Explanation of earnings from Dec 11-13

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bitGRID
Posts: 3
Joined: Mon Sep 25, 2017 5:30 am

Re: Explanation of earnings from Dec 11-13

Post by bitGRID » Sat Dec 16, 2017 4:10 pm

I also don't get it. Additionally when I joined Prohashing some months ago, the profit (in LTC) on it was considerably better than on Litecoinpool.org and that is the reason I stayed. In percentage the difference was almost the same as the higher profit on 12th and 13th December.
What also bothers me is that even now, I would make more on Litecoinpool mining only LTC than I make here, where the profit is supposed to be better as we are mining the most profitable coin.
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Steve Sokolowski
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Location: State College, PA

Re: Explanation of earnings from Dec 11-13

Post by Steve Sokolowski » Sat Dec 16, 2017 4:32 pm

I really need to get back to work on increasing stability, so for most of these questions I'll refer people to the formula in the documentation, which explains exactly how the compensation is determined. As you can see, when the buy price is too low, then the earnings go up.

In regards to the last question by bitGRID, the main cause is that Bitconnectcoin went proof-of-stake, as was planned for the year. At some point, it's likely that another coin will rise up to take its place, increasing profitability again.

litecoinpool provides pay-per-last-n-share mining, which puts all the risk of finding few blocks on the miner. Pay-per-share mining, like we offer, requires higher fees because you earn money when your miner is on, regardless of what it finds. Because of the variance in pay-per-last-n-share mining, pools have to charge less. I'll also refer you to the stickied post titled "our business model" in the "News" forum for other reasons why we're charging more.

Finally, there are additional exchanges out there that offer more coins, but we don't have the manpower yet to add them, since we have higher priority bugs at the moment. We are hiring people as quickly as possible, but finding qualified candidates and training them takes many months. That's why Coinbase never responds to customer support tickets and their system has so many capacity problems.
mck
Posts: 33
Joined: Sat Dec 10, 2016 2:52 am

Re: Explanation of earnings from Dec 11-13

Post by mck » Sat Dec 16, 2017 5:43 pm

Ewil wrote:
AppleMiner wrote:So if you didn't need to purchase LITECOINS, then people who got payouts in LITECOINS would also not be affected by the prices on the exchange?

So how were the profits of the people who were autopool mining and taking payouts in LTC which didnt need to be bought or sold to be paid on an exchange with incorrect pricing data affected also by this error?
I, too, am interested in the response to this question. If you mined the litecoins, then you're only out the equipment percentage/electricity cost and not the exchange cost. If there's one thing I've been told over and over again while dealing in crypto, it's "don't count value of a coin until it's exchanged".
Honestly the statement is now looking quite, um, "hollow", when you say 'While our policy is that we may request all but 15% of the overpayment back, we decided not to execute any clawbacks. If you requested litecoins for payment during those days, enjoy the Christmas bonus!' only for us to find out that it didn't cost *you* what you're saying it would on the exchanges.
These 'bugs' and 'discrepancies' are getting unusually numerous as of late...
What Steve isn't telling, I assume, is the following:

Let's say person A earned $30 that day and was paid in ETH worth $30. All normal.
Person B running the same equipment also earned $30 that day but chose to be paid in LTC. Because of the too low exchange rate of for example $150/LTC he earned 0.2 LTC.
The real exchange rate however had risen to $300/LTC, so Person B should have earned only 0.1 LTC. By earning 0.2 LTC, in fact worth $60, Person B can buy a bigger turkey for Xmas than person A.

Whether Prohashing already owned the LTC, mined the LTC or had to buy LTC at some point is not relevant.
frphm
Posts: 30
Joined: Thu Jun 01, 2017 1:39 am

Re: Explanation of earnings from Dec 11-13

Post by frphm » Sat Dec 16, 2017 6:10 pm

mck wrote:
Ewil wrote:
AppleMiner wrote:So if you didn't need to purchase LITECOINS, then people who got payouts in LITECOINS would also not be affected by the prices on the exchange?

