Last month Crypto Insider reported that Cryptonomos and Giga Watt were launching the WTT token to make cost-effective bitcoin mining available to everyone. The WTT tokan sale started a few days ago and will continue until July 31.

WTT token holders will be able to mine bitcoin with equipment hosted by Giga Watt for 50 years. In terms of return on investment, this looks like a very compelling value proposition – so compelling, in fact, that one wonders about hidden costs and small print. I concluded our previous post noting that:

“If you ask me, this sounds much too good to be true: make an initial investment to buy mining equipment and enough WTT tokens to host it at Giga Watt, and keep printing money out of thin air for 50 years… the question that comes to my mind is, where is the catch? I’ll explore further in a forthcoming report.”

Crypto Insider contacted Dave Carlson, founder of Giga Watt, to find out more.

Could you give me a simulation of total cost and income for a realistic case? For example, suppose I want to earn a profit of $1,000 per month mining bitcoin. What equipment do I need to buy from you, and how much it costs? How many WTT tokens I have to buy to service my equipment, and how much it costs?

In your case we recommend buying three S9 miners. You can see the numbers by using this automatic calculator. Please remember that the numbers can vary greatly because of the changes in bitcoin rate and mining difficulty. Here is a detailed simulation from May 25.

This screenshot shows how it works. Right now three S9s will cost you $4,239, their total power consumption is 4,365W (according to the manufacturer’s specs; it varies from one devices to the other and fluctuates depending on seasonal weather).

At the current bitcoin rate it will bring in $30.49/day ($914.7 per 30 days). This amount is net of daily hosting fees ($10.21) which have already been deducted.

To ensure the availability of spots for your equipment at the facility you need to buy the number of tokens equal to your power consumption – which is 4,365 tokens. Assuming that you buy them during the first 2 weeks of the sale, when the rate is $1 per token, your total token cost will be $4,365.

Tokens will also give you a significant discount on hosting services – you can check the numbers using this calculator.

Here is a screenshot – 4,365 tokens give you $7.07 daily in savings which is $212.1 per month.

So your total mining rewards are $1,126.8 monthly (calculation from May 25).

How much do you charge me for electricity per month?

Giga Watt’s charges are based on the power consumption of your miners. In your simulation, the total hosting fee will be calculated as follows: $10.21 (standard fee, as you can see in the first screenshot) minus $7.07 (savings due to tokens) = total of $3.14 daily, which equals to $94.2 monthly. This amount is your total hosting fees (electricity + maintenance). The standard hosting fees also include fees for facility rent, which the token holders don’t pay. The equivalent all-in hosting costs (electricity + maintenance) are 3.3c per kWH.

How long before recovering the initial investment?

At the current bitcoin rate you get mining rewards of $1,126.8 monthly. The cost of mining equipment was $4,239 so it will take approximately 3,8 months to recover your initial costs. We do not include the cost of tokens in this estimate because their lifecycle is 50 years and you can sell them at any time after they are issued.

How long before I need to buy replacement equipment from you?

It depends on the mining difficulty and the bitcoin price: Equipment can mine until the mining costs surpass your mining rewards. The lower cost of hosting may allow you to mine for a longer period of time. Currently, the average lifecycle of bitcoin miners for token holders is estimated to be about 2 years.

You can also decide not to mine once your equipment becomes outdated and choose to rent out your tokens.

Why did you build Giga Watt in the US? Isn’t electricity cheaper in some foreign countries?

Giga Watt is located in central Washington state, where, to the best of my knowledge, hydro power is cheapest in the world. Its especially important to be able to access large amounts of power at these prices.

What is the Giga Watt capacity limit?

Giga Watt is building 34.5MW for tokenization (30MW for sale and 4.5MW for the team, partners and advisors). We have additional power projects outside of that as well.

Do you plan to build new facilities in the US and/or abroad?

We continue to develop new facilities here in Washington, and are now looking into projects involving wind & solar as well as oil & gas industries. At very large scale, new economics are opening up to us.

Picture from Giga Watt.