Used equipment sales are rough right now. The machines aren't valuable enough for it make sense to spend a lot of time in labor to ensure they work and offer a warranty. The cost of shipping and labor makes up about half the value of the equipment.
Miners selling the equipment don't want to sell it for what it's worth, and buyers of the equipment don't want to pay prices of what makes it profitable for people like me to sell.
There is significant demand for used equipment, but people don't want broken machines.
Offering a warranty on a $250-$500 machine is stupid because if and when there are issues with shipping, which there inevitably will be to varying degrees, shipping them back will completely offset any profitability in the transaction.
As a buyer, it is difficult to place an accurate value on used equipment that could potentially have a failure rate of 10%-75% without a warranty. The warranty suggests that the seller has done some testing or due diligence of the equipment
One thing that makes used Whatsminers valuable is that parts can be taken off them and put on newer units. Buying used Whatsminers can allow you to acquire replacement power supplies for the same or lower cost as new power supplies. As machine valuation goes up, it makes a lot more sense to test and fix broken machines.
Used S19 J Pros are valuable because of their ability to underclock, giving you around a similar efficiency as new K Pro models, but on a model that is significantly cheaper and more durable. In the bull market, these units can overclock really well.
Trying to save a dollar on the front end in this industry often results in paying way more on the backend. As a buyer, it is important to really evaluate your partners and the economics of what they are doing. You do not want to place equipment with a host that goes bankrupt.
Many sellers of miners enter into risky transactions, and cannot absorb any transactions that go sideways. A lot of buyers are not aware of the risks they are assuming. I think it's really important for buyers to understand the market dynamics of why things are priced certain ways. I know everyone is super price sensitive right now and wants the lowest price conceivable, but that usually doesn't yield the best results.
We will have a bull market again, and the economics of used hardware will make a lot more sense.
this territory is moderated
I thought that this sounds too crazy to be able to stand on its own. A bang for buck in this situation is a gamble. But let me tell you something. If a particular batch of equipment is from a batch made by exquisite workers. This may last for as long as you can maintain it. There are newer batch of equipment with inferior parts that render warranties or guarantees useless. In the accounting and auditing world this is crazy but on the account that older batches of equipment are long lasting is something that we should also consider when buying used or second hand equipment.
reply
Yeah you generally don't know how durable or good a model will be until it's ran for a year. How long the lifetime of the equipment is completely unknown. Estimating failure rates is incredibly difficult because it depends largely on environment, but also quality.
A good portion of the world doesn't have the repair infrastructure the US has. The warranty is pretty much useless in most countries, which requires sending units back to China/US to get repaired which makes it really difficult unless you are operating at scale and can do repairs yourself.
Mining is a major headache
reply
51 sats \ 1 reply \ @zx 29 Aug
This made me wonder about business models like those of some miner-heaters that use s9 or similar. I can't say I'm familiar with mining economics or hardware to comment on this, but from the perspective of a consumer, I'd be willing to take certain calculated risks/discounts/premiums for repurposed hardware used in new products.
Like you say, the after-sales part is a factor. I'd never expect much from warranties, and I generally overlook it when buying new hardware. I feel you just have to trust in the information you are provided at time of purchase and reputation of manufacturers. But this does lead me to think that distribution of resellers is a problem. Getting things shipped from far away is a problem, repeated tax on top of shipping is probably another. If there were affiliated distribution networks for used hardware, in the same way you might have 'authorized dealers' and 'repair' for other refurbished electronic consumer goods, that would solve a lot of problems for the industry.
reply
The key is working with people who have reputations. It doesn't guarantee a good experience but definitely lowers the chances of a bad one.
reply
51 sats \ 1 reply \ @OT 29 Aug
Does a raging bull market change those dynamics? Like, do people take more risks on used equipment with no guarantee
reply
People take all sorts of risks all the time, largely due to not understanding the market. People are generally only willing to take the risk if the price seems attractive enough.
The main risk people take on in the bull is overpaying for equipment in general, and getting in bad power contracts.
reply
Nice post
Thanks for sharing your insight
reply