So how were the profits of the people who were autopool mining and taking payouts in LTC which didnt need to be bought or sold to be paid on an exchange with incorrect pricing data affected also by this error?
I, too, am interested in the response to this question. If you mined the litecoins, then you're only out the equipment percentage/electricity cost and not the exchange cost. If there's one thing I've been told over and over again while dealing in crypto, it's "don't count value of a coin until it's exchanged".
Honestly the statement is now looking quite, um, "hollow", when you say 'While our policy is that we may request all but 15% of the overpayment back, we decided not to execute any clawbacks. If you requested litecoins for payment during those days, enjoy the Christmas bonus!' only for us to find out that it didn't cost *you* what you're saying it would on the exchanges.
These 'bugs' and 'discrepancies' are getting unusually numerous as of late...
What Steve isn't telling, I assume, is the following:

Let's say person A earned $30 that day and was paid in ETH worth $30. All normal.
Person B running the same equipment also earned $30 that day but chose to be paid in LTC. Because of the too low exchange rate of for example $150/LTC he earned 0.2 LTC.
The real exchange rate however had risen to $300/LTC, so Person B should have earned only 0.1 LTC. By earning 0.2 LTC, in fact worth $60, Person B can buy a bigger turkey for Xmas than person A.

Whether Prohashing already owned the LTC, mined the LTC or had to buy LTC at some point is not relevant.
To which my reply is: "Person B chose their payout coin really well."

This is crypto. Accumulating the correct coin is part of the game. Boo hoo that person A chose ETH. I for one do not see this as an error, and I'm glad that they chose not to do a clawback, because it would have caused a completely justified uproar.
bitGRID
Posts: 3
Joined: Mon Sep 25, 2017 5:30 am

Re: Explanation of earnings from Dec 11-13

Post by bitGRID » Sat Dec 16, 2017 7:15 pm

Steve Sokolowski wrote:
litecoinpool provides pay-per-last-n-share mining, which puts all the risk of finding few blocks on the miner. Pay-per-share mining, like we offer, requires higher fees because you earn money when your miner is on, regardless of what it finds. Because of the variance in pay-per-last-n-share mining, pools have to charge less. I'll also refer you to the stickied post titled "our business model" in the "News" forum for other reasons why we're charging more.

Finally, there are additional exchanges out there that offer more coins, but we don't have the manpower yet to add them, since we have higher priority bugs at the moment. We are hiring people as quickly as possible, but finding qualified candidates and training them takes many months. That's why Coinbase never responds to customer support tickets and their system has so many capacity problems.
Steve,
Actually Litecoinpool is also PPS as Prohashing. Antpool is PPLNS.
pavvappav
Posts: 59
Joined: Sun Nov 05, 2017 10:19 am

Re: Explanation of earnings from Dec 11-13

Post by pavvappav » Sat Dec 16, 2017 8:34 pm

LitecoinPool is also over 3x the hashing power than LitecoinPool, so LiteconPool has a greater chance of finding a block. Combined with them keeping the merge mined coins for their "profit", that is how they offer the -1% pool fee. Prohashing throws those merged mined coins into the pool's profits.
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AppleMiner
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Re: Explanation of earnings from Dec 11-13

Post by AppleMiner » Sat Dec 16, 2017 9:39 pm

pavvappav wrote:LitecoinPool is also over 3x the hashing power than LitecoinPool, so LiteconPool has a greater chance of finding a block.
WELL DAH!
:lol:
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Steve Sokolowski
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Location: State College, PA

Re: Explanation of earnings from Dec 11-13

Post by Steve Sokolowski » Sun Dec 17, 2017 8:34 am

pavvappav wrote:LitecoinPool is also over 3x the hashing power than LitecoinPool, so LiteconPool has a greater chance of finding a block. Combined with them keeping the merge mined coins for their "profit", that is how they offer the -1% pool fee. Prohashing throws those merged mined coins into the pool's profits.
Ah, I didn't know that. This makes sense now. I was wondering how these pools manage to operate with such low fees.

