中文版 English
Cybtc Portal COMPREHENSIVE NEWS View Content
COMPREHENSIVE NEWS

Freshman Tutorial Serial Part 6: Be careful Bitcoin mining trap

2014-9-16 23:28 | admin

Roundup:Abstract: If you already know how to calculate costs and benefits, then you may try to start to be eager for a fight, but please don't hurry. Prior to this, you must also know, mining industry has no ...


Abstract: If you already know how to calculate costs and benefits, then you may try to start to be eager for a fight, but please don't hurry. Prior to this, you must also know, mining industry has no clear industry standard. There are still have a lot of traps and lot of conspiracy waiting for you. Of course all these lose I have not experienced, but I can make a summary from these sad story of some old miners.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

If you already know how to calculate costs and benefits, then you may try to start to be eager for a fight, but please don't hurry. Prior to this, you must also know, mining industry has no clear industry standard. There are still have a lot of traps and lot of conspiracy waiting for you. Of course all these lose I have not experienced, but I can make a summary from these sad story of some old miners.

In September 2012, "ngzhang" released the first ASIC bitcoin machine (commonly known as: Pumpkin machine), which not only caused a sensation in the world, but also laid the foundation for the development of professional bitcoin  machine. At that time, 4 pieces of 7950 video cards, cost at 8000 money, can reach 2G computing power. And pumpkin machine, same cost at 8000, can bring about 66G computing power. It is just a money printing press! Once the machine was pushed up to as high as 250,000 yuan. Many people line up days and nights in 24 hours, waiting for its pre-order.

As we all know, bitcoins, neither has center of managment and regulators, nor  has third party guarantee mechanism. All transaction base on both sides completely in trust. Under professional bitcoins miner huge profit driven, plus many bitcoin game player habitual trust others, this emerging field is full of unknown. A lot of initial bitcoin machine game player lose everything. These trap, some elaborate hoax, some of limited by capacity, by not have enough capacity of manufacturing. However, the results are the same. Many ordinary game player suffered the biggest loss in the machine. Whether these traps are intentional or unintentional, the lessons for these miners are painful.

IPO
IPO refers to the Initial Public Offerings. The company or projecter stock to the public for the money. IPO for bitcoin machine is the largest trap in the bitcoin history, sure.

(1) Labcoin company,  it has been confirmed to be a hoax now. This is an elaborate hoax.  Only few people fictitious one of bitcoin machine project. Through that they raise, collect, got money. In June 23, 2013, Labcoin made its debut at the bitcointalk.org forum, claiming to be a machine research and development company, having a kind of posted company registration certificate, and developing chip renderings. In August 1, 2013, by IPO, Labcoin got total 7000BTC. Thereafter, the Labcoin continues to update its "project",  even paid dividends in October 19th. However, fraud is fraud, not long after the Labcoin stops updating, main planner disappeared. Not the least trace was found. According to the human flesh search, the chief strategist is in Shenzhen China now, has sports car, a house and bodyguard [1].

The case, only settle a matter by leaving it unsettled so far . Two reason, One is that since its victims around the world, it is not convenient to prosecution; and two is that there are no corresponding laws and regulations. Interestingly, the cheater does not immediately disappeared after recruitment to 7000BTC. It was clear that he wanted to cheat more people, only then he can't fool anymore.

(2) Roast Cat (AsicMiner) company, unlike Labcoin, this is a real sense of IPO. It is also the first bitcoin IPO historically successfully [2]. In the beginning, one of its original stock is 0.01BTC per share. Since February 28, 2013, its dividend has reached at 0.6BTC.  For its highest price, was once reach the climax point of more than 5BTC. At that time the Roast Cat is very influential. Its computing power once reached the 20-30% of total net power. Later, because bitcoin net computing power soaring, their proportion dropped to 1%. The stock dropped to 0.5BTC. No doubt, the initial investors  are to make over. The late coming investors, basically its share is bedding bag. It is very normal, because that is the risk of investment.  The Roast Cat company, from rise to decline so faster, is no one can predict. However, that is controver, in its stock prices as high as 4BTC, one of big V in bitcoin circle open his view, said that it worth to buy even its price near 7BTC. Of course, people who listen to this "big V" 's advice, basically was bedding bag. 

Such case, more can settle a matter by leaving it unsettled. Investment is that yourself thing, other says is always only being as a reference.

