I spent most of my weekend researching and analyzing every piece of data I could get my hands on to figure out whether or not I should order one of these units. It's a big decision for me. I do not have a lot of money to invest with.   After talking to a few friends and random internet strangers about it, I was encouraged to start putting some of the information I've put together on the internet to potentially help others in a similar situation.   

But first, a little bit about myself.    

I'm pretty new to the whole crypto universe. It is something I've kept an eye on for years, but decided to avoid it for the most part as I had a feeling it would consume a lot of my free time. I'm the kind of person that when I find something I'm curious about, I go full "Mad Scientist".    

About 8 months ago, a friend of mine had invested in multiple video cards to start mining. He said it was working out okay, but that a lot of what he was doing was confusing to him and he couldn't explain it. This led to me looking into things to see if I could help out, which led to me picking up 2 x Nvidia 1080 Tis. Like a gateway drug, I've spend every night since conducting various experiments with mining crypto, trading crypto, and turning crypto into USD. It's an absolutely fascinating hobby that I can officially say has turned into an investment. In the last few months I've been gathering additional video cards and purchased my first ASIC (Bitmain A3).   

A lot of my research has been focused on maximizing my investment and learning everything I can about the cryptocurrency industry. A recent discussion on Discord led to me spending most of my day yesterday talking to multiple individuals about ASIC opportunities. And, well, here I am writing on the internet for the first time in my life. So here we go.   

My Mining Hardware and Budget   

Setting a budget for any investment is extremely important. When it comes to investing, you have to assume whatever you spend is gone forever. And, due its "Wild West" nature, this is especially true with Crypto.   There are many ways to play the games of Crypto investing. I've chosen to focus on mining. My overall goal is to increase my monthly recurring income with hardware that I can depend on producing. 

For this you have 3 non-cloud options:    

• CPU Mining
  • Not a great return on  investment, though there are ways to make this work
• GPU Mining
  • Extremely flexible as it can be used for different algorithms
  • Returns can range from OK to Great depending on what your scope is
  • "Safer" because they have a value for something outside of the crypto world
• ASIC Mining
  • Extremely profitable if you get the right device at the right time
  • Much riskier due to their single purpose nature and, due to the industry's rapid development,       reduced lifespan
  • Also risky as these are created by companies that generally don't have much of a reputation

I currently have 12 x Nvidia 1080 Tis and a Bitmain A3. They run 24x7 in my basement and I have various systems in place to make sure I know if there are any issues so that they stay running.   My plan was to add another ASIC For $1500 to $2500 sometime between Feb 2018 and April 2018. This was based on researching the Obelisk DCR1 and SC1 (whole other monster!) that led to me concluding that a viable device will exist to preorder around in that timeframe.

Enter Halong Mining   

If you have been keeping track of things, Halong Mining showed up late in 2017 and poised themselves to take on the current ASIC King Bitmain. They have a fairly active Twitter and have posted a few different videos showing off their equipment. As my only other ASIC experience has been with the relatively trusted Bitmain, from a marketing perspective, Halong does give the best impression.   

As an American used to buying things from Amazon and having a level of protection and security, purchasing a product with Crypto (which feels crazy) from the other side of the world from a place that, I'll admit, seems "shady" may not be the smartest move. Then again, playing the games of crypto investing is not for the faint of heart.   

On March 17th, 2018, Halong announced the Cryptonight mining DragonMint X1 for $1599. A device that is in my price range, and so my research began.     

Is a Cryptonight ASIC the right move right now?   

The focus here is the future, so I'm not going to cover the GPU mining elements here or older ASICs.    

Right now, there are several big units coming that are/were still available for pre-order:    

• Halong Mining's DragonMint X2
  • $3000
  • 248 kh/s at 490W
  • Due Late April
• Halong Mining's DragonMint X1
  • $1600
  • 124 kh/s at 245
  • Due Late April
• Bitmain X3 (Batch 3)
  • $3000
  • 220 kh/s at 550W
  • Due in May
• There are also a few other devices out there and more coming, but these 3 were my focus (Baikal is      going to have something soon!)

In the current climate, Cryptonight is averaging around $.71 per day of coin generation with a 1080ti. This comes out to around $.85 for every kh a device can generate.    

