Why I am leaving ProHashing (at least for now)

A forum to discuss mining pools, features, etc.
Forum rules
This forum is a place to discuss mining pools, features, etc. Topics can include but are not limited to PROHASHING pool.

For the full list of PROHASHING forums rules, please visit https://prohashing.com/help/prohashing- ... rms-forums.
User avatar
TechElucidation
Posts: 36
Joined: Fri Mar 18, 2022 2:01 pm

Why I am leaving ProHashing (at least for now)

Post by TechElucidation » Sun May 22, 2022 8:59 pm

.. but first, why I came to ProHashing.

Until recently I had not been very involved with crypto or mining, though through the pandemic I started looking for something to do, and so started my exploration of crypto. I explored many different aspects of the crypto universe, including trading, staking, and obviously mining. I actually started off by buying two small ASICs (and L3+ and X5) both on the Scrypt algorithm. The first pool I used was obviously paying out in Litecoin and DOGE.

But after doing that for a few months I saw, what I felt, was the down side to mining with ASICs – that you were locked in to just that algo and couldn’t adapt. I had purchased some fairly low-end ASICs that were not particularly profitable, using way too much power for what they produced. I wanted to explore other coins, and so was looking at options on how to get them.

Obviously one thing I could do is simply trade my LTC and DOGE for other coins, but while looking for options I found ProHashing and loved the value proposition. It didn’t matter what equipment I had; I was able to get paid out in whatever coin I wanted. Furthermore, the Portfolio targeting was in my opinion an incredible tool for anybody who didn’t want to sit there and actively manage payouts as the market fluctuated. As I was just exploring, and didn’t always have time to maintain things, this was a god send in the beginning.

To be honest, I think this may be one of the most misunderstood (some YouTube videos really don’t do this credit), and least promoted feature of ProHashing – perhaps even underutilized due to this. For anybody who really is looking for more ‘passive’ income that they don’t have to ‘actively’ manage, ProHashing, and the portfolio targeting, is a great solution. I have recommended it to people whenever people ask me about getting into mining.

I ended up selling my two ASICs, and moved to GPU mining. Like with my two little ASICs, I wasn’t looking to setup some monster mining operation, but wanted to experience it as there was a lot in the news with Nvidia’s LHR, the upcoming Merge, and so forth. I also liked the idea that with GPU mining you had more flexibility with what you mined – to a degree, if you were not looking for immediate returns. Though with ProHashing, I obviously went with Ethereum mining, since it paid the most, that I could get in any coin I wanted.

Why try to mine RVN, when I could get compensated more for Ethereum mining, and just take that compensation in RVN if I wanted?

A changing landscape

A few weeks ago several YouTubers got together and started talking about doing the great Hashrate Migration – the plan was basically to see how the different networks would react once Ethereum went Proof-Of-Stake and was no longer minable with GPUs. Currently no other coins were nearly as profitable, and would the profits drop even further with a sudden influx of miners? Honestly I think they over-estimated how much of an impact they really had, they seemed to take very blip on the total hash rate as evidence of people migrating GPUs.

For me I used it as a personal exercise to see for myself how my rigs would work under different algos. It was kind of fun trying to reconfigure things, and see how things might go post-merge – and the final conclusion, it would be bad. Profits on all other algos were very low, and if they experienced an influx of miners all vying for the same rewards, the profitability was going to get worse. There is always the (slim) hope that one of the coins will start to take off, and even a small slice of the rewards would become an acceptable alternative. But like I said, I have my reservations on how some of these coins are going to react well to the tidal wave of miners that is coming.

Another huge change is obviously Luna, and the UST de-pegging. This has taken a huge hit on the crypto market overall, with prices down across the board. Where I used to HODL my Bitcoin till it got close to $40,000 before moving it to a master node to maximize the impact, recently I have just been hoping it hits $30,000. Obviously Ethereum is also taking its own hits, so mining profitability has been dropping.

Finally getting to the point

As much as I love ProHashing, the ability to get paid (quickly) in any coin I want, and the portfolio targeting – these things come at a price. I would say a justifiable price to be honest, and I want to make this very clear, I have been very satisfied with ProHashing up to this point.

If I was on a traditional mining pool getting paid in Ethereum, first I would have no option to get paid quickly as many of minimum payouts well above ProHashing. The place I am going to has a minimum payout of 0.2 Ethereum – so may be quite some time before I get anything to work with.

As I alluded to above, I was currently working on a project that needed Bitcoin to invest into it. So even once I get my Ethereum I would need to put it on an exchange and convert it to Bitcoin, which would be adds fees outside of the mining pool.

And the shoe drops

While all these things options made ProHashing appealing – like I said, they come at a cost. Fees here are higher than some of the other pools – and again, for good reason, they need to be paid for these tools and options, and again I feel the fees are justified for that.

However, the profitability here is low – and I do get that this is a function of the fact they are not the largest pool around, and the hit to the overall market. Rewards and payouts come from winning blocks, and the larger the number of miners, the smoother they can be. But comparing it to what other pools are paying as rewards, ProHashing is lagging behind. I have noticed a few comments in the last few days about how other pools are paying 20% or more above ProHashing.

With things the way they are, these two pressures on both sides, make it harder to justify staying around. Post merge miners are going to have to go to even less profitable coins (in which case the lower profitability here will make matters worse) or stop mining (which makes the stability of this pool harder to maintain).

One small side note for anybody still reading, and I guess for ProHashing, I think some of the points I love about ProHashing (especially being able to get paid in any coin) make the current overall market volatility appear worse than it really is on the profitability front. Our earnings are shown in US dollars, so day after day I see that number drop. But in reality, if I look at the payouts in terms of BTC (which I have been taking for a while) it has not dropped as significantly. So some of the feeling of dropping is coming from seeing the fiat number drop due to the crypto market. Other pools just tell you the payment in the coins you mined, which won’t fluctuate nearly as much. So yes, I realize this is more a perception, but one others may erroneously feel as well.

My future plans

For me, I will finish off my second GPU rig as I have time and money, but won’t invest too much too quickly until the future of mining becomes a little clearer. I still need something to generate some crypto for me, just need to get ready for leaner times.

Instead, I am going to focus more on other areas of crypto, including trading and staking. Since I will be doing my own trading, getting paid in a single coin won’t be a big of an issue. I will also be able to manage my own portfolio. With that in mind, switching to another pool that only pays out in the mined voice, but has lower fees works out for me.

I also want to explore some of the other projects out there. I really like some of these projects that create coins to actually build an ecosystem and service. I have already gotten into a few, and love the concept of using crypto coins as a way to pay people to build out a service that provides value to others. Helium for example pays people to setup IOT gateways that can then be used for medical devices, smart devices, things like that. SCPrime is trying to build a decentralized storage solution. I like that these projects are trying to do something with the coins. Planetwatch is trying to gather global weather information for climate science. I do like these projects quite a bit more than some of the other coins that are there just to be there.

So, in short, mining is not going to be a focus moving forward. I never though that it really would, while I love all I have learned by my experiences with it, long term I don’t know that I would want to be a miner. I don’t want to abandon all I have done and built, unless the cost to keep it running out-weights what I get out of it. But in order for that to last as long as possible, I simply have to find ways to improve the earnings and reduce the costs, and not sure that is going to be with ProHashing.

This is the start of the next part of the journey for me. I have moved my mining to a new pool, and going to see how things go there for a while. This may just be a case of ‘grass is always greener’, and experiencing other pools may realize more reasons and come back to ProHashing. It may also be farewell if I end up deciding to drop mining all together if things don’t change with the markets and mining in general. Who knows what the future will hold.

In summary – thank you ProHashing

You guys have been really good to me overall. I have enjoyed my time mining here - and may keep my occasional test rig pointed here just as a way to say ‘hi’. I really do think you guys have a great value proposition with the services you provide and that is still attractive for people.

The staff have been amazing. It may be a small group, but you guys are really committed, and put a great deal into what you do. I am also going to keep coming back to check your career pages, as I hope to find a position my step daughter might be a match for!

See you again perhaps~!
UbjfP2ZOJa
Posts: 12
Joined: Sat Dec 11, 2021 3:10 am

Re: Why I am leaving ProHashing (at least for now)

Post by UbjfP2ZOJa » Sun May 22, 2022 11:58 pm

I am sad to see you leave, TechElucidation!

I learned quite a lot from you that I probably wouldn't have otherwise, as you 'cracked open the cover' of things I didn't know that I didn't know. Thank you for that, and for your reasoned well-written commentaries on your mining projects. I'm sure I'm not the only one here who appreciates them.

Good luck in your future endeavors! I'll probably see you in the T-Rex Discord (I'm KennyLV on Discord). Thank you again!
User avatar
Steve Sokolowski
Posts: 4601
Joined: Wed Aug 27, 2014 3:27 pm
Location: State College, PA

Re: Why I am leaving ProHashing (at least for now)

Post by Steve Sokolowski » Mon May 23, 2022 11:42 am

I'm also sad to see you leave. :(

There are a few people who mentioned that they were looking for profitability comparable to 2miners. That can be achieved right here with PPLNS mining, which has a similar fee. The fees are lower than FPPS mining, and you still get be part of this great community and use the features our website has. Most of the largest ethash pools are in fact PPLNS pools. While we don't offer multiple payout coins in PPLNS mining, 2miners and similar pools don't either, so you wouldn't be missing something you can get somewhere else.

