How I became a miner, Part 7

Author's note: This article is part of an ongoing blog about my adventures in the world of alternate currencies.

When I made the decision to host my hardware at the Omnis Data Center I then put in a support request to GAW asking them to ship the hardware to Omnis' address. That's around the time that GAW Miners merged with Zen Hosting, and it seemed everyone from both entities was mobilized to help with the transition. I'd gotten wind of rumors that support tickets were taking way longer than the advertised 24 to 48 hours to get a response.

“I wonder how long it's going to take someone to actually read this request, find my hardware, box it up, and ship it,” I thought. How long would it take my little mining farm to get off the ground while waiting on GAW personnel who had more important things on their minds?

Meanwhile, my Zen account which had gotten emptied once I'd originally switched my hardware over to GAW hosting had been given a GAW Appreciation Fury. GAW CEO Josh Garza decided to give all existing Zen customers a free Fury. Since I had an account I got an Appreciation Fury. That Fury had already been hashing away for several days. I figured I'd use my earnings to buy more Furies and gradually build up my Zen account again. Why not?

Then Luke from GAW Miners emailed me offering me a year of free hosting plus some additional furies if I'd agree to switch my hardware from GAW hosting to Zen hosting. I decided to take the deal, and within a few hours I bought a new set of hardware for the data center. I couldn't resist the thought of free hosing and free furies, and there was simply no telling how long it would take GAW to respond to my request for delivery.

It took just a day to ship my new set of hardware, and it was one of the last things I bought while the price of Bitcoin was $543 (it is now a hundred dollars less). It only took a few hours to get the hosted equipment transferred to Zen along with two additional Furies. By the time I had switched back to Zen, my hardware collection gained three additional Furies. I now had six Furies and one Black Widow in my Zen account.

Then the Hashlet craze began. I quickly purchased two, giving me some additional gear. At that time the main distinction Hashlets had was that they could mine in the proprietary Zen pool, which yielded better than any of the other five multipools Zen was supporting.

I got another email from GAW telling me I could upgrade all my hardware to hashlets but I'd have to act within a limited time window. I thought about it for several days, then started switching over my gear a little bit at a time. Shortly after I'd converted the last piece (the Black Widow) to hashlets I received an email informing me that window had closed. I had mixed feelings. I was glad I'd taken advantage of the opportunity. I was worried because now I knew there was never going to be any chance of getting that hardware shipped. The upgrade to Hashlets was irreversible. Hashlets can only live on the GAW/Zen platform.

Over the next few weeks GAW built up the concept of Hashlets, even selling pool-specific solo Hashlets. You could buy a Hashlet which only mined in the CleverMining pool, for example. The various pool specific Hashlets were priced differently based on the pool's overall performance. Then there were the prime Hashlets, which would always be the most flexible of them all. All my new Hashlets became prime Hashlets and GAW gave me yet another gift. Each customer got a free solo Hashlet to celebrate the launch of the solo Hashlets. My solo Hashlet corresponds to WafflePool. This Solo Hashlet marks the fourth piece of free hardware I've gained as part of the merger and new project launches.

Although there have been some ups and downs, in particular one memorable day when it took forever for all the Hashlet daily payouts to get processed before GAW/Zen upgraded the system to be able to better handle the workload, the payouts have been consistent and very high. At the height of my cloud mining on the Bitcoin Commodity Exchange (back when Bitcoin mining difficulty was much lower) I was getting paid around 0.015 BTC per day. That didn't last long. With my hashlets I can count on more than that in my daily payout. At first I reinvested half of my earnings into more prime hashlets. But I stopped when the price of prime hashlets started going up (it is now $49.99 for 1 MH/s) and when I started to have questions about exactly how the mining was working. I withdraw the daily payouts to my secure wallet as soon as they clear my Zen balance and those payouts have significantly contributed to my ability to pay for my first month's data center colocation fees as well as the new Zeus Lightning rig which should be up and hashing by this coming Monday.

At one point the evidence that none of the represented multipools registered the incredible spike in hashing power which would be expected from all those new Hashlets people were buying like crazy leaked out. This caused people to wonder what exactly GAW/Zen was up to. An entire thread on the Bitcoin Forum explored that idea from all possible angles, including the possibility that GAW was just another high yield investment or Ponzi scam. The major question on everyone's mind including my own was if the Hashlets weren't actually mining in the multipools, if they weren't mining the Scrypt coins which made up those pools (hashing power for those coins which should have come from Hashlets could not be found either), then what exactly were they mining? The most plausible explanation to me seems to be that they are mining some other more lucrative algorithm, possibly N-Scrypt. Other information which came out was that GAW hadn't made any purchase from any of the major ASIC companies in months. Although GAW still has a few mining rigs for sale on its site, the main type of “rig” you can buy today is a Hashlet. And you can't take delivery on that.