But it turns out that they are advertising their fees based upon only part of what they're mining, because we do give customers all the profit from all six (or however many there are) merge mined coins. We need to make this more clear in our documentation.
dajackson33
Posts: 1
Joined: Thu Dec 14, 2017 8:29 pm

Re: Explanation of earnings from Dec 11-13

Post by dajackson33 » Sun Dec 17, 2017 8:42 am

Steve Sokolowski wrote:We recently discovered an issue with earnings for Dec 11-13, which was brought to our attention as a result of many support tickets submitted on Dec 14 that drew attention to lower profits that day compared to the previous days.

Chris spent over 12 hours investigating this problem. It turns out that during the period of Dec 11-13, exchanges with low volume did not see its litecoin price track the price of the other exchanges. This was a period of an extreme increase in litecoin prices, up to over $400. The data below demonstrates the discrepancies. The first two columns are the day of the month and the hour of day. The third and fourth columns are the Poloniex LTC/BTC price, and the fourth column is the price at the lowest-priced exchange. The ratio of the two prices is in the fifth column.


day hour poloniex_price outlier_price ratio_of_outlier_to_poloniex
9 0 0.009782696 0.009466673 0.967695698
9 1 0.009589155 0.009415575 0.981898354
9 2 0.009477958 0.009391412 0.990868638
9 3 0.010008159 0.009896414 0.988834557
9 4 0.010014572 0.00997425 0.995973662
9 5 0.010022874 0.009930385 0.990772179
9 6 0.009646416 0.009552601 0.99027464
9 7 0.009699054 0.009689729 0.99903861
9 8 0.009874545 0.009839075 0.996407955
9 9 0.010159194 0.010121642 0.996303628
9 10 0.010154612 0.010119304 0.996523024
9 11 0.010196556 0.010157176 0.996137942
9 12 0.01013047 0.010063301 0.993369671
9 13 0.01003676 0.009775917 0.974011146
9 14 0.01003002 0.009896656 0.986703544
9 15 0.010016726 0.009987674 0.997099651
9 16 0.010106209 0.010026333 0.99209634
9 17 0.010151133 0.010065681 0.991581995
9 18 0.010111847 0.01010398 0.999222003
9 19 0.010157163 0.010099486 0.994321535
9 20 0.010138628 0.009984377 0.98478589
9 21 0.010084344 0.009810804 0.972874853
9 22 0.009936678 0.009858729 0.992155454
9 23 0.009846391 0.009735912 0.988779702
10 0 0.009901798 0.009897684 0.999584502
10 1 0.00986684 0.009893148 1.002666256
10 2 0.00995562 0.009922419 0.996665016
10 3 0.009970084 0.009921371 0.995114066
10 4 0.009833823 0.009880609 1.004757651
10 5 0.009754749 0.009789207 1.003532479
10 6 0.00969487 0.00971957 1.002547715
10 7 0.009726326 0.009764681 1.003943456
10 8 0.009792292 0.009807416 1.00154447
10 9 0.00939144 0.009335078 0.993998518
10 10 0.009173528 0.009184427 1.001188101
10 11 0.009193513 0.009162812 0.996660558