In terms of profitability for all types of miners, we also significantly improved the mining servers over the past three weeks. I spent every day of the week, even Saturdays and Sunday, working on fixing issues with the mining server. There should already have been as much as a 5% increase in hashrate, and we expect profitability to continue to go up almost 10% over the next 15 days, now that these bugs have been fixed and optimizations have been applied. For ethash, you can see that the profitability has not declined at the same rate that price and hashrate have, and the "untrusted" mining line has converged on the "trusted" line. The resolution of these issues will earn both miners and the pool additional money, and you can see that already by how the "uncle rate" in ethash has continued to decline every day.

I'm curious to find out: TechElucidation, what would you consider the additional features that Prohashing provides to be worth? Everything has a price - I would change careers to clean sewage tanks if I were paid $1m/year. What would be the maximum difference from 2miners where you would decide not to leave? Would you stick around if the difference were 2%? 4%? 8%? 20%?

Everyone else is welcome to respond on that price, too.
User avatar
TechElucidation
Posts: 36
Joined: Fri Mar 18, 2022 2:01 pm

Re: Why I am leaving ProHashing (at least for now)

Post by TechElucidation » Tue May 24, 2022 5:53 pm

Steve Sokolowski wrote: Mon May 23, 2022 11:42 am I'm curious to find out: TechElucidation, what would you consider the additional features that Prohashing provides to be worth?
Hi Steve,

Thanks for your comments, and for seeking additional feedback not just from me, but from the ProHashing community as a whole. I do hope more people take advantage of the opportunity to speak up. One of the things that set ProHashing apart is the interaction with the staff, and ability for the community to have a voice. It is important for that exchange to happen, so that you know what people are looking for, and what you are able to provide for them. We have seen what happens when companies stop treating their customers with respect and just ignore them, so keeping open, active, and honest communication is paramount.

Now to try to answer your question - “what would you consider the additional features that ProHahsing provides be worth?” To me there is two ways to look at this question.

The first part is asking the value of the additional features. Some parts of this are pretty easy to answer, take a list of these additional features, and see what others are charging. For example, the exchange service, mining one coin and getting paid in another is one of these. With most other pools I would get paid out in Ethereum, and then need to pay an exchange 0.6% to convert it to the coin I actually wanted. So, by using ProHashing I am avoiding that external exchange fee, so adding that back to ProHashing fees make sense.

Other features are a little harder to consider this way, as they are unique to ProHashing from my (all be it, limited) experience. For example, I have not seen another pool that does such a good job tracking electric usage the way you guys do. This was a huge benefit to me as I was growing, and helping me realize how critical efficiency is when it comes to mining. It’s one thing to see the money come in, but when you see the cost right next to it in your charts, those numbers take on new meaning. You also go further than just tracking it, by giving us an easy way to do a direct deposit back to pay the electric. As I said however, these features are not something I have seen elsewhere, so trying to figure out what this is worth is a little harder – but overall, does add value, so yes, fees could go up accordingly.

I quickly want to mention something, I did not move to 2Miners myself. I have specifically been vague about which pool I am trying out right now as I didn’t want to start a debate between this pool vs. that pool.

However, since you brought up 2Miners, I am going to use them to finish up this part of my feedback. Looking on MiningPoolStats it shows 2Miners is 1% fees on PPLNS, and considering just the exchange fee (0.6%) benefit, ProHoshing would be fine charging fees of 1.6% for the combination mining pool and exchange aspect. Add the other features, and you could go even higher. But you are actually charging less than that, so currently your service is a bargain, and from a purely business aspect, you could increase your fees for that service.

But…. This is where the second aspect of your question comes in. Not just what it is worth, but specifically what it is worth to ME. As of right now, I don’t have a need to exchange my coins, and I am looking at getting paid in the coins I mine. With that in mind, even though I think the ProHashing fees are a bargain for what they provide, if I don’t need what is provided, I don’t want to pay for them. I would rather pay just the 1% fee at other miners, rather than pay more for features I don’t need – no matter how much of a bargain they are.

If I had to say anything, I think that is one thing that may hurt ProHashing with growth. People new to mining have very little clue what what they are doing, and what all these things mean, and how they can help or hurt you. People are scrambling trying to figure out wallets, exchanges, and mining pools. If you look at that site, and if you didn’t know what hashrate, blocks, and PPS/PPLNS/SOLO all mean you can quickly become lost, and have no idea which pool to pick or why. However, everybody knows what “fees” are, you latch on to that like a lifeline.

To be honest, when I first started mining, I was doing exactly the same thing, looking over MiningPoolStats, and seeing what fees were involved. Probably the only reason I actually found and looked at ProHashing was because I was looking for something based in the US. This took ProHashing (as of looking at it today) from being the 37th on the list, to 5th. I wonder how other ProHashing customers found the site, may be worth getting other people’s stories to understand how they got here.

I think the problem for ProHashing may continue at the other end. Major mining individuals/businesses have the resources to do all the value-add things I mentioned above internally. So again, for them, given the choice between a mining pool with 1% fees (and some go lower than that for large-scale farmers) or ProHashing with services they don’t need, it would be hard to convince them to join here.

The comment about cleaning sewers for $1m/year though it more akin to other side of this however, earnings rather than fees. If you had to maintain a “sewer cleaners license” for $500k/year, that would be more the fee aspect, and to continue the simile, if you could do the same job but get your annual license from somewhere else that only charged $250k/year – which license would you. Many people would jump on the lower cost one with little investigation. Others may look at what the $500k/year license gives you, and you would decide if that value-add is worth the higher cost / fee.

I have to assume that for many people who are here already, they have probably decided that the value of the higher fees is worth it – including me, at least when I needed them. But at this point I don’t need everything any more. I may have actually stayed even if I didn’t need all the features offered - I still like that you will send the required tax document for me. But the earnings are also lower here than other places. I am trying to be careful between the use of ‘earnings’ (which to me is what the mining generates) and profitability (which would be earnings less cost). I had actually been holding off to do this post to complete one full day in the new pool, and my earnings for the day were about 20% higher than the three days before I left. The difference was actually a bit more since the ProHashing total included Chia, which I did not move to the same pool as my GPUs.

So the real thing is both at the same time – higher fees (although possibly justified, just not in my current situation) and lower earnings. I did read that you were expecting hash rates/

While writing this I was wondering if perhaps you could do a standard/basic service, providing the minimums that other pools usually do, and lower rates that would show up on sites like MiningPoolStats that would match – at least that would put you on the same footing for trying to attract new people. Then you could provide the option of the pro service, which adds the features like in-pool-exchange, ACH payments for electric, tax documents, etc. that you are currently doing at the higher rate. The standard/basic service may also work well for larger farmers who don’t need the extras, or perhaps you might come up with an enterprise level, that provides some services they might appreciate like the electric tracking, but not the others.

Anyways, hope I provided an answer to your question.
User avatar
Sarah Manter
Posts: 388
Joined: Fri Aug 13, 2021 11:15 am
Contact:

Re: Why I am leaving ProHashing (at least for now)

Post by Sarah Manter » Wed May 25, 2022 8:33 am

TechElucidation wrote: Tue May 24, 2022 5:53 pm
Hi Steve,

Thanks for your comments, and for seeking additional feedback not just from me, but from the ProHashing community as a whole. I do hope more people take advantage of the opportunity to speak up. One of the things that set ProHashing apart is the interaction with the staff, and ability for the community to have a voice. It is important for that exchange to happen, so that you know what people are looking for, and what you are able to provide for them. We have seen what happens when companies stop treating their customers with respect and just ignore them, so keeping open, active, and honest communication is paramount.

Now to try to answer your question - “what would you consider the additional features that ProHahsing provides be worth?” To me there is two ways to look at this question.

The first part is asking the value of the additional features. Some parts of this are pretty easy to answer, take a list of these additional features, and see what others are charging. For example, the exchange service, mining one coin and getting paid in another is one of these. With most other pools I would get paid out in Ethereum, and then need to pay an exchange 0.6% to convert it to the coin I actually wanted. So, by using ProHashing I am avoiding that external exchange fee, so adding that back to ProHashing fees make sense.

Other features are a little harder to consider this way, as they are unique to ProHashing from my (all be it, limited) experience. For example, I have not seen another pool that does such a good job tracking electric usage the way you guys do. This was a huge benefit to me as I was growing, and helping me realize how critical efficiency is when it comes to mining. It’s one thing to see the money come in, but when you see the cost right next to it in your charts, those numbers take on new meaning. You also go further than just tracking it, by giving us an easy way to do a direct deposit back to pay the electric. As I said however, these features are not something I have seen elsewhere, so trying to figure out what this is worth is a little harder – but overall, does add value, so yes, fees could go up accordingly.

I quickly want to mention something, I did not move to 2Miners myself. I have specifically been vague about which pool I am trying out right now as I didn’t want to start a debate between this pool vs. that pool.

However, since you brought up 2Miners, I am going to use them to finish up this part of my feedback. Looking on MiningPoolStats it shows 2Miners is 1% fees on PPLNS, and considering just the exchange fee (0.6%) benefit, ProHoshing would be fine charging fees of 1.6% for the combination mining pool and exchange aspect. Add the other features, and you could go even higher. But you are actually charging less than that, so currently your service is a bargain, and from a purely business aspect, you could increase your fees for that service.

