it will be dissected in the coming days. If it does indeed work then it will be a major breakthrough for Gaw’s mission to bring crypto transactions into the realm of widespread adoption. For now if you are brave you could read the white paper here.

Price Fluctuation Protection

This was the claim that interested me the most and I was eager to see the detail. It turned out to be the least interesting section of the launch. The currency will have a Coin Adoption Fund (CAF) with a ‘sole mandate to promote mass adoption for merchants, miners, and the general public’.

In practice this ‘fund’ is likely to be used to control ‘buy’ and ‘sell’ orders to stabilise the price.

Existing miners at Zen and the ICO (initial coin offering)

Here’s the good news for existing Gaw/Zen customers and a delivery on a promise made by Garza a couple of weeks ago. Zen users will get first dibs on the coin along with institutional investors. All the ‘Hashpoints’ mined will be eligible for exchange against paycoins at the rate of 400 points to 1 coin. This second stage of the ICO will enable miners to purchase the coins at a discounted rate (similar to a conventional share option scheme). The public ICO will see the coins priced at around $20 each and (with the help of CAF) the price should be sustainable in the short to medium term.

This represents a very good deal for loyal Gaw/Zen customers and could prove to be a masterstroke by Garza. The plans for the coin are very ambitious and Garza has been forging an almost cult like status amongst zen cloud users. The next few months are going to be incredibly interesting to see if Gaw/Zen can pull off one of the most ambitious projects the crypto currency world has ever seen.

Update: The coin hit the markets mid December. As of writing the coins were trading for around $10 each on Cryptsy ahead of the ‘guaranteed’ $20 per coin buyback floor at Paybase. (Due to launch Monday 22nd December)

x11 Coin Cloud Mining at Crypto Coins Trade

Trade all your coins
One cloud mining operation sneeking under the radar is Crypto Coins Trade.

We are well down the road with the larger cloud mining services such as CEX.io, scrypt.cc and zencloud. With a turbulent market it is important to buy and sell at the right time and x11 coins could be something to explore as an alternative to SHA256 and Scrypt.

The site enables you to try before you buy with 5khs of free mining power for 10 days and allows mining of SHA256, Scrypt and interestingly X11 coins. You can buy mining power with paypal and (like other sites) trade your mining power with other users once purchased.

The site looks to be well run and we’ll report back on ROI in a future update. Find out more here.

Scrypt Mining In The Cloud – Best Bang For Buck at Gaw Miners!

With the launch of myriad asic scrypt miners the days of mining at home seem to be disappearing in favour of cloud mining. Gaw Miners offer a variety of hardware hosted through the zen cloud mining site.

There are many factors to consider and with such a wide array of hardware on offer it can be difficult to make the right choice. Gaw currently offer 1 month of free hosting with their current range but what miner is the most profitable once the daily maintenance charges kick in?

We looked at the full range and took into account the upfront cost and 3 months maintenance charge to find the best deal per Mh for each machine. As hardware is often obsolete within 4-6 months this guide effectively lets you know how much the costs will be for 4 months (including the 1 month free)

Asic Scrypt Cloud Mining Hardware - Best Deals At Gaw
Miner Hash Rate (Mh) Cost $ per Mh Maint/Day Maint/Mh (90 Days) Total $ per Mh Link
War Machine 54 $1049.99 $19.44 $4.41 $7.35 $26.79 More Info
The Boulder 43 $939.95 $21.86 $2.40 $5.02 $26.88 More Info
Silverfish 2 28 $839.95 $30 $1.18 $3.79 $33.79 More Info
The Falcon 27 $734.95 $27.22 $2.20 $7.33 $34.55 More Info
The Ratchet 19 $599.95 $31.58 $1.10 $5.21 $36.79 More Info
G Black 25 $839.95 $33.60 $1.22 $4.39 $37.99 More Info
The Cliff Jumper 9.5 $309.95 $32.63 $0.61 $5.78 $38.51 More Info
Black Widow 13 $419.95 $32.30 $0.98 $6.78 $39.09 More Info
The Fury 1.3 $44.95 $34.58 $0.11 $7.62 $42.19 More Info
Gridseed Blade 5.2 $209.95 $40.38 $0.34 $5.88 $46.26 More Info
The Bee 3.6 $154.95 $43.04 $0.24 $6.00 $49.04 More Info
A2 80 $4199.95 $52.50 $1.54 $1.73 $54.23 More Info
Silverfish 5 70 $3834.95 $54.79 $2.69 $3.46 $58.24 More Info
A2 Mini 28 $2519.95 $90 $0.49 $1.58 $91.57 More Info
Gridseed 5 Chip 0.3 $29.95 $99.83 $0.11 $33 $132.83 More Info

