I like the concept, but I think the pricing model is problematic because you're basically trading money for money, essentially buying hashes. Where that could have problems is that as the BTC exchange rate goes down people will be less likely to pay because they can see, in black and white, the cost basis and get turned off.
Another model, one I would like to try if I had the capital (I don't) is a leasing model: lower entry fee but a larger cost in the long term.
Example: A basic machine with 2 6990's would be about $1,800USD, more than most people are wanting to pay up front. You could offer to lease that machine for $200/month, but require a 12-month commitment (contract), so in the end you earn $600 extra gross. Those costs are just examples, you would change them to suit your market.
It's not even a new model, really, server hosting companies have been doing this for over a decade. It won't appeal to everyone, especially those who like playing with hardware, but people who believe BTC is a long-term currency but don't have the space/time/skill to build or maintain miners would jump at the chance.
Another model, one I would like to try if I had the capital (I don't) is a leasing model: lower entry fee but a larger cost in the long term.
Example: A basic machine with 2 6990's would be about $1,800USD, more than most people are wanting to pay up front. You could offer to lease that machine for $200/month, but require a 12-month commitment (contract), so in the end you earn $600 extra gross. Those costs are just examples, you would change them to suit your market.
It's not even a new model, really, server hosting companies have been doing this for over a decade. It won't appeal to everyone, especially those who like playing with hardware, but people who believe BTC is a long-term currency but don't have the space/time/skill to build or maintain miners would jump at the chance.
Clearly it is money for money, but so is any hosting model
Customer gets in this:
- access to any desired amount of hashing power without figuring anything out
- No need to fully purchase the hardware upfront
- no need to manage hardware, software etc. just "push a button"
- no need to manage electricity capacity or scaling issues
We get:
- Money upfront towards the Hardware
- Steady monthly profit
- We get to own the HW (ie. sell it if it becomes useless)
So the business model will be staying ahead of the direct HW owned profit vs. our pricing, to a degree.
With monthly our benefits are emphasized. This would allow us to grow our cluster waaaay faster than otherwise, as we get money upfront, not after the fact.
While at first glance it might look like it does not make sense for us to offer this, ie. we'd be doing an charity. That's actually a PRO for the business.
Truth is that if we spend like 10k on hardware day 0. We have to wait atleast till day 11 till we can add capacity by mining ourselves (whatever the return happens to be). Selling that same capacity to end customers at day 0 for 1/3rd of the cost + mohtly rate, allows us to add ~3300 worth of hardware online, which we can use for mining, or yet again sell, and cycle for 1100 more capacity.
That would bring us at day 30 capacity of at least 14400 in terms of investment.
At which time we get again monthly payments.
Assume monthly payments total to 1/5th of HW price after costs, it would mean we have gained 33% + 11% + 2.2% + 20% + 20% on the hardware at end of month 1, totaling 86.2%.
Assume difficulty raises so much that HW ROI drops to 25% monthly in the next couple of weeks, this is significantly higher rate of growth.
Assume atleast 10% turnover monthly too, ie. at day 1 of month 2, we can again sell 1k worth of investment to new customers for new setup fees.
At which point HW has devalued itself only by 20-25% worth.
New HW gets released, we instantly invest into it, and start recycling our HW, and after enough has been swapped, lower prices accordingly, meantime profitting from old rates with new HW (increased profit margin).
The model you describe would require customer to pay HW + Operating costs for 1 year upfront, with no way of backing out, meaning it's actually worse than just doing it yourself, way more expensive, way less flexible. You'd pay full HW price + full operating cost, but end up owning nothing but the gained BTC, meaning you loose immediately 100%+our margin on the HW investment. Makes absolutely no sense.
This should be win-win-win situation, customer wins (lower initial investment, lower risk), we win (risk is offset by customers, operational costs covered if BTC goes haywire), bitcoin network wins (commercial mining service!).
The example pricing on my initial post should be actually quite close to the actual.