But…. This is where the second aspect of your question comes in. Not just what it is worth, but specifically what it is worth to ME. As of right now, I don’t have a need to exchange my coins, and I am looking at getting paid in the coins I mine. With that in mind, even though I think the ProHashing fees are a bargain for what they provide, if I don’t need what is provided, I don’t want to pay for them. I would rather pay just the 1% fee at other miners, rather than pay more for features I don’t need – no matter how much of a bargain they are.

If I had to say anything, I think that is one thing that may hurt ProHashing with growth. People new to mining have very little clue what what they are doing, and what all these things mean, and how they can help or hurt you. People are scrambling trying to figure out wallets, exchanges, and mining pools. If you look at that site, and if you didn’t know what hashrate, blocks, and PPS/PPLNS/SOLO all mean you can quickly become lost, and have no idea which pool to pick or why. However, everybody knows what “fees” are, you latch on to that like a lifeline.

To be honest, when I first started mining, I was doing exactly the same thing, looking over MiningPoolStats, and seeing what fees were involved. Probably the only reason I actually found and looked at ProHashing was because I was looking for something based in the US. This took ProHashing (as of looking at it today) from being the 37th on the list, to 5th. I wonder how other ProHashing customers found the site, may be worth getting other people’s stories to understand how they got here.

I think the problem for ProHashing may continue at the other end. Major mining individuals/businesses have the resources to do all the value-add things I mentioned above internally. So again, for them, given the choice between a mining pool with 1% fees (and some go lower than that for large-scale farmers) or ProHashing with services they don’t need, it would be hard to convince them to join here.

The comment about cleaning sewers for $1m/year though it more akin to other side of this however, earnings rather than fees. If you had to maintain a “sewer cleaners license” for $500k/year, that would be more the fee aspect, and to continue the simile, if you could do the same job but get your annual license from somewhere else that only charged $250k/year – which license would you. Many people would jump on the lower cost one with little investigation. Others may look at what the $500k/year license gives you, and you would decide if that value-add is worth the higher cost / fee.

I have to assume that for many people who are here already, they have probably decided that the value of the higher fees is worth it – including me, at least when I needed them. But at this point I don’t need everything any more. I may have actually stayed even if I didn’t need all the features offered - I still like that you will send the required tax document for me. But the earnings are also lower here than other places. I am trying to be careful between the use of ‘earnings’ (which to me is what the mining generates) and profitability (which would be earnings less cost). I had actually been holding off to do this post to complete one full day in the new pool, and my earnings for the day were about 20% higher than the three days before I left. The difference was actually a bit more since the ProHashing total included Chia, which I did not move to the same pool as my GPUs.

So the real thing is both at the same time – higher fees (although possibly justified, just not in my current situation) and lower earnings. I did read that you were expecting hash rates/

While writing this I was wondering if perhaps you could do a standard/basic service, providing the minimums that other pools usually do, and lower rates that would show up on sites like MiningPoolStats that would match – at least that would put you on the same footing for trying to attract new people. Then you could provide the option of the pro service, which adds the features like in-pool-exchange, ACH payments for electric, tax documents, etc. that you are currently doing at the higher rate. The standard/basic service may also work well for larger farmers who don’t need the extras, or perhaps you might come up with an enterprise level, that provides some services they might appreciate like the electric tracking, but not the others.

Anyways, hope I provided an answer to your question.
I'm going to let Steve address the technical aspects of this in his response, but I wanted to thank you for continually thoughtful feedback and suggestions. The comment about reaching out and seeing where people came from and how they got here is useful, and it's always helpful to know the logic behind customer opinions and decisions, which you generally provide.
User avatar
Steve Sokolowski
Posts: 4601
Joined: Wed Aug 27, 2014 3:27 pm
Location: State College, PA

Re: Why I am leaving ProHashing (at least for now)

Post by Steve Sokolowski » Wed May 25, 2022 9:26 am

Hi TechElucidation,

This is a great post! Thanks for the comments. Let's go into an in-depth conversation about them.


Getting stuck on ethash profitability

First, I think that a few people here are getting stuck on ethash profitability, and you did mention that number of 20% again, which is not only an outdated measurement, but which will continue to improve. I want to reiterate again that ethash profitability increased by 5% over the past two days, and will continue to increase significantly over the coming two weeks due to the previously released bugfixes and optimizations.

The bugfixes and optimizations affected both trusted and untrusted miners, and therefore both types of customers will progressively earn more as the system becomes more confident in itself.


Following the law

While profitability for ethash will increase significantly - by 5% over the last two days and at least 6% more over the next week alone - and while SHA-256 profitability does not have a difference like you described, I don't think that we could ever get these differences below the current fee of 4%. The reason is what you said about our location. Many of these other pools are operating outside the US, or they are operating in the US but not following the law.

It's expensive to follow the law. Stephanie had to be paid thousands of dollars to review hundreds of hours of W8-BEN forms in December, for example. We spent over 400 hours - about $36,000 - working on this year's taxes. Rather than developing Prohashing features, from January to March I spent almost all of my time writing code for a new database to track coin spending, cost-bases, and on an algorithm to compute the best way to minimize taxes.

We also spend money on other things that some pools don't do, like on the huge auditing database that detects problems, on self-hosting, and on cold storage (which Nicehash, for example, did not.) Self-hosting, in particular, is why we have never lost a single coin or dollar to hacks, and why no third party has ever revealed any of our customers' personal information after almost nine years. That isn't an optional feature, too. While it's also the right thing to do, if you're going to run a legal business, then you have to make sure that nobody can sue you for these things.

One option to lowering fees would be to simply not comply 100% with every regulation. However, that's not something I'm willing to do, even if the pool were in such bad shape the only other option were to close (which it is not.)


Cutting out services would be a bad idea

It would cost us more to offer a "low-service" option than it would to provide all services to all customers. All of the work has already been done to create the existing services, and it would require additional development to create the "low service" option. Then, customer service representatives would need to be trained to differentiate between the two groups, testers would be needed to ensure people don't get what they're not paying for, and so on.

There is a base level of manpower required to provide a great pool. For example, you need a mining engineer, a web developer, a trader, a server administrator, someone to handle the finances, and someone to handle the tech support. You can't hire 0.1 people to do something because it takes an enormous level of training just to get the basics. Sarah is still spending half her time right now taking statistics and economics courses. We have reached that base level, are close to finishing all the training, and are holding there while cutting costs as much as possible in electricity and similar areas. The staffing is ready.


Large farms and internal development

I don't agree with your assertion that businesses can spend 1% to set up infrastructure to track their mining internally. I would guess that it would cost them at least 10%. While layoffs from the beginning of the recession are starting to hit developer salaries, you still can't hire a developer with the experience required in mining for less than $150,000/yr after taxes and costs. I believe that you probably need to spend $200,000 if you're a mining CEO who knows nothing about programming and you need a "lead developer." At 1%, that mining farm would have to earn $15-20m to pay one developer, and one developer is not sufficient to manage what they are doing because even a little downtime costs them the entire developer's salary.

Some might say that open-source software is available. Open-source software is not the solution. Every single open-source mining pool right now on github has a serious flaw that reduces profitability by far more than 1%, and I know that at least one huge mining pool is using this bugged code. They must have all forked from the same codebase at some point in the past, and the bug has even been repeated across languages.


Breaking through the noise

TechElucidation, I think the core issue is pretty simple: it's impossible to break through the noise. From what I hear here, there are many customers who believe that Prohashing has the best interface and the most advanced technology. I also receive comments from people stating that the pool isn't "well-known." If you disagree on these points, then the rest of this post is invalid.

We spent $30,000 on a Google Ads campaign that brought in $15,000 of mining, and continue with search engine optimization that currently has led to only five searches per day for something other than "prohashing." While our twitter feed has gained a few subscribers and Sarah has added great content to our YouTube videos, these feeds pale in comparison to those of Nicehash and even many other less professional pools like zpool.ca. Sites like reddit are controlled by people who actively ban our content, because we support coins like Bitcoin Cash and Bitcoin SV, which are against the agenda of Michael Marquadt and the "maximalists" who own major domains like bitcoin.org and bitcointalk.org (even Coinbase is banned from these sites because they trade in Bitcoin Cash.)

To address the point of the "enterprise services," we do have a page for that, and are willing to discuss lower fees with enterprise miners who call, but nobody has actually called in the entire year we've had the page up.


A theory

I pointed out above that we have the staffing, servers, and everything else we need in place, and these expenses are not going to rise. Right now, the fees are set so that we can break even. If there were twice as many customers, then we could charge half as much. If there were four times as many customers - or about 1% of the ETH network's hashrate, we could reduce fees to 1%. At eight times as many customers, we could undercut all the major pools, continue following regulations, and provide more features as well.

The problem is figuring out how to get to that point. High fees are not causing people to avoid us - if they were, we would see a lot of people who mine a few cents and then leave. Once people start mining, the analytics show that they usually stay. However, we are too far down the search results in the first place.

Writing software is easy. We can add ETH staking, more portfolio options, more bugfixes, and a lot more within a few months. Installing servers is trivial. Parallelizing stuff is simple; we can handle 8 times as many customers right now with no action, and 64 times as many with a few hours' work. Michael is also a genius at making changes to the website when customers request them. All this stuff is ready right now and with the exception of the website, has been for some time.

