Cloud hashing auction (Toomim Bros)

Mining
1

Auction Overview

We at Toomim Bros Bitcoin Mining Concern are selling the first 400 H/s of our ZCash cloud mining capacity in two parallel auctions completing this Monday, Oct 10th at 5pm PDT. Contracts will begin on Oct 28th, and last for 3 months, backed by the Toominer GPU mining software. The auctions will be uniform price multiple unit auction. One will accept only public bids, and the other only private bids. Both will be for 200 H/s. We will offer more batches later. We currently have 5,000 H/s available which we will sell before Genesis day. We will be adding more capacity as fast as we can.

This thread is to discuss the rules and format of the auctions. The auctions themselves will be conducted in separate forum threads. We will open the first auction thread within 24 hours.

Auction mechanisms

Bidders will name the price they are willing to pay and the quantity of hashrate they are willing to pay at that price. Bidders can place multiple bids. At the end of the auction, we will aggregate the bids into one list, sort them by price, and fill them in order from highest to lowest bid until we have filled the 200 H/s. Bids must be fully paid (either to us or into escrow) to be valid. Losing bids will have their funds fully returned.

For the public auction only, bidders will not pay their bid price, but rather the price set by the lowest winning bid in the auction. The difference between their bid and this lowest bid will be refunded. Rational behavior is thus to bid the most you are willing to pay.

Example - Auctioning a total of 200 H/s for 3 months

Bid #1 - 2.0 BTC - 100 H/s ā† Bidder Refunded 0.5 BTC
Bid #2 - 1.5 BTC - 100 H/s ā† Winning Bid ā€“ All 200 H/s auctioned for a total of 3 BTC.

Bid #3 - 1.3 BTC - 100 H/s ā† Losing Bid
Bid #4 - 1.0 BTC - 100 H/s ā† Losing Bid

For the private auction, winners will pay the actual amount bid, as there is no way we can prove what the lowest winning bid was.

Accounts and payment methods

Bidders will first create an account with Toomim Bros. We will assign a Bitcoin payment address to each customer. We will use the address listed on http://toom.im/faq, 1CjUsGn5iQ7eRRjYfryQ2EPoE2z5oNvVT4, to sign messages for each payment address assignment. This proves that Toomim Bros controls the address you were given, and that you are not being scammed by a phisher.

Bidders who wish to use third-party escrow may do so with OgNasty. The minimum size for escrow bids is $1000. Alternate escrow agents will be considered for large bids. At the bidderā€™s choice, the funds can either be held in escrow until the auction closes, or they can be held in escrow until the first 7 days of the hashing contract has been fulfilled. If the funds are released upon auction close, OgNasty will get a 1% fee and Toomim Bros will not charge an additional fee. If the funds are released upon 10% completion of the contract, OgNasty will get a 1.5% fee and Toomim Bros will charge an additional 5% fee. Using escrow is a lot more work, and makes it harder for us to use our revenue to buy more GPUs, so we disincentivize it.

Payment will be accepted in BTC or in ETH. All bids will be officially denominated in BTC. When exchange rates are required, conversions will be made at the time the auction closes, using the rates listed on Poloniex at that time. Failed bids will be refunded in full in their original currency.

To create an account, please send an email to orders@toom.im with the following information:

  1. Your preferred Toomim Bros account username.
  2. Your forum username (if you have one).
  3. A return bitcoin (or ethereum) address. It is strongly recommended that you be able to sign messages with this address.
  4. An email address. We will need this in order to get your pool information before activation. (PGP is nice if you have it. Our PGP keys are here.)
  5. Whether you will be using OgNastyā€™s escrow service.
  6. Whether you expect to bid mostly privately or publicly. (You can switch later, but it helps us to know early.)
  7. Optional: Phone number for 2FA.
  8. Optional: Skype/Facetime/iChat for 2FA or answering questions.

Accounts created less than 4 hours before an auctionā€™s close time will not be permitted to bid until the next auction.

Escrow (optional)

(Note: escrow instructions via OgNasty are still being written.) Bidders using OgNasty still need to register their account with Toomim Bros as above before bidding. Bidders utilizing OgNasty (from bitcointalk) for escrow should send their bids to 1Zcash1bw9DNTbDkqaB67uYme44eEmtp6. After sending a bid to this escrow address, bidders should post the transaction ID as well as an address the funds should be returned to in the event the bid is not accepted. Bids that are not accepted will be returned to the sending address if no return address is listed.