(3) Silvefish mining (sfminer). This a IPO still on going. The total number of shares is 25000. In 2014 January, foreign currency has 10000 shares, each one is about 0.7BTC. If by the bitcoin price of 5000 yuan, they totaly raised to 35,000,000 yuan. Because the fundraiser "God fish" is quite reputation in bitcoin circle [3], and Silvefish mining machine really pre-sale in April and it seems that it is much possible to ship in June, the whole things is looks well. Looks like a real IPO. However, the current situation become very bad. Ajie's 60M Litecoin machine is scheduled for ship at 15,May. Not only take the time more earlier than the Silvefish, but also at more affordable prices. So this will be a huge impact on Silvefish. Now the Litecoin price is very low, and it has no any possibility in short-term rewarm. The Silvefish company face one disaster after another.

(4) Alcheminer, it is just on its beginning IPO [4]. It is going to having 80000 shares, each share of 0.14BTC, total raising 11200BTC. How about the company's programm going now? At the beginning of FPGA Demo (chinese character 8 does not have one pie). Dare to thinking about raise more than 10000 coins? In a time of A Jie, Silvefish and Zeus miner will soon going to delivery, such a IPO, how much risk, you can judge for yourself.

In a word, all above four examples  represent four different IPO respectively. One is a scam, end, one is on going, one is on preparation. Here, I suggest that you do not participate in any form of IPO. First of all, it was so difficult to identify whether it is a fraud; Secondly, even it is being major suit recommended, may also fail; Third, even a big man personally operation, also contains a huge risk.
Futures delay

If IPO is the bigest trap in bitcoin ecomomy, the futures is second for miners. IPO risk is variety. For futures, the only one eternal risk -- futures delay [5]. Up to now, I haven't seen a future that have no future delay.

(1)Butterflylabs, known as the number one of "Not to be trusted". This old mining company in the industry, is well know but it does not depend on the quality of its reputation, but by its truthlessness. As early as in June 2012, the company began to pre-sell its 5G miner. Promising the shipment will take at December. The results is a timeless delay. Until June 2013, at a time that a 5G miner even can not dig back its electricity consumption, its shipment does have. In 2013 August, the company began to pre-sell its 600G computing power of Monarch miner. We do not see its ship in November or December. Until now there is no delivery. Two days before, they update message, said that they will do their best to sure it will delive at the end of this month[6]. The company's vice president of marketing and publiction, Jeff Ownby, in a Coindesk interview, even boast without shame said: "in some cases, it may be resolved (delay), such as  one developed a chip, and direct sales spot, but I haven't seen" [7]. Doesn't he know, there are many machine manufacturers aleary start sell in stock only?

(2) HashFast,  November 2013 pre-sale of its 1.2T computing power Sierra miner, is expected to ship at  February 2014. Until now they still do not delivery anything. By its customer reflected, the company is quite not professional. They released updates via email, to one's surprise, its email list contains all the user's e-mail address. And the company changed the shipping time to  March 2014 without informing anyone.  In addition, even the terms of service points out clearly, bitcoin machine orders could be refunded. In fact, when its early customer make requirements to ask bitcoin refund, they rejected [8]. The court has ordered a freeze on Hashfast bitcoins wallet [9].

(3) Advanced Mining Technology (AMT). The company have computing power from 80G to 3.2T machine all on sell, which various types. From 2013 until now, they always sell but not ship! Even today on its web site, one can still find each machine has in stock. Let people have to doubt it is a real. Because that a real machine maker, is may not always have the stock goods. The customer try to contact them by e-mail, by phone or in personally,  but AMT is always not responding. Now, the customer sue them to court [10].

(4) Avalon, as the world's first manufacturer and developer production of ASIC chip bitcoin mining machine, also has delay continuously. Too many story so that could not separate statistics. The most well know occurred in 2013. Avalon company began to accept the miner makers pre-order in May. But until September it is still unable delivery. Although they refund, a lot of mining machine maker can not going on its business [11]. Even some of mining machine maker, after get the refund , not returned to the customer but pocket money themself and escaped, which causing these had paid for machine lose everything. No one can set problems [12] at this time.  There is a small episode, because Avalon has delay more and more, the development team members family information in the China was being released. People base on these information, find out its members parents' home, knocking on doors, and threated. Late pumpzhang have to issued a notice, said it would no longer pre-sale chip [13]. The results is, a lot of mining machine maker following whom are being down to machine business. Even at the very late,  when Avalon really has goods for sell in spot, there are very few people dare to believe them.