10 12 0.00962281 0.009579762 0.995526477
10 13 0.0098509 0.009864184 1.001348512
10 14 0.009882647 0.009893534 1.001101552
10 15 0.009802563 0.009755142 0.995162394
10 16 0.009708812 0.009756616 1.004923823
10 17 0.009700294 0.009740592 1.004154275
10 18 0.009560566 0.009544129 0.998280715
10 19 0.009580186 0.009534353 0.995215808
10 20 0.009509071 0.009525142 1.001690076
10 21 0.00940565 0.009257362 0.984234193
10 22 0.00940565 0.009134416 0.97116267
10 23 0.00940565 0.009172771 0.975240483
11 0 0.009479664 0.009384498 0.989961029
11 1 0.009753564 0.009688587 0.993338102
11 2 0.009515552 0.009565896 1.005290718
11 3 0.009554868 0.009558331 1.000362403
11 4 0.009674401 0.009696491 1.002283329
11 5 0.009767942 0.00970445 0.993499968
11 6 0.009685061 0.0097 1.001542481
11 7 0.009828467 0.0097 0.986929088
11 8 0.010346858 0.0097 0.937482643
11 9 0.010953289 0.0097 0.885578724
11 10 0.010992889 0.0097 0.882388579
11 11 0.01093475 0.0097 0.887080164
11 12 0.011400066 0.0097 0.850872252
11 13 0.011742657 0.0097 0.826048157
11 14 0.011635209 0.0097 0.833676491
11 15 0.010983364 0.0097 0.883153862
11 16 0.011255672 0.0097 0.861787717
11 17 0.012403952 0.011050051 0.890849224
11 18 0.012797908 0.010807347 0.844462015
11 19 0.012581696 0.0097 0.770961245
11 20 0.013174643 0.0097 0.736262846
11 21 0.014281162 0.0097 0.679216457
11 22 0.014099521 0.0097 0.687966646
11 23 0.014422838 0.0097 0.672544481
12 0 0.014513866 0.0097 0.668326397
12 1 0.013992004 0.0097 0.693253093
12 2 0.013566193 0.0097 0.715012694
12 3 0.013994231 0.0097 0.69314275
12 4 0.014266388 0.010153771 0.711726802
12 5 0.014189908 0.0097 0.683584404
12 6 0.014972842 0.0097 0.6478396
12 7 0.016772367 0.0097 0.57833219
12 8 0.016490732 0.0097 0.588209199
12 9 0.018509711 0.0097 0.524049244
12 10 0.017947357 0.0097 0.540469545
12 11 0.018032625 0.0097 0.537913929
12 12 0.018242366 0.010417435 0.571057218
12 13 0.018451966 0.0097 0.525689248
12 14 0.01822378 0.0097 0.532271583
12 15 0.01858688 0.0097 0.521873498
12 16 0.018692429 0.0097 0.518926661
12 17 0.017624562 0.0097 0.550368286
12 18 0.017312481 0.0097 0.560289435
12 19 0.017784813 0.0097 0.545409178
12 20 0.01778565 0.0097 0.545383497
12 21 0.017749377 0.0097 0.546498062
12 22 0.017643157 0.0097 0.549788235
12 23 0.017557074 0.0097 0.552483866
13 0 0.018032605 0.011337665 0.628731396
13 1 0.018220947 0.0097 0.532354342
13 2 0.017984421 0.0097 0.539355709
13 3 0.017858137 0.0097 0.543169775
13 4 0.017756707 0.011717544 0.659893976
13 5 0.017662683 0.016738506 0.947676307
13 6 0.017581802 0.0097 0.551706829
13 7 0.018173932 0.0097 0.533731507
13 8 0.019404351 0.0097 0.499887891
13 9 0.019094611 0.0097 0.507996725
13 10 0.018622946 0.0097 0.520862805
13 11 0.018642836 0.0097 0.520307112
13 12 0.018249918 0.0097 0.531509226