Key:
Column 4 $/Mh = Cost per Mh based on purchase cost only
Column 5 Maint/Day = Maintenance Charge for full Machine per day
Column 6 Maint/Mh (90 Days) = Maintenance charge per Mh for 90 days (120 days if you include first month free)
Column 7 Total $ per Mh = The total cost per Mh over 90 days including purchase cost and maintenance (120 days if you include the first month free)

Conclusion:

Best High End Stealth Machine:

The War Machine 54Mh $1049.95 – Cost Per Mh over 4 Months = $26.79

Gaw Miners War machine

Best Mid Range Buy:

Silverfish 2 28Mh $839.95 – Cost Per Mh over 4 Months = $33.79

Gaw Miners Silverfish

Best Budget Buy

The Fury 1.3Mh $44.95 – Cost Per Mh over 4 Months = $42.19

Gaw Miners Fury

We have a limited number of promotional codes for Gaw Miners.

WELCOMETOGAW – $10 off orders over $150

GAW25 – $25 off orders over $200

GAW3FOR3000 – 3% off orders over $3000

GAW4FOR4000 – 4% off orders over $4000

GAW5FOR5000 – 5% off orders over $5000

*Note – Prices correct as of 5th August 2014 and may be subject to change. Errors and omissions excepted.
 
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Major Miners Altcoin Mining Pools

beatlecoin

For the first in our series of Mining Pool reviews we’re looking at a newcomer to the scene. Major Miners offer (from what i can gather) – 5 alt coin mining pools:

http://hkc.majorminers.com/ HongKongCoin (SHA256)

http://pcn.majorminers.com/ ProCoin (Scrypt)

http://bea.majorminers.com/ Beatlecoin (Scrypt)

http://lyc.majorminers.com/ Lycancoin (Scrypt)

http://vmp.majorminers.com/ Vampirecoin (Scrypt)

The homepage at Majorminers.com is a simple wordpress blog and the first thing i noticed was an absence of links to the mining pools. You can find them by rummaging around but a simple menu or category list would certainly help.

The pools cater to some of the lesser known ‘fun and profitable’ altcoins. All the pools look fairly stable although could do with a few more miners, so point your equipment at some of the pools listed above and give them a try.

They have a 1-2% fee and offer 10% block finder rewards on some coins. Data centres are located in Europe, Asia and East + West Coast USA.

About the currencies:
Beatlecoin – (BEA)The main appeal seems to be the limited number available. Only 1 million coins will be issued. More info at the Beatlecoin website.

HongKongCoin – Following the success of Auroracoin (the cryptocurrency of Iceland) HongKongCoin (HKC) is a SHA256 algo coin designed for quick business transactions in Hong Kong. There is also a specially designed App on the website to facilitate trading use.

ProCoin – (PCN) – Is limited to 1 Billion coins and claims to be a business friendly coin. 2% of the coins are being given away in a pre-mine during March/April 2014. More details here.

And whether you choose to call them fun, ridiculous or bizarre we have Lycancoin & Vampirecoin. Lycancoin is a cryptocurrency for lycanthropy & werewolf enthusiasts. It was designed as part of a 3 coin set which includes Vampirecoin and Zombiecoin. The danger of the ‘wacky’ crypto’s is that they really need a reason to exist. We’ve seen with Flappycoin how quickly alt crypto’s can start to devalue and struggle.

For the remainder of 2014 I think we’ll see a thinning out of the multitude of cryptocurrencies with only the strongest business models surviving. There’s always a chance, however, that something will survive against the odds. Dogecoin is living proof of that!

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