Quote from: dyask on September 05, 2014, 06:08:05 AM

Quote from: Netwerked on September 04, 2014, 07:13:00 PM

Quote from: dyask on September 04, 2014, 05:20:34 AM

(However I still think they are both scams.) Grin

Just because we don't understand a business model doesn't automatically make it a scam. If I understand you correctly, you think that PBmining.com does not have a sustainable business model. Since it is not sustainable, it will eventually fail. The solution is to not invest if you think that will be the outcome.

No you misunderstand me. I think it is a scam because the math shows they aren't backing up the GH/s with real hardware. If they came out and said we aren't actually backing up the GH/s with hardware, I wouldn't have a problem with it. There are many variations of that ... for example they could say when we run of funds for power we will stop mining. The problem is they are selling 5 year contracts that can't possible work at the prices they are charging. However it is better now than a couple months ago as there is now a lot cheaper hardware like the S3, but the number still don't add up. It has nothing to do with business model, it is just lining up the numbers against their claims.

I agree with you partially-- yes, the hardware isn't totally real-- no, it isn't a scam. It is true that the price per GH cannot sustain a 5 year contract with today's hardware. PBmining.com made a statement in another thread that a mining contract would not use the same hardware for all 5 years. Since most of the mining will take place with future hardware that doesn't exist yet, I would agree that the majority of the hardware used to support your contract is not yet real. There is a good chance of it existing in the future.

But think of it logically. If a contract is going to break even, it will break even within the first year, maybe even as long as the first 18 months. People who bought a contract in February already broke even in July. If the same difficulty increases take place, then people who bought contracts in July might never break even, receiving only 85% of their purchase price back (according to my own calculated guesses). The other school of thought is that difficulty increases will slow down, allowing contracts purchased today to eventually become profitable.

Also, keep in mind that a "5 year contract" is mainly a marketing ploy. With each difficulty increase, you will earn less and less. To put things in perspective, you'll earn 98-99% of your income in the first year, 1% in the second year, and pocket change beyond that (assuming a 1TH contract). In fact, I think a 1TH contract purchased today will only pay out for 2 years, since the amount mined will become so small that the payment can't make it through the Bitcoin network.