Getting people to know about something and actually try it is 100 times harder than developing it. Someone who can do that is worth far more than the best developer.

My view - and you can correct me if I'm wrong - is that everything is now there. We spent 2019 parallelizing the system to handle hundreds of thousands of miners, we have a new website, we have a customer service person who has the capacity to handle many more tickets, and every coin in the top 200 is now earnable. This should be enough to get people to visit and, if they believe it isn't worth the fees, leave - but they still don't know it's there.
User avatar
TechElucidation
Posts: 36
Joined: Fri Mar 18, 2022 2:01 pm

Re: Why I am leaving ProHashing (at least for now)

Post by TechElucidation » Wed May 25, 2022 9:10 pm

Hi Steve,

Thanks for taking the time to engage with me. I really do appreciate it. I had no intention of this getting as involved as it is, or going in the direction this post goes, but we are here so here are a couple of responses for you.
Steve Sokolowski wrote: Wed May 25, 2022 9:26 am Hi TechElucidation,

This is a great post! Thanks for the comments. Let's go into an in-depth conversation about them.


Getting stuck on ethash profitability

First, I think that a few people here are getting stuck on ethash profitability, and you did mention that number of 20% again, which is not only an outdated measurement, but which will continue to improve. I want to reiterate again that ethash profitability increased by 5% over the past two days, and will continue to increase significantly over the coming two weeks due to the previously released bugfixes and optimizations.

The bugfixes and optimizations affected both trusted and untrusted miners, and therefore both types of customers will progressively earn more as the system becomes more confident in itself.
Sorry if I am stuck on profitability, but I personally (and I think others) are all mining to make some added income, and that starts with profitability. As I stated in my original post, I am concerned about where things are going to go in the future as we see profitability drop, and especially post merge. This is GPU crypto mining wide – everybody is getting challenged, and concerned, with everywhere hitting new lows – this is not a direct comment on ProHashing specifically.

I saw a chat comment that somebody has shutdown his ASICs because, despite the cheap electric in his state, he isn’t earning enough to justify running them. The same thing for me, in order for me to continue mining, I have to make sure I am profitable, making more from mining, than it costs me to operate them. On the cost side I am doing what I can, using efficient OCs rather than max-hashrate OCs, reducing power usage, using 220V instead of 110V, everything I can on the cost side to keep them down as much as possible.

On the flip side of costs, is how much is coming in. From this aspect two things come into play, how much the pool is going to pay me per MH/s, and how much your fees are to operate the pool I used. I think we have covered the fees side of it enough already in other posts, so not going into that again.

You have reiterated multiple times that profitability is increasing. Here you say it has gone up 5% in the last two days. Here are the numbers for Proswitching (Trusted) miners for the last week from the charts page on the ProHashing website:

18th – 2.08c
19th – 2.02c
20th – 2.03c
21st – 2.02c
22nd – 2.07c
23rd – 2.00c
24th – 2.02c

Going back 2 days to the 22nd it was 2.07c, and the last number is 2.02c – that is not an increase, but a decrease. Though perhaps you were talking that since today is the 25th, going back to the 23rd. However, you have been talking about this increase for a while now, and in the post from the 23rd you said there should have already been a 5% increase already, but that was the lowest recorded number on the chart. I do grant from the 21st to the 22nd there was a 5% increase, but that was immediately lost on the 23rd - however that number was not available when you made your post.

I am focusing on the Trusted numbers, because that is what I am, and what I think ProHashing is trying to promote everybody to be. The numbers for the non-trusted group is different, and did show a bump, the day before (21st to 22nd) but that was only an increase of about 3%, and has pretty much been flat since then.

I just pulled up my current pool, and it is saying yesterday’s MH/s was 2.42c. You said my 20% number was outdated, but from the ProHashing chart saying I would have made 2.02c adding, if I add 20% I am at 2.424 which is what the other pool said.

Now perhaps the other pool is lying, or your chart is wrong – though trying to do the math on my hash rates they seem about right given fluctuation throughout the day.

If you are telling me that if I come back to ProHashing I will not see that significant a drop, then I am more than willing to set a date switch my two rigs back, run them for 24 hours, and record the change.

Just to set the parameters, it will only be my two biggest rigs (FirePit ~ 730MH/s and RedWood ~ 220MH/s). I have one rig that is not on the other pool (it’s actually back here while I tested new Nvidia driver and I am mining for charity here) or my Chia (which is on a totally separate pool and not added to the same GPU pool and not included in my numbers below).

So, to do an apples-to-apples comparison, the other pool is currently just those two, and I would move them both back for a full 24 hours (midnight to midnight) and set my payout to Ethereum, and compare the two. Over the last two days my pool is reporting my revenue as:

23rd – 921.03MH/s – 0.01122548 ETH
24th – 961.89MH/s – 0.01160226 ETH

Using the *lowest* ETH to USD rates for each day, that works out to $22.12 on the 23rd, and $22.34 on the 24th. Let me know if you feel I should be able to return to ProHashing with just these two rigs, and be comparable on my earnings with these two miners.
Steve Sokolowski wrote: Wed May 25, 2022 9:26 am
Following the law

While profitability for ethash will increase significantly - by 5% over the last two days and at least 6% more over the next week alone - and while SHA-256 profitability does not have a difference like you described, I don't think that we could ever get these differences below the current fee of 4%. The reason is what you said about our location. Many of these other pools are operating outside the US, or they are operating in the US but not following the law.

It's expensive to follow the law. Stephanie had to be paid thousands of dollars to review hundreds of hours of W8-BEN forms in December, for example. We spent over 400 hours - about $36,000 - working on this year's taxes. Rather than developing Prohashing features, from January to March I spent almost all of my time writing code for a new database to track coin spending, cost-bases, and on an algorithm to compute the best way to minimize taxes.

We also spend money on other things that some pools don't do, like on the huge auditing database that detects problems, on self-hosting, and on cold storage (which Nicehash, for example, did not.) Self-hosting, in particular, is why we have never lost a single coin or dollar to hacks, and why no third party has ever revealed any of our customers' personal information after almost nine years. That isn't an optional feature, too. While it's also the right thing to do, if you're going to run a legal business, then you have to make sure that nobody can sue you for these things.

One option to lowering fees would be to simply not comply 100% with every regulation. However, that's not something I'm willing to do, even if the pool were in such bad shape the only other option were to close (which it is not.)
In regards to this, I don’t think anybody is suggesting that you do not follow the law. In fact as I stated in a previous post, I purposefully limited the pools I was looking at to US based ones because I wanted to ensure that I was following applicable laws. Also as I mentioned, I feel paying an appropriate fee for that, and all the other services, is completely fair.

What I am struggling with, and I think others are as well, is how much that is. The fees for most pools are 1% to 2% and according to some sites ProHashing falls into that range (all be it towards the top end). If my current pool is giving me a profitability of 2.42c, and ProHashing is giving me 2.02c – that is a very significant difference than a difference between 1% and 2% fees would account for.

This is based on the numbers we can see reported, and aligns with what I saw moving off ProHashing, but as I said I am willing to test again by coming back.

I don’t think you are trying to say the significant difference I see between the two pools is the ProHashing fees, in order to pay for these services and regulations. In fact I see a response over in Discord which I think you are verifying that the difference between the MH/s rates are not in fact intentionally taken out as a fee.

But then the question remains - why is it so significant? And as miners trying to maximize our bottom line, are we 'OK' with that much difference?
Steve Sokolowski wrote: Wed May 25, 2022 9:26 am
Cutting out services would be a bad idea

It would cost us more to offer a "low-service" option than it would to provide all services to all customers. All of the work has already been done to create the existing services, and it would require additional development to create the "low service" option. Then, customer service representatives would need to be trained to differentiate between the two groups, testers would be needed to ensure people don't get what they're not paying for, and so on.

There is a base level of manpower required to provide a great pool. For example, you need a mining engineer, a web developer, a trader, a server administrator, someone to handle the finances, and someone to handle the tech support. You can't hire 0.1 people to do something because it takes an enormous level of training just to get the basics. Sarah is still spending half her time right now taking statistics and economics courses. We have reached that base level, are close to finishing all the training, and are holding there while cutting costs as much as possible in electricity and similar areas. The staffing is ready.
I can appreciate the challenges you state with offering multiple levels of service, and you have very valid points. It was just a suggestion that might help ProHashing attract more people by being able to enter ProHashing at a fee level the community expects, but then an option to upsell them with additional services. This is not an uncommon a practice for companies trying to establish a foothold and grab the attention of people who focus on the costs so much. People may complain that they feel like a bait-and-switch, but it gets them in and gets them started, and so long as you are honest about it being a basic platform, there is little room for complaint.
Steve Sokolowski wrote: Wed May 25, 2022 9:26 am
Large farms and internal development

I don't agree with your assertion that businesses can spend 1% to set up infrastructure to track their mining internally. I would guess that it would cost them at least 10%. While layoffs from the beginning of the recession are starting to hit developer salaries, you still can't hire a developer with the experience required in mining for less than $150,000/yr after taxes and costs. I believe that you probably need to spend $200,000 if you're a mining CEO who knows nothing about programming and you need a "lead developer." At 1%, that mining farm would have to earn $15-20m to pay one developer, and one developer is not sufficient to manage what they are doing because even a little downtime costs them the entire developer's salary.