GAW adjusted some of its marketing material and terms of service to indicate that while Hashlets were paid out based on various Scrypt mining pools, they didn't necessarily actually mine in those pools. If GAW has a proprietary pool with a completely different algorithm which makes more money, then it certainly makes sense to continue paying its customers based on the Scrypt pools and pocket the difference. My point is there are a number of possible explanations besides the Ponzi or scam scenario.

The GAW people worked on finessing the various features they were bringing online, as well as market the whole Hashlet concept even more. GAW is determined to be the best cloud mining platform out there. So far, they are doing pretty well. They now have an entire forum (they revamped the original Hashtalk forum). Prime hashlets can now be “boosted” to mine at nearly double their advertised rate for a brief period of time. You just have to log in and click on the little rocket icon on each Hashlet. You can now buy so called Legendary Hashlets–these are solo hashlets mining in the Zen Pool which have a graphic around a certain theme. The first Legendary Hashlet was in honor of the victims of 9/11. As far as I can tell, the only difference between it and the regular Zen solo hashlet is that it has a different graphic on the user's dashboard. There are only 500 of them. People apparently like to collect them. Digital collectibles. Perhaps the next Legendary hashlet will be the Patriotic Hashlet. It will sing the National Anthem all day long while it hashes. But you'll have to take the GAW/Zen people's word for it as all Hashlets only exist on the GAW/Zen platform.

My first thought was… Seriously?

Whatever the Hashlets are really doing, they do pay out daily. I like that part. My main concern right now is to gain ROI on the original hardware that I'd purchased. After all, it cost me way more than the second set did. I am tracking the cost of the hardware against the daily payouts on a spreadsheet. Once the original hardware has reached ROI I will feel more comfortable buying more, or selling them off. The latest feature is the ability to sell your Hashlet for 80 percent of what you paid for it. This means that if you reached 30 percent ROI from daily payouts and then sold them for 80 percent, you'd come out ahead. GAW has repeatedly expressed the concern that all their customers make ROI. They say that if you want to make it in the mining hardware business, you have to fight tooth and nail for your customers' ROI. That obviously applies more when what you're running is a cloud mining service.

I bought my Zeus Lightning from someone who wanted to use the proceeds of the sale to buy Hashlets. The Hashlet craze is definitely on. GAW/Zen claims to be the place where people will make the most return on their mining hardware. They are certainly striving to accomplish this.

It currently costs 8 cents a day for each MH/s worth of Hashlet that is not under some kind of free hosting deal. When my new Zeus Lightning gets up and running, my colocation costs will run around ten cents a day per MH/s. So I'm slightly better off with Hashlets than I am at the data center on that score. Not only that, the data center is not offering me any amount of free hosting.

As for what my hashing power can earn, that is not so clear cut. Zen Pool was the highest paying pool offered in the Zen Platform until DogeCoin and LiteCoin merge mining. Now the LiteCoin Pool pays out as much as the Zen Pool. I can mine in the LiteCoin Pool with my own hardware. But I can also rent out my hashing power and usually I get a price that's better than even the highest paying multipool. I won't rent out my hardware for less than what I can get from a pool because then I'd just mine in the pool. The rig rental prices fluctuate considerably. They started out low when I first put my rigs up for rent, and they have climbed higher, and now they seem to be dropping. If I'm lucky I also can make more on mining and dumping a successful new coin than I can either mining in a pool or renting out hashing power.

In other words, the potential to fare much better with my own data center hosted hardware than with my hashlets at least exists. Time will tell which turns out to be better. My own rigs require more management on my part and I haven't really tracked that cost. I don't have enough data to really be able to say. Pool yields and rental costs fluctuate, and right now it's all looking worse than I'd projected because the price of Bitcoin is seriously on its way down. I made the decision to mine with my own equipment back when Bitcoin was worth $600. It's now priced at $450. My expenses are priced in fiat. I can still pay my bills, but the profits aren't looking so hot right now.

The guy I bought my Zeus Lightning from told me that Zeus Miner is now taking pre-orders for upgrade chips which will substantially increase the hashing power of specific rigs while maintaining or even reducing the power consumption. He advised me to pre-order the chip for the Zeus Lightning, as it would raise the hash rate from 40 to 250 MH/s. I am currently looking into it. If I buy the chip and it holds true, then my daily colocation costs per MH/s will be at least an order of magnitude less than what they are today as well as what they are at GAW/Zen. I can also pre-order chips to upgrade my Furies and Black Widow, bringing each one's hash rate to 10 and 65 MH/s, respectively. This would put the advantage squarely with the rigs I own and control, at least in the beginning.

