Fed up with waiting for ASIC mining rigs from suppliers who can’t deliver? Don’t want to spend money on a box that you have to power and maintain yourself?

Welcome to the world of Mining as a Service (Maas).

UK firm CloudHashing is offering users the chance to mine for bitcoins without buying any equipment. Just as companies in the software world began offering online Software as a Service (SaaS) contracts to customers who didn't want to invest in their own expensive servers, CloudHashing is trying to offer online mining services using ASIC equipment that it buys en masse. The firm will offer online mining capacity to users for as little as $150 a year, it promises.

The firm is offering two types of contract. The first, a one-year deal, costs $150, and yields 1Ghash/sec. The estimated payout is six bitcoins, of which the firm takes 10 percent, leaving the user 5.4 bitcoins. At today’s rate, that would equate to $640 in profit in a year’s time, or a 326 percent return. Returns are paid in bitcoins biweekly.

The alternative is an indefinite contract, which costs $246. This runs for as long as the user wants, and provides 1 Ghash/sec of compute power. With this type of contract, 30 percent of the return is reinvested in additional computing power, with another 10 percent going to CloudHashing and the rest paid back to the customer as profit. Returns are reinvested as soon as CloudHashing earns enough money to buy its next big mining rig.

The idea with the indefinite contract is to keep the customer’s investment growing along with CloudHashing. CloudHashing predicts a first-year payout estimate of six bitcoins per indefinite contract.

CloudHashing’s founder, Emmanuel Abiodun, who currently works full time as a software engineer for an investment bank, is basing the coin return forecast on predicted network terahash rates (one terahash is 1012 hashes). Currently, the Bitcoin network is running at 86 terahashes/sec. But Abiodun bases his expectations on a network hashrate of 180 Thashes/sec.

That’s a pretty hefty 110 percent increase in the available computing power on the bitcoin network.

Why would that happen? Because CloudHashing isn’t the only firm that will be introducing number-crunching ASICs into the network. Bitsyncom is set to start flooding the market with Avalon ASIC chips for others to build boards with using its OEM reference design, and Butterfly Labs hopes to start shipping soon too. ASIC Miner, which is already mining with its own ASICs, continues to add capacity.

CloudHashing initially expected to start its contracts in May, but now plans to begin them in July, following delays from Kansas-based Butterfly Labs, from which CloudHashing has purchased 6 Terahashes/sec of hardware. Abiodun offset the delay by purchasing boards from California-based Terrahash, based on the Avalon chip design. He is also in negotiation with KNC, which he says is pledging September delivery for its own ASIC products.

All of these manufacturers will host the ASIC rigs at their own facilities, meaning that CloudHashing doesn’t need a data center of its own. It really will be hashing in the cloud.

Customers who choose mining-as-a-service make several tradeoffs. On one hand, the cost per GHash/sec will be more than an outright hardware purchase. Butterfly Labs’ as-yet unavailable ASIC box offers 5Ghashes/sec for $274. This means that the capital expenditure on a MaaS contract is actually higher, which goes against traditional SaaS principles. Customers are also relying on CloudHashing’s own predictions about the network hash rate (and therefore the difficulty of mining bitcoins), and the return rate is not guaranteed. But then, that’s true for those people purchasing their own mining rigs, too.

So, where does the money go? It certainly isn’t into data center facilities, as CloudHashing doesn’t have any. But Abiodun says he has to factor contingencies into his margins. If the level of difficulty computing bitcoins spikes, for example, or a hardware supplier doesn’t deliver on time, it will force more capital expenditure on his part.

On the other hand, there are other benefits for customers, not least of which is being able to get in on the ASIC game early. Currently, ASICs are extremely hard to come by, and CloudHashing is near the top of Terrahash’s queue for Avalon-based boards.

“It’s an arms race,” says Abiodun.

Then there’s the capital expense. CloudHashing’s fees may be higher on a per-Ghash/sec basis than simply buying your own ASIC hardware, but ASIC rigs are costly because they’re so scarce. ASIC Miner’s castoffs are shipping on eBay for the equivalent of around $700 per Ghash/sec. And these are 10Ghash/sec boards, meaning that you’ll need around $7,000 to buy in.

Not buying the equipment directly also frees up customers from space and power requirements, and means that they can scale up their investment to keep pace with the network hash rate.

The firm has already taken $150,000 to 200,000 in contract orders from customers, and has spent $200,000 on equipment.

Abiodun says he plans to begin by joining an existing pool ... mostly likely the Eclipse Mining Corporation’s pool, which was run by Josh Zerkel before Zerkel became COO at Butterfly Labs. After a while, though, when everything is shown to be running smoothly, he will migrate off a third-party pool and concentrate on his own internal pool.

“If you have 5 percent of the network hash rate, there’s no real need,” he says, “but at the beginning it’s important to us to get it running smoothly.”

This is certainly the plan. In addition to the 6 Thash/sec of capacity from Butterfly Labs, it has bought 2 Thashes/sec of Avalon-based capacity from Terrahash, which will hopefully deliver in June. It is also hoping to add 20 Thash/sec from KNC Miner.

Abiodun is also in talks with a Canadian firm to make CloudHashing's own ASICs, which he hopes will free it from the constraints of other manufacturers and allow it to add more capacity far faster.

CloudHashing originally planned to start hashing at the end of May, but thanks to supply issues from Butterfly Labs this has been pushed back. If it can get the Avalon boards early enough from Terrahash, it will be able to start mining in late June. If it slips to July, it will add 50 percent hashing capability to its May contract holders, gratis, for the life of their contract. That's a sweet deal for those who opted for an indefinite contract, and illustrates how much headroom the firm has built into its margins for unexpected hiccups.

Find out how bitcoin mining works with our guide.