Some might say that open-source software is available. Open-source software is not the solution. Every single open-source mining pool right now on github has a serious flaw that reduces profitability by far more than 1%, and I know that at least one huge mining pool is using this bugged code. They must have all forked from the same codebase at some point in the past, and the bug has even been repeated across languages.
Perhaps I was not clear with what I was trying to say for larger scale businesses. I was not trying to suggest that they would develop their own mining pool or platform, that would make no sense.

My point was the value of the added services that would differentiate ProHashing from any other mining pool. What would attract them to join you and pay 1% more in fees, over other pools? Are those benefits worthwhile and cost effective to them as a business?

Internally nothing at the miners end changes – they need power, they need networking, cooling, maintenance, HR, somebody to manage finances, things like that. Joining ProHashing does not impact any of that. So as a market differentiator, what is supposed to make them say “I want to use ProHashing instead of x, y, or z” because of what they provide that I can’t get elsewhere.

Since they are focused on the bottom line, low fees are going to be a very important part of that decision making – or have a very good justification for what they get in exchange for higher fees. You stated that trying to use an opensource pool might cost them 1% hash rates, and they wouldn’t risk that.

So if we agree that they don’t want to lose 1%, then we (well, you) have to justify why they will agree to a 1% fee to be part of ProHashing. That was where my comment was coming from.

Trying to look at the value proposition of that 1%, what benefit do they get here, by paying more, that makes it worth it to them?

Power tracking – these large farms are a business, and they can go look at the power meter outside if they want to know what they are using, though any finance person worth the title should be able to provide an rough accounting for it after the first month. Plus this does not actually save them anything, your not reducing the power usage or anything. For individuals it may be nice, because for most of us we are not a business, and we want to see what the impact is broken out of running our houses – or perhaps we only run it on occasions. But for a business, they get the electric bill and they pay it, they don’t need the website tracking it, and they don’t need it coming out in AHC.

On-pool-exchange – From a major business perspective I think they are less likely to be speculative trying meme and alt coins. Running a large ASIC farm they are more than likely going to be happy to take payouts in the coins they mine. For me, and possibly other individuals, having the ability to be paid in different coins is nice as it saves us time and effort when we get back from work from having to play around with exchanges. But if that is your job, then dealing with that yourself is not a big deal.

In my opinion, if I was doing this as a business, and had even a small staff dedicated to a farm – I don’t know that there is enough here to tempt me to say that added cost is worth it. I have seen a couple of YouTube videos on tours of mining facilities, and they rarely talk about the pool they are mining on. They do talk about tools to manage the miners, but you don't offer that here, where something like HiveOS does. Other options exist that are mining pool agnostic, but then we are back to what is is ProHashing offers that will draw them in?
Steve Sokolowski wrote: Wed May 25, 2022 9:26 am
Breaking through the noise

TechElucidation, I think the core issue is pretty simple: it's impossible to break through the noise. From what I hear here, there are many customers who believe that Prohashing has the best interface and the most advanced technology. I also receive comments from people stating that the pool isn't "well-known." If you disagree on these points, then the rest of this post is invalid.

We spent $30,000 on a Google Ads campaign that brought in $15,000 of mining, and continue with search engine optimization that currently has led to only five searches per day for something other than "prohashing." While our twitter feed has gained a few subscribers and Sarah has added great content to our YouTube videos, these feeds pale in comparison to those of Nicehash and even many other less professional pools like zpool.ca. Sites like reddit are controlled by people who actively ban our content, because we support coins like Bitcoin Cash and Bitcoin SV, which are against the agenda of Michael Marquadt and the "maximalists" who own major domains like bitcoin.org and bitcointalk.org (even Coinbase is banned from these sites because they trade in Bitcoin Cash.)

To address the point of the "enterprise services," we do have a page for that, and are willing to discuss lower fees with enterprise miners who call, but nobody has actually called in the entire year we've had the page up.
My responses all lead to this response. This is also WAAAYYYYYY off the simple topic I was trying to bring up when I started this thread. Also, you don’t know me from a hole in the wall, so not sure how much you really want and trust my opinion. I would like to say “here is my 2c”, but honestly I tend to go way overboard, so buckle in for at least a couple bucks worth of opinion here.

It is probably a very hard industry to get noticed in. As I said, many people at least in the start, are going to go to something like MiningPoolStats and look at the top 10, and go with one of them. Being down at the high 30’s, you don’t stand out there.

You mention that you did a Google Ad campaign, and having worked in IT for an industry focused on advertising for over 15 years, one of the biggest mistakes I hear about and see over and over is people feeling that if they can just get people to their site that will translate to sales. I don’t blame them for this misconception, as so many marketing firms focused on that part, especially people selling advertising (even ones I worked with), because that is what they can impact.

But once there people need to have a reason to convert from a visitor to a customer. I have mentioned the phrase value-proposition a couple of times, and that is such a critical aspect. It’s not just about getting people to come, but explaining to them how becoming a customer benefits them. Perhaps clique, but the sales pitch of “you can’t afford NOT to buy it” is actually what you’re trying to get to. It also makes the strongest argument for people to not just buy/start, but also to become an ongoing customer.

Thinking like that, just because you may have gotten somebody to the website, how do I see the value-proposition proposition of your website to say “we are worth a percentage of your mining”. Here is my pretty blunt opinion of your homepage:

“The Crypto Mining Pool You Can Trust” – I have yet to see a single pool website that says “We are based in a shady offshore country, and there is a 30% or maybe 35% chance we will rug pull you”. My point is EVERYBODY says you can trust them. Nothing there differentiates you from anybody else on the internet. You still have to say it, but it does not sell you.

“Join our secure and profitable mining pool” – The security comment again feels somewhat like marketing, every pool says they are safe and secure. From a quick look I don’t see anything other than this to back up this claim on the homepage – if I dig around enough I do find more but making visitors work to convince themselves is not going to help you. Two other sites I was looking at both happened to mention how they switched to startum+SSL “to enhance security” showing and effort in that direction. If I was a browsing mining pools, and saw that, and came here I would be wondering if you support SSL and why you don’t mention that you do. It’s because you don’t support it (I asked a while ago) and so somebody doing their due diligence may wonder why you mention secure, when you’re not doing something that others in the industry are starting to adopt - and everybody knows you should be using HTTPS for everything these days. Along the same lines (and not trying to rehash the debate above) if I was looking deeper at the ‘profitable mining’ part, and saw the numbers in the charts, compared to what other pools are promoting that wouldn’t win me over. So for this statement the best case would be that people think it is just meaningless marketing not worth looking into, or if I do look into it, then it does not align with what I am seeing elsewhere.

“Transparency” – again, nice marketing term – though in this case if people went to the charts section there is a lot of very open information in there. You just need to trust that the information there is correct, but then your going to compare it to other mining pools if you can.

“Availability” – The first part about daily payouts is pretty common on miners (just buried under the fact that you need to reach a minimum payout). Though I think one site I saw had payouts every 2 hours which is just stupid unless you love transaction fees. But again, a very overused term that does not stand out these days by itself.

Scrolling down, you list the blocks found. Not sure the value of this as the second main item on the page, taking up that much space. Every pool finds blocks. If they came from one of the sites that ranks mining pools, they often talk about the last time blocks were found, and how many in the last 24 hours, things like that. So sure, nice information to have, but would it convince me to mine with you if I wasn’t already? Does it deserve to be the second thing on your homepage? Feels like filler.

Down a little more. If there is one thing I hate on websites is stock artwork. That friendly agent, with her headset on just screams “we googled customer support and grabbed the first picture that showed up” - and in my opinion drops a professional look. If you want to make a personal appeal to people to show ProHashing is different and not a cold corporate entity, stick your actual support staff’s picture up there. Next thing that sticks out to me is that there is only 4 hours of support from 1PM to 5PM? And yes, I personally get the difference between ‘Live support’ and people being around far beyond those hours as I have talked with a couple of people outside of those hours. But again, looking at this form a new visitor coming to the site, and you pitching your value proposition for 2% fees, and you only say your going to be here 4 hours a day? Others say (lie) they have 24/7 support – sure you have to wait a day or two for a reply, but there is somebody there taking a nap at their desk 24/7 apparently.

In the “Enterprise Mining Services” I like that you mention your one of the only mining pools legally operating in the US, and that you have had zero hacks. But not only did I have to scroll down to get to this area, but I also had to know to click on the Enterprise Mining Services, and a private person may not realize there is that valuable information since they are not an ‘Enterprise’. So great information, that many visitors may never see!

A quick comment here on the “Self-hosted” statement here – since I have already gone so far overboard on comments, why stop now. Many people may not understand the value of this, and brush it off as more fluff. But for people who have the technical expertise to appreciate the value of it, it can then make them wonder about how well you built and maintain your infrastructure, and more importantly what the response times of your servers are going to be. As you know, low latency connection to servers is important in mining to win blocks. So people in the know may ping/traceroute your server, and at least for me, I got much better times on almost every other east coast based pool. I am luck enough to have access to several locations along the east coast, and so tried from a couple different locations, just to eliminate my carrier, location, or network and all had similar results. So just felt this was a little bit of a catch-22, if people don’t understand it then it confers no value, if they do understand it then it may cause them to dig into it. I have also seen YouTube videos promoting the important of checking the latency to mining pools when picking them, and some mining pools are including your personal ping time to each of their servers on the page.