Hashpower delivery

Our hashrate will be delivered to a pool of your choice via the ZCash stratum protocol. As the pool ecosystem is not yet mature, we will collect pool information from you in the weeks or days before the October 28th ZCash launch. Pool changes will also be permitted after launch. We might also be able to assist you in solo mining, but we legally cannot be a pool. Toomim Bros will never handle your mining revenue. We are not a money services business or a money transmitter, merely a purveyor of computation.

Refunds

Nope. After the auction is complete, we will not do refunds unless we have difficulty fulfilling the hashpower contract. Bid with that in mind.

Exception: If the community is able to crowdfund a purchase of our mining software as open source, we will refund all cloud hashing customers (pro-rated, if after the start of the contract) and start the auctions over. If we sell the software privately to another entity, we will offer our customers a choice of a full refund.

Questions

We will be appearing on BlockTalk w/ Alex Sterk https://www.youtube.com/c/blocktalk with hosts @Sterky @NotSoFastCrypto @CollinCrypto Tuesday October 11th at TBD time to talk about our offering, plans and answer general questions. Please feel free to post questions on this thread youā€™d like us to address on the show, just add #blocktalk to your post.

Poll

For our next auction, how long should the contract duration be?

  • < 1 month
  • 1 month
  • 3 months
  • 6 months
  • 12 months

  • 12 months

0 voters

2

Sounds great, but this:

Rational behavior is thus to bid the most you are willing to pay.

Is not entirely accurate, particularly with unsealed bids. This is a type of multiunit auction, and per Wikipedia:

In theory, the uniform-price auction provides an incentive for bidders to bid insincerely unless each bidder has demand for only a single unit. For multiple-unit demand, bidders have an incentive to shade their bids for units other than their first because those bids may influence the price the bidder pays. This demand reduction results in an inefficient equilibrium.

This is further confounded by having unsealed bids, because in an auction where bids are public, your bid reveals information to other bidders, meaning youā€™re incentivised to game the system - for instance, by bidding late when you have more information about other biddersā€™ intentions.

Another consideration is how the final price is determined; setting it at the price of the highest losing bid may be fairer than setting it at the price of the lowest winning bid; otherwise, in the situation where one bidder buys the entire stock, they would be forced to pay their maximum price, rather than the amuont others were willing to pay.

1 Like
3

@nickjohnson Yes, I read that too. Itā€™s a very small deviation from the theoretical optimium, and the VCG auction comes at a high cost in terms of complexity. It might be borderline significant in this first test auction (because it is small), but not extreme. To a first order approximation, I think that the statement holds.

We may scrap the private bids if you guys think theyā€™re a bad idea. I just thought that with this being ZCash and all, some people might prefer to remain anonymous.

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4

I am interested in renting hashing, but not gonna bother with what seems like a poorly thought out auction.

Consider scraping the auction and just setting a price.

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5

We intend to offer fixed-price sales as well based on the auction results. The fixed-price offering will have a slightly higher price than the previous auctionā€™s final price.

3 Likes
6

Yes, I read that too. Itā€™s a very small deviation from the theoretical optimium, and the VCG auction comes at a high cost in terms of complexity.

Yup, thatā€™s fair. Iā€™m far more concerned about the unsealed bids.

We may scrap the private bids if you guys think theyā€™re a bad idea.

On the contrary; I think all the bids should be sealed.

I am interested in renting hashing, but not gonna bother with what seems like a poorly thought out auction.

I donā€™t think this auctionā€™s poorly thought out; I just think it needs a bit of tweaking, personally.

1 Like
7

I agree with this. It may raise prices somewhat, but it will also be fairer.

Prices are most likely to be kept down by the prices of the competition (where known) in a fully sealed auction. (i.e. the prices of other cloud mining options, rather than other bidders).

It reduces the capacity to game the system.

8

Perhaps we should alternate public auctions with sealed auctions?

This auction is partially meant to be a small prototype run, so that we can get a feel for how it plays out and use that experience to inform the design of our website.

A sealed auction was actually my preference, but my brotherā€™s preference was for a public auction. Eventually we decided to try a hybrid.

1 Like
9

A couple of other clarifications would be good:

  • I assume that in the case of a tie, bids will be filled in order of when they were placed. It would be good to explicitly state that.
  • For bidders that pay in ETH, how will their unfilled bids be refunded? Using the BTC spot price (in which case the bidder bears the exchange rate risk during the auction), or proportional to the original bid?
1 Like
10

In the case of a tie, weā€™d probably just fill both bids.