13 13 0.018027596 0.0097 0.538063989
13 14 0.018240914 0.0097 0.5317716
13 15 0.017916934 0.0097 0.541387265
13 16 0.018063287 0.0097 0.537000815
13 17 0.01828951 0.015820533 0.865005886
13 18 0.018211909 0.018219305 1.000406109
13 19 0.018113646 0.018140526 1.001483972
13 20 0.018316162 0.018333814 1.000963717
13 21 0.0185736 0.018484683 0.995212685
13 22 0.018527631 0.018505473 0.998804043
13 23 0.018561171 0.018535414 0.998612325
14 0 0.018445996 0.018417976 0.998481003
14 1 0.018305062 0.018279205 0.998587402
14 2 0.018327354 0.018297003 0.998343971
14 3 0.017875151 0.017783944 0.994897543
14 4 0.01776668 0.017782626 1.000897513
14 5 0.017878657 0.017879134 1.000026643
14 6 0.01789963 0.017898786 0.999952867
14 7 0.01772104 0.017692035 0.998363266
14 8 0.017397729 0.017277846 0.993109259
14 9 0.017068026 0.016980412 0.994866773
14 10 0.016493799 0.016383273 0.993298963
14 11 0.017117219 0.017008784 0.99366513
14 12 0.017022163 0.017024169 1.000117872
14 13 0.016387525 0.016351973 0.997830556
14 14 0.016235473 0.016228674 0.999581229
14 15 0.016508412 0.016500408 0.999515161
14 16 0.016674859 0.016685069 1.00061235
14 17 0.016566461 0.01656444 0.999878008
14 18 0.016436872 0.016457069 1.001228728
14 19 0.016541031 0.01657557 1.002088079
14 20 0.015947788 0.01582927 0.992568396
14 21 0.014870482 0.014769196 0.993188831
14 22 0.015030073 0.014921239 0.992758896
14 23 0.015905438 0.015756781 0.990653679
15 0 0.015556504 0.015538616 0.998850117
15 1 0.015627198 0.015603145 0.998460828
15 2 0.015650137 0.015624321 0.998350454
15 3 0.015663773 0.015662701 0.999931557
15 4 0.015261283 0.015279209 1.001174587
15 5 0.014555103 0.014486663 0.995297886
15 6 0.01458068 0.014607529 1.001841404
15 7 0.014602197 0.01462302 1.001425989
15 8 0.016013318 0.015822721 0.988097569
15 9 0.016267617 0.016191977 0.995350317
15 10 0.017121171 0.016952683 0.990159073
15 11 0.017387858 0.017332687 0.996827079
15 12 0.017519658 0.017434133 0.995118331
15 13 0.016998107 0.016955418 0.997488588
15 14 0.016834257 0.016815099 0.99886196
15 15 0.017241564 0.017219685 0.998731006
15 16 0.017252827 0.017283437 1.001774156
15 17 0.017153128 0.017126938 0.998473128
15 18 0.017022402 0.016859461 0.990427897
15 19 0.016925558 0.016717003 0.987678107
15 20 0.017007542 0.016973797 0.998015909
15 21 0.017208563 0.017225882 1.00100643
15 22 0.017090554 0.017154707 1.00375374
15 23 0.016985074 0.016974657 0.999386682
16 0 0.01696603 0.016981236 1.000896239
16 1 0.016866242 0.016818023 0.997141097
16 2 0.016568316 0.016575505 1.000433891
16 3 0.01665539 0.01668989 1.002071385
16 4 0.016936251 0.016634471 0.982181438
16 5 0.016721438 0.016602252 0.992872256
16 6 0.016656748 0.016668366 1.00069749
16 7 0.016862942 0.016818788 0.997381579
16 8 0.016869742 0.016850476 0.99885794