In the “#Proswitching” area you again provide some interesting propositions (though again, needing to scroll, then have both the desire to and knowledge to click on it, hides it from most visitors). One thing I found odd looking at this more in-depth is that for Ethash the Proswitching vs. Anchor is only 99.80%, considering this is the biggest algorithm for GPU miners (currently) that seems like a problem that your actually promoting your special platform performs worse than standard? For Scrypt, the table suggests Proswitching is giving a 360% increase which seems a little strange, and would make me question if the table is accurate or what it is trying to claim, and if it is truthful. The old "if it sounds too good to be true" - and perhaps it is true, but saying join ProHashing and we will quadruple your profits.... you get my point I hope.

Finally there is the “Trusted Mining Program” which talks about the benefits of joining the program. This is probably the most buried item in this block, yet is probably the most appealing to a typical visitor. This should have taken the place at the top, and bury that 4-hour support one. Lead with the good stuff!

Scrolling down is another join appeal / call to action. But this one says “we believe in a no-frills honest approach”. But throughout this conversation we have gone back and forth on how ProHashing provides features others do not, and what is that worth. So yes, there are “frills” and ones you are trying to convince us are worth the higher fees than other sites. There are plenty of other bare bone sites that offer nothing more than just mining (no tracking electric, no tax docs, etc.) and that is really “no frills” and have a lower fee as well. So on one hand your trying to say your so much more than your typical mining pool, but then use the “no-frills” comment. And just to satisfy my English teacher mother, technically “no-frills” is referring to things you don’t actually need, and includes comforts that make things easier for you. By that standard I would say things like tracking the electric usage is not something people have-to-have, but is a comfort, therefore a ‘frill’. My point here is you seem to be trying to sell yourself as both no-frills, but full of features at the same time, which makes your sales pitch confused - and confuses me to what I am paying for. If you think of "no-frills" services, they are usually the cheaper ones - ProHashing does not fall into that category.

By now I am almost half way down the homepage, and apart from what I refer to as “marketing fluff”, there has been little to give a new visitor (in my opinion) a reason to join, and the parts I do like were harder to get to. So I guess the point I am trying to make is that even if you get people to your site, are you going to be able to convert them to clients? If not, then you are wasting time and money trying to get attention, and if anything it is hurting your future prospects because people who didn’t like what they saw the first time may not come back to try again.
Steve Sokolowski wrote: Wed May 25, 2022 9:26 am
A theory

I pointed out above that we have the staffing, servers, and everything else we need in place, and these expenses are not going to rise. Right now, the fees are set so that we can break even. If there were twice as many customers, then we could charge half as much. If there were four times as many customers - or about 1% of the ETH network's hashrate, we could reduce fees to 1%. At eight times as many customers, we could undercut all the major pools, continue following regulations, and provide more features as well.

The problem is figuring out how to get to that point. High fees are not causing people to avoid us - if they were, we would see a lot of people who mine a few cents and then leave. Once people start mining, the analytics show that they usually stay. However, we are too far down the search results in the first place.

Writing software is easy. We can add ETH staking, more portfolio options, more bugfixes, and a lot more within a few months. Installing servers is trivial. Parallelizing stuff is simple; we can handle 8 times as many customers right now with no action, and 64 times as many with a few hours' work. Michael is also a genius at making changes to the website when customers request them. All this stuff is ready right now and with the exception of the website, has been for some time.

Getting people to know about something and actually try it is 100 times harder than developing it. Someone who can do that is worth far more than the best developer.

My view - and you can correct me if I'm wrong - is that everything is now there. We spent 2019 parallelizing the system to handle hundreds of thousands of miners, we have a new website, we have a customer service person who has the capacity to handle many more tickets, and every coin in the top 200 is now earnable. This should be enough to get people to visit and, if they believe it isn't worth the fees, leave - but they still don't know it's there.
I certainly appreciate the scales of economy with an operation like this. You have my admiration for building something from the ground up. It is a huge weight on your shoulders to try to responsibly build the business, support your staff, and provide a valuable service to your customers. Improving the economies of scale would certainly help with that. Part of my previous section was my humble (ok, pretty arrogant) attempt to help with that. While we would like to believe in the field of dreams concept that “build it and they will come”, building it might actually be the easy part of the business because it is the part we are passionate about and understand. Getting other people to understand that vision and what you have put into it, and why they should want it, there is a real challenge.

(Wrote this before reading your line about getting people to try it being 100 times harder than developing it – but that is spot on)

I also agree, high fees are not what are causing people to not flock here. But as I said, I don't know that you are ready for them to start flocking here. I think one of the first challenges is that conversion rate – changing people who come to look into people who stay. That is where that value-proposition needs to be made, and convincing people why you should get (any) part of their mining effort. Once you get them hooked to say ‘I like what ProHashing has’, then you can debate the price of that service.

From a foundation of a mining service, yes, I agree that everything is in place.

There are part here (if you dig for it) for visitors to get attracted to and to convert them, but where I think there is a gap is getting them to the things of value, and convincing them they are worth paying for.

The better you can convert people to customers, will more it will help you grow, but it will be slow at least at first. Again, despite years in the advertising industry, I am going to say most advertising is somewhat useless as a direct appeal to “come in”. I recall one convention where they were talking that advertisings true function is to build familiarity through repetition, rather than getting people to do something. Think of driving along a freeway, you see billboards all the time, and most you never even notice. The ones that start to catch your eyes are the ones that seem “familiar” because you see a logo over and over. On TV most of the ads are not really intending to inform you of something, but to keep repeating themselves, that is why catchy jingles, mascots, phrases, etc. are so prevalent and always used so you become comfortable with them. But all of that is for naught, if you can’t convert them once you reach that point.

When it comes to online, things are not much different. Many people have developed blinders for most online ads that appear on pages - I know I hardly notice them most of the time. But once the same ad has popped up so many times you feel it is “normal” in a way, your ability to 'auto-reject' drops. Think about sites you have visited, and do you recall what ads were on there? If it was a company you don't know it is unlikely, but if it was eBay, Verizon, or another company logo that is easy to recognize you recall those ads because they were familiar enough that you didn't just block them out.

For search engines, unless you have a terrible web designer (which I don’t think you have) search engine optimizations do very little. I can tell you most of these "search engine optimizations" were started and intended for the mom-and-pop businesses that had their kid throw something up on a free website. They just found they could put a whole lot of lipstick on that pig, and sell it to bigger and bigger companies.

What really builds you in ranking is more relevance, and you get that through detailed content people seek, and links from other sites. You get that through news, articles posted on other sites, and especially other people posting about you on their sites. The bigger a web of references you can get (from people who have a good reputation, please don’t buy web links) will be much more important to search engine ranking.

If you think about it, as the name "search engine optimization" suggests, it just improves the ability for search engines to find your content - not improve your relevance or ranking other than the search engine knowing you might contain something the searcher is looking for - not that it is the best content for the searcher.

So yeah, as annoying as it is, trying to generate “press-released” to sites in the industry help as lot. Trying to get people to talk to and do interviews with you that link back to you helps a lot. Having a document or paper you write published on a trade site that links back to you helps. All these things help so much more, especially if they are reputable sites. Think about it as getting good references from trusted people, and that makes you go up in the ranking.

Anyways, I really need to stop now, and need to spend some time not writing huge posts today!
User avatar
Sarah Manter
Posts: 388
Joined: Fri Aug 13, 2021 11:15 am
Contact:

Re: Why I am leaving ProHashing (at least for now)

Post by Sarah Manter » Thu May 26, 2022 9:20 am

@TechElucidation Thank you so much for continuing this discourse even though it wasn't what you'd intended. We appreciate you hashing things out with us. We've received your response and are working through it. Taking time to process and really make sure we're addressing your thoughts/concerns when we respond.
User avatar
Steve Sokolowski
Posts: 4601
Joined: Wed Aug 27, 2014 3:27 pm
Location: State College, PA

Re: Why I am leaving ProHashing (at least for now)

Post by Steve Sokolowski » Fri May 27, 2022 9:24 am

Hi TechElucidation,

Ethash profitability

In the first part of the previous message, I was referring to my concerns that ethash profitability in particular was attracting many of your and others' complaints, despite that that one algorithm was having a specific issue that has already been corrected.

The only truly accurate way to compare profitabilities between two pools is to have two identical miners - one at each pool - starting and stopping at exactly the same time. Your measurements in the previous message are a great start, but it wouldn't be an accurate measurement to compare mining today at Prohashing to those figures from another pool two days ago. If you'd like to try again with a simultaneous comparison now that ethash profitability is improving, I'd be glad to assist you.

From my estimates, I don't believe that you'll find a 20% difference after this comparison. If I am incorrect, that indicates there still remains a serious issue and I will be glad to investigate it, even over the weekend.

I understand the concerns about profitability, and that's why I want to direct the conversation towards improving profitability in general, rather than focusing on the ethash issues that have already been corrected and for which no further action is required. For the remainder of this post, I'm going to focus on profitability in terms of other algorithms, where fees may still be higher than those of other pools, but where the ethash-specific changes are not applicable.