For ETH bids, if they fail the auction, we will refund the ETH amount. If they pass the auction, they will be converted into BTC as of the exchange rate on the auctionā€™s close date, and then the difference between their bid and the lowest winning bid will be converted back into ETH and refunded.

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11

That sounds fair, and means people can effectively bid in ETH without taking on exchange-rate risk themselves. I assume youā€™ll provide an ETH address for bids too, then?

In that event, you need to update this, though:

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12

Thanks, done. (Post must be 20 characters or longer.)

13

I wanted to chime in here with an escrow address for this auction and a signed message from my known public address to confirm my identity. If you would like to confirm personally by sending me a message on bitcointalk.org, that is also acceptable.

The Bitcoin address that will be used for this auction escrow is:
1Zcash1bw9DNTbDkqaB67uYme44eEmtp6

Please make sure to provide a return address where your BTC will be returned in the event it is not a winning bid. If no return address is provided, BTC for failed bids will be returned to the sending address.

Public Address: 168WXhArv7Fasqvi2xm5MQMfLhG18jifMe

Signed Message:

Address 1Zcash1bw9DNTbDkqaB67uYme44eEmtp6 is under my control and exclusively being used for the Toomim Bros Cloud Hashing Auction.

Signature:
HPWbZSG3H5CchbsPB/uwxgesep+58Hoqj2UlwuLFNi2pLpOV7NLCV0sh5mAaykXuX3UV3yCojoBfqIqZ8WSLHBM=

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14

I apologize in advance for the stupid post ā€“ I am an absolute newbie at mining.

So Iā€™ve become very excited about the Zcash project and was planning to give mining a shot in order to better understand that side of things & hopefully make a profit. I have $3k saved up that I wanted to put towards this goal and was looking at building a rig with 6 GPUā€™s.

After reading through the threads here it seems that the best move at this point is probably to instead put that money towards this cloud mining auction.

So this probably defeats the purpose of a private auction, so please just ignore me if iā€™m out of line, but would anyone be able to help me figure out how to bid this given my budget?

From what I can tell my planned rig of 6 R9 290xā€™s would give me a hashrate of about 132 MH/s for $3,000 - but this auction wants bids in H/s, so my budget would have given me 132,000,000 H/s for 3,000?? This just doesnā€™t seem right. It be great if I could know what per H/s my planned rig would have cost, but Iā€™m confused by the math. Anyone willing to help the dumb guy here??

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15

The 132MH/s figure youā€™re quoting is almost certainly relevant to another currency - Iā€™m guessing Ethereum. This hashrate is not some immutable number which applies independant of the task you put it to (unlike, for example, the speed of your processor in Ghz).

Instead, itā€™s an estimation of how many times your processing device can generate a hash, per second.

The hashes per second figure for your 290s will be much, much lower than the 132MH/s you are quoting, when computing zcash hashes. This is not a problem, apart from at the very bottom end of computational ability, because everyone else will be similarly limited in relative terms, and the difficulty of the solutions you need to arrive at are kind of artificial.

The answer is that nobody knows what the hash rate of your 290 will be for zcash, because nobody knows what publically available mining software will be able to do. However, if you look at the examples under development, you can get a rough idea, which I would hope ought to be in the same order of magnitude.

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16

@ChuckFeast thanks so much! youā€™re exactly right - I came up with 132MH/s from an ethereum mining calculator.

Iā€™m coming to the realization that Iā€™m probably just not knowledgeable enough to participate in this auction appropriately.

Is there any idea when cloud hashing services will be available for a set fee? Would that be available by 10/28? Thatā€™s what Iā€™d like to do the most, but Iā€™d hate to miss out on mining right out of the gate

1 Like
17

Genesis mining and zeropond have set fee miners ready if you want to lock in some hash.

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18

@_jt

Thatā€™s what this thread is for, to auction 200 H/s. The lowest winning bid will inherently set the price for future orders. They have 5000 H/s available to sell, which will occur after this initial auction.

2 Likes
19

I would be interested in bidding, but not against ā€œprivateā€ bids. I have no way to verify that they are legit bids.

20

Thanks! Iā€™ve looked into those. Iā€™m in the U.S. so zeropond isnā€™t an option and Genesis does not seem like a great deal. After eliminating those options I was going to build my own rig, but iā€™m not confident itā€™d be any better than whatever gpu miner I could hopefully rent from the Toomim bros. I guess weā€™ll see what they put together.