Now comes the part of the story that's a little more strange. When I accepted the deal for moving my GAW hosted hardware over to Zen, I had mental images of one of the GAW techs physically unplugging my gear from GAW's data center and handing it over to the techs at the Zen data center where they would get plugged in and activated.

I'm convinced that all that was transferred was an equivalent amount of hashing power. 16.8 MH/s were deducted from my GAW account and added to my Zen account. But no actual hardware was moved. I'm pretty sure that what I originally purchased wasn't actual hardware, but more of an allowance for a certain amount of hashing power that would get credited to me. In that sense I was misled as what I thought I was ordering was physical hardware. It seems that GAW has really wanted to sell cloud mining shares all along and they are making that official by moving everything over to hashlets. That being the case it was absolutely the right decision for me to just order a new set of hardware to be shipped directly to the data center once I was ready to host there.

At the time my hardware (or hashing power shares) were transferred to Zen, the Black Widow (or hashing power representing the Black Widow) was pointed to MultiPool and the three Furies were pointed to WafflePool. I was collecting small payouts from both of those pools at the time my rigs were switched.

However, the pool WafflePool and MultiPool payouts have continued long after the switch from GAW to Zen. At one point about a week or so afterwards I was trying to troubleshoot an issue with the rigs which had just started hashing for me from the data center and which were also pointed to WafflePool. I logged into my GAW hosting account and quickly switched the three Furies to CleverMining.

The next time I tried to log into the GAW hosting platform I found my IP address was blacklisted. I tested that theory by visiting the site from my work IP address, and was able to reach it just fine, though I didn't log in. I figured that was the end of the MultiPool and CleverMining payouts. But no, no one at GAW has bothered to change the Bitcoin address or account for those pool payouts. I'm still collecting them. They blacklisted my IP address but haven't made any changes to the payout destination. That is something I don't understand. It's also what's convinced me that when I bought hosted hardware with them, I never actually bought hardware. It was always some form of cloud mining. That's why I'm so concerned about ROI–because while I paid hardware prices I got cloud mining instead.

Now it's official that my hashlets are basically shares in a cloud mining service. As such it is a pretty good service, and I've certainly been given enough freebies to keep me from complaining. The freebies will help me reach ROI that much faster. The daily payouts are also a great help in me being able to pay my colocation bills even while I have to pay those ahead and I'm experimenting and learning the ropes.

I actually appreciate having both hashlets and my own hardware working for me. I view it as a form of diversification. Although I could quibble with the way I was kind of misled into it at the beginning, I do not see anything but good intentions on the part of GAW/Zen. They believe strongly in helping their customers make their ROI, they are good at marketing these things known as Hashlets, and although it's a bit difficult to get responses to support tickets, I can eventually raise them and get my issues addressed by emailing or posting my issue on the forum. I got a major issue worked out yesterday that way. It's probably about time I wrote up a support ticket explaining to them that I'm still getting paid for GAW hosted hashing power that got switched to Zen a long time ago. It's clear they want to do right by their customers. They are just a bit overwhelmed by their own success and explosive growth. Some details fall through the cracks in interesting and unusual ways.

And while prime hashlets are a bit on the expensive side, it's not like mining rigs where you also have to buy a PSU and a Raspberry Pi in order to get it set up. It is true set it and forget it “mining,” and I can definitely see the advantage of that. I just don't want all my mining to be that way.

I'm glad with the outcome so far. I get to mine in my own pools, rent out my hashing power and speculate on new coins with my own rigs that are hosted at the data center. And I also get to collect daily payouts from a slightly larger amount of hashing power that just does its thing without much input or management from me. I'm not sure I would recommend prime hashlets at these prices right now, but Zen hashlets get to mine in the most profitable pool and may be what most people are looking for. The value of prime hashlets is largely in future features so their current high price should be viewed more as an investment similar to if one were buying shares in a new company. Will that investment pay off in the future? GAW/Zen is committed to it at least making ROI. In the mean time it does pay daily dividends.

But it's not what I personally would consider real mining. Real mining is what I get to do with my data center hosted rigs, with all the ups, downs, twists, turns, colocation bills, uncertain mining results and fluctuating rental returns. Real mining is what I was reluctant to do for the first year and a half of my involvement with cryptocurrencies. Real mining is what I got pulled into thanks to a briefly profitable but otherwise dead Scrypt coin and a mining hardware company which really was a cloud mining service provider all along.

I have a funny feeling that once you become a real miner, you don't ever go back.

Devtome Writers

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