Mined coins

In your post, you referenced "speculation" on altcoins. That brings up a point that I noticed with many large miners - many of them mine the anchor coin of an algorithm and do not mine other coins that are more profitable. Even though they might be able to earn more by mining DigiBytes or Bitcoin SV or Peercoins, many miners buy huge warehouses of SHA-256 ASICs and direct them to exclusively mine bitcoin. You rarely hear about these miners mining anything else, even though there is hashrate directed at the other networks.

Large miners who don't mine bitcoin cash when its difficulty drops are leaving profitability on the table, and I would assume that the ability to earn bitcoin while mining bitcoin cash would be attractive if bitcoin cash occasionally adds a few percentage points to their mining. I agree with you that many of these miners don't want to earn SHIB, but I would imagine they would still want the larger coins.

TechElucidation, do you think that these large miners simply don't know that you can boost profits by mining other coins?


What can and can't be offered

Unfortunately, there are some things that we can offer, and other things that we can't. For example, we can't control the fan speed of a miner, because the stratum protocol doesn't allow that. We will never be able to compete with HiveOS on that issue because that's impossible.

There are other things that we can do that HiveOS can't, like interacting with the legacy financial system. I'm surprised that the ability to interact with the legacy financial system automatically without exchange rate risk or fees doesn't seem to attract more attention, given that no other pool offers it.


Conversions

Before you read the next part, I think that there might have been a miscommunication about the conversions issue. We don't have issues converting customers who are interested in mining and who visit the site. In fact, most of those customers love us once they get started. There are two blockers: the first, already discussed in enough detail, is the five visitors per day from organic search.

The second issue with conversions is that we get a huge number of hits from people who aren't interested in mining, because the blog posts like the "interest" article are ranked far higher in search engines, and linked more widely, than Sarah's articles on mining, for whatever reason. I stopped looking at the stats for the "interest" page in January when I found that there were something like 2000 people who read the article, and only one account had been created. For these visitors, I doubt that any changes we make to the site are going to convert these customers.


Telling the truth

I appreciate your extensive feedback. In regards to the stock images, I was thinking of asking Paula to create new images that actually represent the company. As a result of your feedback, I increased the priority of that and you should expect improvements by June 3.

I noticed that many of your feedback items referenced things that other pools claim they have, like 24/7 support. Some even claim higher profits than us but I think you'll find that zpool.ca doesn't actually pay more. As you pointed out, many claim trust but don't do things that are trustworthy.

This is one of the core issues we have always had, and continue to have. Sarah continually struggles and expresses her concerns to me over whether we should actively work to attack false claims other sites are making, or simply deliver on our promises and hope people figure that out. Try calling between 1 and 5 today and you can actually talk with Paula. Try contacting Coinbase and see if their "24/7 support" ever gets back to you.

Sarah and I would love your thoughts as to how to make people believe that we actually do these things and how to break through the noise of lies on these topics.


Self-hosting

Could you tell me more about the ping times you experienced? In my tests, when I go to the servers and ping sites, and then do the same on a cable modem from home, I consistently notice a 15ms reduction in ping times from a location that is close by. Are you saying your ping times are abnormal? Perhaps there is some internal network issue that could be increasing latency, and if so, I definitely want to work on it.

On the other hand, it is true that high ping times reduce profitability due to stale shares, but the reduction in most cases is incredibly low. For example, in the case of bitcoin, bitcoin cash, or bitcoin SV, you would expect to lose $4.68 in stale shares out of every $188,000 found block. You will lose more due to ASIC downtime unless you can guarantee less than 10 minutes offline in an entire year. Therefore, I believe that ping times are another messaging issue.


Final comment: interviews

You mentioned in your reply about industry attention. I always marvel about how there are these CEOs who get interviewed about things that they really aren't all that knowledgeable about. It's amazing to read articles in the media where a CEO from some mining company makes a statement like "the price of bitcoin is holding steady because its hashrate is increasing," even though hashrate is actually dependent upon price. One of the CEOs who was being interviewed about thefts of cryptocurrencies actually read the article I wrote about wallet security, where I talked about burying keys in forests, and said that he "knows someone who does" the exact same thing written in the article.

Don't you find it weird that the journalist would interview someone else rather than the people who actually wrote the content that person is referencing?
User avatar
TechElucidation
Posts: 36
Joined: Fri Mar 18, 2022 2:01 pm

Re: Why I am leaving ProHashing (at least for now)

Post by TechElucidation » Fri May 27, 2022 8:58 pm

Hi Steve,

Here is my feedback to your latest post.
Steve Sokolowski wrote: Fri May 27, 2022 9:24 am Hi TechElucidation,

Ethash profitability

In the first part of the previous message, I was referring to my concerns that ethash profitability in particular was attracting many of your and others' complaints, despite that that one algorithm was having a specific issue that has already been corrected.

The only truly accurate way to compare profitabilities between two pools is to have two identical miners - one at each pool - starting and stopping at exactly the same time. Your measurements in the previous message are a great start, but it wouldn't be an accurate measurement to compare mining today at Prohashing to those figures from another pool two days ago. If you'd like to try again with a simultaneous comparison now that ethash profitability is improving, I'd be glad to assist you.

From my estimates, I don't believe that you'll find a 20% difference after this comparison. If I am incorrect, that indicates there still remains a serious issue and I will be glad to investigate it, even over the weekend.

I understand the concerns about profitability, and that's why I want to direct the conversation towards improving profitability in general, rather than focusing on the ethash issues that have already been corrected and for which no further action is required. For the remainder of this post, I'm going to focus on profitability in terms of other algorithms, where fees may still be higher than those of other pools, but where the ethash-specific changes are not applicable.
I have limited capabilities myself, and do not have two identical systems to run in parallel on two different pools to compare the two like that. I can only give information to the best of my ability, and to that end going from ProHashing to another pool I did see a significant increase. To that end I laid out a proposal on what I could do to try to assist with getting to the bottom of the concern.

I was also willing to accept any recommendation you may have had on how we might be able to do a better comparison given what tools are available. Eliminate doing the test in USD but purely on ETH production to avoid current coin values. Perhaps switch pools every hour, so over the course of a day things should average out over a 24 or 48 hour period. Accept that there would be +/- 5% difference between the two.

But honestly at this point, it seems like your response is set that things are fine and fixed, so I am not going to pursue this any further.
Steve Sokolowski wrote: Fri May 27, 2022 9:24 am
Mined coins

In your post, you referenced "speculation" on altcoins. That brings up a point that I noticed with many large miners - many of them mine the anchor coin of an algorithm and do not mine other coins that are more profitable. Even though they might be able to earn more by mining DigiBytes or Bitcoin SV or Peercoins, many miners buy huge warehouses of SHA-256 ASICs and direct them to exclusively mine bitcoin. You rarely hear about these miners mining anything else, even though there is hashrate directed at the other networks.

Large miners who don't mine bitcoin cash when its difficulty drops are leaving profitability on the table, and I would assume that the ability to earn bitcoin while mining bitcoin cash would be attractive if bitcoin cash occasionally adds a few percentage points to their mining. I agree with you that many of these miners don't want to earn SHIB, but I would imagine they would still want the larger coins.

TechElucidation, do you think that these large miners simply don't know that you can boost profits by mining other coins?
I have limited knowledge of these farming businesses, and all from an outside perspective, so everything I have to say is pure speculation. I assume that you might be able to reach out to them, and ask them directly. You will probably get a lot of ignored emails, some refusals, but I have to assume at least a few would eventually talk with you. I don't know if you guys have tried already, but just start looking up the contact information for as many as you can find, and see if they will talk to you. Don't try to sell them (right away) but first listen to them.

If I had to guess, for these large-scale farms, it comes down to cost effectiveness of chasing the best algorithm over time. If you have to update hundreds or even thousands of machines, then it would be more painful to try adjusting over time. You could obviously work with somebody who would do a switching process for you, either through a management tool, or the pool. But they do come at an added cost, so these large scale miners would have to decide if the potential added revenue will offset the added cost.

However, the bigger issue is probably the risk of stability. Several months ago I had both an L3+ and an X5. These are both Scrypt miners that I had on ProHashing for a few months. While the proswitching worked well on the L3, the X5 had issues resulting in very poor results and occasional hangs. If I recall I ended up having to lock it with the ‘c=’ parameter to keep it on LTC, and then it worked a lot better. The reason I bring this up is that it is possible that with so many devices, they don’t want to risk stability concerns. If I recall from one of the YouTube videos I mentioned touring these mining facilities the owner was saying they didn’t overclock for that very reason, that they wanted to maintain stability.
Steve Sokolowski wrote: Fri May 27, 2022 9:24 am

What can and can't be offered

Unfortunately, there are some things that we can offer, and other things that we can't. For example, we can't control the fan speed of a miner, because the stratum protocol doesn't allow that. We will never be able to compete with HiveOS on that issue because that's impossible.

There are other things that we can do that HiveOS can't, like interacting with the legacy financial system. I'm surprised that the ability to interact with the legacy financial system automatically without exchange rate risk or fees doesn't seem to attract more attention, given that no other pool offers it.
To your comment about the connection to legacy financial institutes I will only mention that is nowhere on the first half of your homepage, and goes back to my comments about not providing the value-proposition to people. Even under the “Availability” you only mention payouts in coins and tokens – not directly to your bank account. So yes, it is a very nice feature – but don’t expect people to sign up because of it, if they don’t know about it.