As you can see, at about 7:00am EST on Dec 11, the price of LTC/BTC on Poloniex started to dramatically climb, but the lower volume exchanges did not immediately respond to the sudden jump. Once the LTC/BTC price fell after the price of LTC declined on Dec 13 at 6:00pm EST, all the exchanges returned to around the same price. Between those two times, you can see where the ratio is as low as 0.5, meaning that LTC on Poloniex was twice as valuable as that on the other exchanges. It's strange to me that prices became this far out of sync, as normally people seem to sell litecoins on the higher priced exchange when this happens. However, we double checked this data and determined that it is correct.

During that time, we used the lowest buy price in calculating earnings, as we always do, and therefore customers who requested to be paid in litecoins made (1/column 5) times what they should have earned. When column 5 returned to normal in the later rows, many customers who were overpaid in previous days noticed that their next day's profits had declined to the correct amount and submitted support tickets.

About $100,000 was overpaid in this incident. While our policy is that we may request all but 15% of the overpayment back, we decided not to execute any clawbacks. If you requested litecoins for payment during those days, enjoy the Christmas bonus!

As an aside, I troubleshot the issue on the morning of Dec 15 and because I thought that the problem was occurring then, rather than already having been fixed, I messed up the hashrate charts for that day. Chris is fixing them, but no money was affected that day.

Chris will be directing all support tickets about the issue to this post. In the future, we'll add a new feature to cease trading and using price data from exchanges where the price is such a dramatic outlier from all the others like this.


How generous of you guys for following your own policy, getting screwed by it, and not trying to steal those profits back from your users. How admirable! Merry Christmas indeed!

Also, it’s a little appalling that you were so ignorantly unaware of Litecoinpool’s payout structure. Perhaps y’all should start getting to know your competitors a little better—it’s business 101, Mr. “Prohashing is trying to be a legitimate business.”

Despite your incredibly greedy fee structure, I was actually excited to try you guys out. But it’s clear you guys have your heads so far up your own a**es and your priorities way out of whack—good luck making any money charging 5x your competition and sending tax forms. Good job making it very clear you care more about yourselves than your customers. “Waaaaaaaaa my brother and I work so many hours a week!” That’s what it takes to run a business, dude. The people who are successful just don’t b*tch about it.
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Steve Sokolowski
Posts: 4585
Joined: Wed Aug 27, 2014 3:27 pm
Location: State College, PA

Re: Explanation of earnings from Dec 11-13

Post by Steve Sokolowski » Sun Dec 17, 2017 10:27 am

dajackson33 wrote:
How generous of you guys for following your own policy, getting screwed by it, and not trying to steal those profits back from your users. How admirable! Merry Christmas indeed!

Also, it’s a little appalling that you were so ignorantly unaware of Litecoinpool’s payout structure. Perhaps y’all should start getting to know your competitors a little better—it’s business 101, Mr. “Prohashing is trying to be a legitimate business.”

Despite your incredibly greedy fee structure, I was actually excited to try you guys out. But it’s clear you guys have your heads so far up your own a**es and your priorities way out of whack—good luck making any money charging 5x your competition and sending tax forms. Good job making it very clear you care more about yourselves than your customers. “Waaaaaaaaa my brother and I work so many hours a week!” That’s what it takes to run a business, dude. The people who are successful just don’t b*tch about it.
The reason we haven't looked deeply into Litecoinpool's fee structure is exactly what you said - there isn't any need to, because we can make more money by fixing the many issues here that are caused by the increase in the number of miners. None of the companies in this industry can handle the growth right now, and trying to take marketshare from competitors isn't necessary when it's difficult enough to keep up with demand. Remember, we closed registrations for months for that reason and when we reopened, usage tripled. Of course, we want to get to the point where we have enough manpower that we spend time on advertising and competition, but we are purposely remaining slightly understaffed for when this bubble ends so that we don't have any layoffs.

As to the tax forms, that's what we decided to do, and if you're unhappy about it, then you can fill out the form for the income you have made already and leave. I advise other customers who disagree with the simple step of receiving one piece of paper to also fill out the form in a few weeks and leave. While we appreciate customer feedback on everything else, it should be made very clear that this is one issue where we will not be listening to customers. I would rather people spend their posts and tickets writing to us about things we can work to improve, like disconnects or adding new coins, rather than this decision, which is final.

It's also important to understand that once we set a precedent of submitting 1099 forms, it is likely that other pools will follow suit. If litecoinpool has US customers and chooses not to issue the forms, then the IRS could take them to court as a test case, asking the judge why we submit the forms and they do not. Now that mining is a big business, and big businesses attract audits, I don't think that many mining pools will be operating without greater scrutiny of laws and regulations.

I also want to address the issue that has been brought up here about the possibility of our making less money or going out of business. I disagree that there will be any significant reduction in the number of miners as a result of these forms. But even if there were, we already performed a risk-benefit analysis and realized that we are very fortunate and don't need to be billionaires. Going out of business over this issue is a risk we're willing to take, so even if it is true, having fewer miners is not a persuasive argument.

Again, this is not a big deal. It's just some paperwork that needs to be sent. Nothing else is changing, and it affects less than 4% of miners.
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