After looking at the various options I talked about in the Assessing Altcoin Mining Contracts post, I decided that I’d buy Hashlets (virtual Bitcoin and Altcoin miners) from GAW Miners.
There a three types of Hashlet on offer. I was thinking about getting one or two Hashlet Primes over the weekend, but the $10 price hike on those on Monday put paid to that idea. They’re supposed to be their flagship product, but they don’t seem to do anything different to the other Hashlets apart from offering the ability to mine both Bitcoin (SHA-256) and Scrypt for $49.95. They’re also supposed to be constantly updated which I presume means that their hashing power will be increased as network difficulty increases. For $9.95 (a Hashlet Genesis) and $20.95 (a ZenHashlet Solo) [$30.90 total] it looks like you could get the same hashing power from two separate devices, saving $19.05 in the process.
However, since I don’t own a Hashlet Prime, I can’t say if they are better long-term investments than the Hashlet Solo and Hashlet Genesis. I may buy one at some point just to check out what supposedly makes it a better long-term prospect.
Why Am I Buying Altcoin Mining Contracts?
Because GPU mining is dead for me. My electricity charges – ~$0.24 per KW/h – mean it now costs money to mine with my BAMT mining rig. I still want to be involved in mining crypto currencies but I’m wary of spending several hundred to several thousand dollars on dedicated mining equipment. Those all eventually just become metal bricks with no potential for being resold or re-tasked (at least a GPU mining rig can be turned into a gaming PC and sold on).
Plus, the low price points of these Hashlets (and similar products from other companies) mean people can get into crypto currencies for a price they can afford. The miners can also be bought with credit cards (in the case of GAW Miners) and PayPal (in the case of ZoomHash). So no messing about trying to buy Bitcoin through an exchange before you can actually buy a miner (as is a requirement to buy many of the physical miners).
The Hashlets I Did Buy
So last night I stumped up $209.50 to buy 10 ZenHashlet Solos. I chose the “Zen” models because they provide the best daily returns and seem to have done so since Hashlets were launched a little over a month ago.
Currently, the average daily payout per ZenHashlet is 0.00064220 BTC (~US$0.31 with USD/BTC at $480). Payouts will increase or decrease depending on the value of Bitcoin in relation to the dollar. Increasing network difficulty will also reduce payments over time. GAW have said that no miner will ever cost owners money, so there shouldn’t be a situation where payouts are less than the daily maintenance fee of $0.08 per Scrypt miner.
My miners haven’t even been running for 24 hours yet, but I expect to get a payout of about 0.0064220 BTC (US$3.00) later tonight. I’ll continue to track performance here on the blog to let you know how things are going.
If I were simply to sit back and let things run, I could expect a return on my investment (ROI) in about 70 days. However, rising network difficulty will push that ROI period out so it may be more like 100 days. The arrival of the ASIC Scrypt mining gear that people pre-ordered during the year (physical equipment you plug into your wall and burn your electricity) could actually force network difficulty to start increasing rapidly. And it is entirely possible that the Hashlets will never pay for themselves. But that’s the gamble.
This chart gives some idea of when to expect ROI to be reached for the various Hashlets.
The Power of Compound Interest
My plan is not to let my 10 Hashlets just sit there, earning payouts until the initial cost of them is covered. I intend to reinvest my earnings into buying more Hashlets. GAW Miners provide the option for auto-buying Hashlets when enough funds have accumulated in your account, another reason I decided to buy from them.
As time goes by, more money will be earned from my increasing portfolio. That, in turn, will allow me to buy more Hashlets in a given amount of time. This is the beauty of compounding. It’s an exponential curve. The more you can invest up front, the more money you can earn more quickly.
An illustration of compound interest
– the figures have nothing to do with Hashlet purchases
At some point, probably in about 6 months, I’ll scale down the buying of new Hashlets and start diverting a percentage of daily payouts directly to my Bitcoin account. I’ll still be buying new Hashlets, but not all earnings will be reinvested.
GAW provide a 5% discount on Hashlet prices if you reinvest your payouts into buying new Hashlets. So for every 20 Hashlets you buy, you get one free.
I know it’s usually wise to recoup your initial spend before you start reinvesting profits, but that would radically slow down the exponential growth. I’m fully aware that I may eventually lose my initial $209.50 investment but it’s money I’m prepared and able to lose, should it come down to that.
If all goes according to plan, in about 6 months, I should be getting about $30 in daily payouts; $20 of that would go to buying a new miner and the remainder would go into my BTC account.
There’s a lot of variables in this – will Bitcoin go up or down in value? Will rising network difficulty significantly reduce the daily payouts over the next year (or even in the shorter 3-6 month time frame)? Will the price of the miners themselves rise? Will the price of these miners look very expensive compared to what physical Scrypt mining boxes can do in the next few months? Will GAW still be around in a few months?
I hope that continually buying new miners will offset and exceed any reduction of daily income due to rising network difficulty.
But that’s the experiment. Will it work or not?!
Tagged with: altcoin mining contracts • ASIC Scrypt miner • ASIC Scrypt mining • Bitcoin • Bitcoin miner • Bitcoin mining • compound interest • GAW Miners • GPU mining • Hashet Solo • Hashlet Genesis • Hashlet Prime • Hashlets • mining equipment • network difficulty • Scrypt • Scrypt miner • Scrypt Mining • SHA-256
Filed under: Altcoin Mining Contracts