Let me address the fact you can find the information on another page. There are some studies that suggest that people judge new website primarily by what they see the moment they land, then by what they see in the top half of the homepage – beyond that people have formed the majority of their opinion – good or bad.

While I have a passing knowledge of these things, usually because I had to learn some of it to explain them to sales people, I am not an e-commerce expert. I do know there are some quality firms out there that can evaluate and recommend website designs to get customers.

What I can do however is tell you my opinion on your page, which I did in detail before. Did it excite me when I looked at it? Not even close. Was I able to find all the information that I needed to make a decision? Yes, eventually. But at the same time I am also the kind of person who will spend several hours preparing multiple long winded posts on a forum, so taking my time and being methodical is kind of a thing with me. Can you say every miner that visits lacks a life, so will read through all these pages?
Steve Sokolowski wrote: Fri May 27, 2022 9:24 am
Conversions

Before you read the next part, I think that there might have been a miscommunication about the conversions issue. We don't have issues converting customers who are interested in mining and who visit the site. In fact, most of those customers love us once they get started. There are two blockers: the first, already discussed in enough detail, is the five visitors per day from organic search.

The second issue with conversions is that we get a huge number of hits from people who aren't interested in mining, because the blog posts like the "interest" article are ranked far higher in search engines, and linked more widely, than Sarah's articles on mining, for whatever reason. I stopped looking at the stats for the "interest" page in January when I found that there were something like 2000 people who read the article, and only one account had been created. For these visitors, I doubt that any changes we make to the site are going to convert these customers.
I would like to highlight this particular line in your response:

In fact, most of those customers love us once they get started.

I agree, most people who take the time and get to know you, do find the services and capabilities very good. But the key part here is that they need to know more about you, and get started, to reach that point. That is the conversion I am talking about, people who know nothing about ProHashing and coming to your site, converting to a miner and starting to mine here. From there, yes, they can find the options here very beneficial.

I look at the process of converting people to customers as building interest and excitement in the product or service, to the point that they feel the they have to have the service or product. Converting them from somebody disinterested or having just a passing interest, into a fan.

This does, in my opinion, have an impact on your growth. If I just tell somebody to visit ProHashing.com, and they go there but fail to be impressed, they don’t convert. However if I tell them all the great things about ProHashing.com, and then they visit the site they may look around more in-depth or based just on my word sign up.

So I would wonder – and given I have no access to details logs and analytics, I am just guessing here – that perhaps the high conversion rate you are seeing is more people who already know. In other words, is there a higher ratio of people who already know ProHashing before they get here, to people who are really coming here with no previous knowledge.

Perhaps you have done a poll of your miners already to determine how many of them found ProHashing, and if they were pointed here by somebody they knew/trusted and went on their words, or what else brought them here.
Steve Sokolowski wrote: Fri May 27, 2022 9:24 am
Telling the truth

I appreciate your extensive feedback. In regards to the stock images, I was thinking of asking Paula to create new images that actually represent the company. As a result of your feedback, I increased the priority of that and you should expect improvements by June 3.

I noticed that many of your feedback items referenced things that other pools claim they have, like 24/7 support. Some even claim higher profits than us but I think you'll find that zpool.ca doesn't actually pay more. As you pointed out, many claim trust but don't do things that are trustworthy.

This is one of the core issues we have always had, and continue to have. Sarah continually struggles and expresses her concerns to me over whether we should actively work to attack false claims other sites are making, or simply deliver on our promises and hope people figure that out. Try calling between 1 and 5 today and you can actually talk with Paula. Try contacting Coinbase and see if their "24/7 support" ever gets back to you.

Sarah and I would love your thoughts as to how to make people believe that we actually do these things and how to break through the noise of lies on these topics.
As I mentioned before, I have never suggested that you do anything other than tell the truth. But that does not mean that you can’t put yourself in the best light, without lying.

I noticed that you don’t itemize the problems that have happened in the past. For example, I recall a period of time when nobody was able to mine Ethash, and I spent some time on Discord chatting with other miners while it was down. Home come you don’t have on your site “we are usually up and running, but not always”?

Your home page says “We never hold back information, fees, or payouts” – but go to the legal page, and you explicitly say “Balances in mining pool accounts owned by children under 18 will not be paid and will be permanently forfeit.” – These statements contradict each other, you say you never hold back payouts, but if you find out the person is under 18 you would. Rightfully so, and not saying you shouldn’t.

My point is there is a world of difference between this black and white view you keep trying to push that trying to market your service in a positive light might be “Telling the truth”.

Take for example the “Honest Client Support” text that currently says:

PROHASHING provides live hours of support from 1PM to 5PM Eastern time, daily (including weekends and holidays). During the live hours, a support representative is available to immediately answer calls and respond to tickets.

As I said before, since this fails to mention that people are looking at tickets at other times, the only detail that people can focus on is the 1PM to 5PM time frame. Without lying, you could also say:

PROHASING always provides a response within 24 hours of submitting an issue. We also provide LIVE support daily from 1PM to 5PM Eastern who can immediately assist you in our discord channel, and also has an active community of fellow miners you can discuss topics with!

You are still telling the truth. Since you have live support from 1pm to 5pm, if somebody submitted a ticket at 5:05PM, they should get a response before 5PM the following day. But this reassures people that they will get a reply within 24 hours first – and yes, if people take the time to do the maths, it means the same thing. But saying it up front does not hurt, and gives people that safety net. You actually already say that on your about page – but again, don’t make people work for that answer. This also still mentions the 1PM to 5PM, but promotes it as a bonus that people get from ProHashing and highlights it.

Furthermore, you add a mention of an active community of fellow minors. This phycological phrasing helps in a couple ways. One, you are mentioning how your miners are active and engaged – people love to hear that. By using “community” and “fellow miners”, you are making them feel like a “part of our group”, building a kinship with them.

There is no lying here, you are still telling the full truth. You are just promoting it more, highlighting key aspects, and putting your differentiators front and center. This builds that sense of excitement and interested, and converting a potential person into a customer.
Steve Sokolowski wrote: Fri May 27, 2022 9:24 am
Self-hosting

Could you tell me more about the ping times you experienced? In my tests, when I go to the servers and ping sites, and then do the same on a cable modem from home, I consistently notice a 15ms reduction in ping times from a location that is close by. Are you saying your ping times are abnormal? Perhaps there is some internal network issue that could be increasing latency, and if so, I definitely want to work on it.

On the other hand, it is true that high ping times reduce profitability due to stale shares, but the reduction in most cases is incredibly low. For example, in the case of bitcoin, bitcoin cash, or bitcoin SV, you would expect to lose $4.68 in stale shares out of every $188,000 found block. You will lose more due to ASIC downtime unless you can guarantee less than 10 minutes offline in an entire year. Therefore, I believe that ping times are another messaging issue.
I am not going to open another back and forth on trying to prove something else here. Instead let me suggest you get a service like Site24x7.

I have no affiliation with Site24x7 or ZoHo (owners) other than I have used them for several years for monitoring my remote offices, data centers, and other 3rd party services.

Specifically they provide “monitors” that can show you network response times from 30 locations in North Amercia. You can setup a monitor to check network response times from say Boston, Miami, Atlanta, Detroit, and Saint Louis. It then tracks the response time from all these locations over time and charts them out. This gives you the ability to see how accessible your service is over time, from around the country (or world if you wanted), and can provide metrics for you. You can also set alerts that will notify you if response times drop off the server becomes unreachable.

Even if you don’t want to pay for the service, you can get a 30 day trial, and try it out to see how the network acts from multiple locations. You could also setup monitors for a couple of the other pools, and see how your times compare to other pools. Then you can make your own determination on how your servers look to the rest of the country.
Steve Sokolowski wrote: Fri May 27, 2022 9:24 am
Final comment: interviews

You mentioned in your reply about industry attention. I always marvel about how there are these CEOs who get interviewed about things that they really aren't all that knowledgeable about. It's amazing to read articles in the media where a CEO from some mining company makes a statement like "the price of bitcoin is holding steady because its hashrate is increasing," even though hashrate is actually dependent upon price. One of the CEOs who was being interviewed about thefts of cryptocurrencies actually read the article I wrote about wallet security, where I talked about burying keys in forests, and said that he "knows someone who does" the exact same thing written in the article.

Don't you find it weird that the journalist would interview someone else rather than the people who actually wrote the content that person is referencing?
And finally to your final comment. Do I personally find it strange that they would interview the CEO rather than their source? No, not at all.

A CEOs purpose is not just to lead the organization, but to be the public face of a company, and promoting the company. As such they position themselves to be open to interviews, and many train to learn to deal with the media. Then having a ‘CEO’ title, journalists feel they are talking to the most important person in the company, and are more open to talking with them.

Think of this, in the early days of Apple who was the most important person? Steve Wozniak was a freaking genius, and what he built in the original Apple series was incredible. But you didn’t hear from him directly, apart from special highly technical conferences that were over most peoples heads. Why you credit Apple’s growth most people talk about Steve Jobs, the CEO, far more. This quote from Wikipedia from Daniel Kottke:

Between Woz and Jobs, Woz was the innovator, the inventor. Steve Jobs was the marketing person.

So perhaps take that as a parallel to what I have been trying to say. ProHashing is the innovator and inventor of a very unique platform. Now you need to start getting your Steve Jobs mojo going to build that energy and excitement for what you have made.
Post Reply