(5) The shells. Its mining machine does not delay very long. In  November 2013 they began selling, they have shipment at January 2014. However, the shell is cheating, they claims not to sell futures. But in fact, it is a future. It was said they are known that but not honest. It is still a delay delivery. Perhaps at the time, they  think that machine manufactur work was draw to a end. They has confident that the ship will begin within a week but the trueth is that they are not able to finish the machines. Or on unknowing reason, it is delay. And in addition, its mining machine does not reach 380G computing power which they declaims, it has only actual computing ability of 200G.[5].

(6) The other machine manufacturers. Such as: Cointerra, KNCMiner, all have different degrees of delay. Since they soon have shipment after postponed, and  they give custom compensation. In general they did not cause too much damage to the user. So I have no more words to them.

Mining machinery manufacturing is not a simple thing, it is a complex systematic project. The specific processes include: chip design (divided into pre-design and back-end design, 2-4 months), chip make(2-3 months), packaging and testing (2-4 weeks), debugging and bugs check, prototype (3-4 weeks) to prepare (stock, production preparation, 2-4 weeks), mass production [5]. Most machine chip desinger begin their pre-sale after the chip taped out. It should be noted that if the chip design has bug, so sample does not work, must redo again and again. Such a case cause King butterfly taped out several times, which chip almost abortion. A machine manufacturing process, Gridseed Li Feng in an interview, has detail list[14].

The history of mining machine buyer's tears and blood is so many bad story previous. Here I just want warn everyone, the right thing is you just buy a machine which is on the stock. These risk of IPO and futures are not be controllable. Buy a IPO or a Future, is same as buy a lottery tickets. No little difference.  If you win, you are one of very very luck.

In addition, even you want purchase a bitcoin machine in the spot, it is necessary for you to go to the formal channels. For example, some time ago, when a so called "Wright coin" Uncle buddy, posing and sell mining machine on the net. He boast his business is very well. He can get more discount from maker so that he has a preferential price. Soon after, this elder brothers donations disappeared, all the matter has also settle a matter by leaving it unsettled [15].

The stock machine is good, but there still has risk too. In the next article, I will talk about where you shoud pay attention to your dealer.
Reference material.

The investigation of Labcoin events [1]
Http://bbs.btcman.com/thread-10123-1-1.html
[2] the currency IPO, angel or devil?
Http://bbs.btcman.com/thread-17798-1-1.html
[3] The clouds with God fish: "Scrypt ASIC Litecoin machine will take the lead in shipment"
[4] The Taiwan Scrypt company Alcheminer IPO: 0.14BTC/ shares mine
Http://www.cybtc.com/thread-7399-1-1.html
[5] How much love can be repeated, how many futures worth waiting for?
Http://www.cybtc.com/thread-7151-1-3.html
[6] The butterfly Monarch machine updated this month, the fastest delivery
Http://www.cybtc.com/article-863-1.html
[7] Butterfly Labs 28nm Monarch mill to bouncing, postponed to April delivery
Http://www.cybtc.com/article-672-1.html
[8] to spend $46000 to buy a bitcoin machine: who will fulfill your promise?
Http://www.cybtc.com/article-765-1.html
[9] The court ordered the freezing Hashfast bitcoins wallet
Http://www.cybtc.com/article-757-1.html
[10] Sue: the bitcoin's Advanced Mining Technology machine (AMT)
Http://www.cybtc.com/article-787-1.html
[11] Analysis of domestic Avalon chip group purchase and OEM refund situation 
Http://www.cybtc.com/article-152-1.html
[12] Shenzhen "CCBMC" version of "rain" machine maker, pocket 3000B, overnight move factory, pumpkin confirm.
Http://www.cybtc.com/thread-6837-1-1.html
[13] the August 9, 2013 announcement of the Avalon
Http://www.cybtc.com/article-105-1.html
[14] Yuanyuan and master Bao's interview:  Gridseed Li Feng, litecoin and bitcoin mining machine 
Http://www.cybtc.com/article-782-1.html
[15] The "Litecoin uncle" fraud
Http://c.blog.sina.com.cn/profile.php

Translated from:http://www.cybtc.com/article-875-1.html

flowers

shake hands

shocking

pass

egg

Prev.:Freshman Tutorial Serial Part 5: The Opportunity Cost of Bitcoin
Next:The Parameters of Avalon4 28nm Bitcoin Miner Chip

To Top