This is based on the current rates and current mining difficulties:    

• Halong Mining DragonMint X2
  • Creates $200+ per day
• Halong Mining DragonMint X1
  • Creates $100+ per day
• Bitmain X3
  • Creates $200+ per day

So when you look at this, YES, absolutely a Cryptonight ASIC the right move. However, if this isn't your first rodeo, you know these numbers aren't the real numbers. As these devices begin to exist, they will dominate mining pools and increase difficulties for everything they touch. The challenge is figuring out the impact once this happens.   

Deciding on the Halong Mining DragonMint X1   

So, the X1 is the right price, but is it coming at the right time? My only experience with ASICs and their impact have been with the Bitmain A3. It was the first on the market for mining Sia and I was one of the first to receive it. During that time, I generated over $300 a day, to $100, to $50 . Now, it is hovering around generating $8 to $13 per day as things have become more stable.   

Some of the factors to consider:    

• If I went with the X1, I will not be among the first to mine with the ASIC. There devices that will arrive in earlier batches, starting at the end of March/Early April. The X1 would ship in late April
• Coins may switch to a different algo. (Monero already said they will!) 
  • A major difference between the A3 and the X1 is that Cryptonight is used for multiple coins, not just one. A lot of threads out there are focusing on Monero (XMR) making the decision to change its algo. This means the X1 will not be able to mine it. However, Monero is not the only coin that uses Cryptonight. (Check out: https://minecryptonight.net/ )
• All estimates are based on the current values of crypto (which are all down in the last couple of      months, but up over the last year, mostly)
• Halong Mining's devices have not shipped yet, they have no track record
• Calculating the impact of the new hash power of multiple devices across multiple algos is going to be very difficult, especially without knowing how many devices have been sold

When I stepped back to review, I simplified my concerns into two things:

1. Halong has no reputation and their devices are untested.
2. I'm not sure if 124 kh/s would be enough to justify the purchase .

My logic for overcoming my concern about Halong Mining came down to having faith that it is in their best interest to not only create a device that works, but one that arrives when they say it will arrive. Reviewing every tweet, every youtube video, their website, and talking to their customer service, I failed to find a reason not to take the leap of faith.   

In order to get a rough estimate of how things could go. I couldn't find any shipping numbers, so I took an aggregate average from previous batch sizes that Bitmain has done in the past combined with some visual estimates based on order numbers and guesstimates (One of my variables was to count the number of units that can fit on a pallet). I took an average of all of this to get a global hash rate based on a large quantity of X2s/X1s,X3s and a smaller quantity, to get a range based on what the potential new network hash rates would be at the end of April.   

Without showing all of the details:   

• If you tally up the hash rates of the top cryptonight coins you get around 1,400 MH/s. 
• I averaged everything to estimate that with all the new devices, the total new hash rate would be      around 1,800 MH/s , raising the total network hashrate to 3,200 Mh/s

There are a lot of variables to consider:    

• Any of the cryptonight coins could go up or down in value
• A % of the Monero miners will still mine Cryptonight coins for some time
• My network hashrate estimates could easily be higher or lower depending on ship dates, new ASICs, and      just being way off in device estimates
• Other coins could switch to a different algo to remain "ASIC Resistant"

Ultimately, when I ran numbers for various scenarios the X1 would end up doing very well for a week or so, then start to plummet, just like the A3 that I had purchased. In theory, it could pay for itself in less than 60 days, then become a flexible ASIC for switching between different coins. All of my estimates suggest that once the dust settles, it will average between $8 and $15 per day, at today's crypto prices.     

Pulling the trigger   

I decided it was a risk worth taking.     

• Worst case - Halong doesn't actually ship the device and screw me over. I lose my money.
• Best case - This device is going to pay for itself relatively quickly and add to my monthly crypto generation.  If the market recovers, then estimated returns grow with it!  (Boosts from Bitcoin and other Altcoins help!)
• Realistic Case - This device is going to generate more than I would have generated if I had bought 3 to 5 1080 Tis for MSRP.

Is getting an X1 (or other ASIC) the right move for you? 

Maybe! 

Is the X2 an even better move? 

Yes, if you can afford it! 

Should I write more articles like this or about Crypto investing or mining in general? 

You tell me!  :)

Cheers,

Meneroka