Topic: [ANN] A public company will build a huge Bitcoin Mining Operation (ASIC). - page 4. (Read 27061 times)

Vlad, I mined with you back in the MMC days. I always remember the 'I wanna be the first bitcoin billionaire SO BAD' tagline

However, I work in the investment management industry. I've got a couple of questions.

1. You need investors to take you on trust that you actually have a technical solution that works to the claimed specification, right? I presume you know that a PLC is significantly different to a normal limited company that can get away without audits (and how auditors will account for BTC 'profits' is unknown)? BFL suffered from this, big claims up-front to get *fiat* investment;

2. What sounds questionable is *fiat* investment with the prospect of *fiat* dividends, when the hashpower potentially gathered could, as mentioned repeatedly on this thread, reduce the value of the BTC. Mining all the blocks will put you as the main seller on the exchanges, and knowing that will help traders drive your price down. I'd invest if divvies were paid in BTC because you'd clearly be maximising the effectiveness of the economy. Accepting fiat and extracting fiat sounds like draining the value of the BTC economy dry, and there's not enough value in that economy to give a useful ROI on the numbers required for ASIC development (AFAIK);

3. What is the first Bitcoin REIT? The acronym means 'real estate investment trust'. These invest capital in property, and distribute the rental income to the investors. The REIT always has a residual value if the income collapses since the property can be sold. Custom ASICs would leave investors with no return of capital if the income stream dries up;

4. I suspect that you'd only be able to operate as a hedge fund, and given today's 'risk-on' - 'risk-off' volatility, you'd have to restrict withdrawals from investors in a BIG way to have a chance of survival. If the capital invested could be returned (i.e. no collapse of BTC economy, ASIC licenses sold, etc.) then investors would be more reassured. As it is, it sounds risky as hell;

5. Investors expect a yield commensurate with the risk they take. Mad risks demand insane yields. The only way I can see an 'insane yield' is if your plan takes the entire current value of the BTC economy and redistributes it to the investors. That's not good for BTC, you know that.

The legality of the fund is equally complex, and the up-front cost of establishing a PLC (minimum turnover required... where's that coming from?) as opposed to a normal LTD, plus the legal fees, plus the fund setup advice, etc. - you're going to need a LOT of capital. If you're very rich and you're putting it all up yourself, fair enough. But after Madoff, you're not going to fool the UHNW crowd and the institutional fund-of-hedge-fund crowd either.

Of course, if you really meant 'Limited Company' rather than PLC (think about that turnover limit again), then you can be gone as soon as the investments roll in. And I never thought that of you, so what *really* is the master plan here? I'm interested as an investor, simply to hedge my moderate FPGA investments... most of my savings Hey, high risk, high reward....

Isn't the correct play for vlad to take his ASIC farm up to 25-35% of total mining power (ie, just under the range where the community really starts to freak out), and then start selling ASIC hardware at huge markup to everyone else? He can tightly control the supply of his high-margin sold-to-the-public ASICs while bringing on a like quantity of his cheap production-cost ASICs in his own farm to maintain that 20-30%. I think if we assume that vlad is a rational actor, this will be the play (assuming the mining efficiency of his ASICs really is a few orders of magnitude better than current tech).

You say he has no incentive to harm his business. This is obviously wrong if one can believe his words. He claimed he'd become one of the biggest if not the biggest player in the game again and clearly said he didn't want to sell his future SuperAsic to the competition, but which he wants "public" investors to pay for. This makes me think he didn't think it through at all before opening this thread. If you think about it, the idea is pretty failsafe for him if it works out, but only if those investors are willing to take the risk though. This alone is bold, but what I find appalling is he makes an attempt to intimidate people in telling them if they aren't investing with him, they'll be out of the game. Oh hold it, I'm sure it was meant as a joke. ;-)

Yes, this is why I responded so enthusiastically to the project initially. I am just disappointed that Vlad doesn't have anything more ambitious than 10-30% of mining power planned.

One point that I have not seen mentioned is the fact that bitcoin failing would destroy his company. He has no incentive to harm this economy. The better it does, the more he makes. So I am assuming that he will be spending money to further bitcoin in the world. He might plan on doing this through advertising or other methods, but either way I look it this will bring more people to bitcoin.

Thanks for taking the time to respond Vladimir.  I appreciate it.  I understand your comments about context, I did my best to try and maintain some linearity in your statements.  I respect your inabilities and dis-interest in out right answering a lot of questions that people are having.

However, this thread *is* soliciting investors, you have it listed right on the first post.  I can only assume with confidence there are people who are watching this who are, or have ties to professional investors and IMO this thread is doing nothing but harming your potential with them (the ones present here, in this thread).  So it is my understanding that despite your non-intention of addressing investors, by posting this thread you are.

If you're serious about all of this, I would consider having your lawyer peruse this thread and make sure you haven't done anything you really shouldn't have such as indicating to the investors you're soliciting to that you have a long-term production contract which you've publicly announced (albeit indirectly) that you intend to renege on.  If this is a fallacy in its entirety, then I suppose it doesn't matter.

But I digress, if you're successful in your ventures please tread lightly.  I have the feeling this has the propensity to end quite tragically for those involved.

We are talking with legal bods about this. This is our goal to allow "small time investors" in. At this stage it is not possible. We are in talks with a number of "funds" some of which are considering using GLBSE. We will do what we can to allow small investors to participate, but it is neither simple nor quick process.

Will there be an opportunity for small time investors to get in on this?

lack of clues explanation: http://www.legislation.gov.uk/uksi/2005/1529/contents/made

Went through 11 pages.

Not a single clue on:
*the investment required
*time frame
*prospects on mining capacity
*view on development of Bitcoin prices the next few years
*prospects on ROI for investors, their position etc
*etc

I appreciate that it's not a prospectus, but you aren't giving any clues whatsoever. I wish you good luck with your enterprise.

ASIC's are really the last major advancement that can be made.  As long as we survive the transition to ASICs, there's no reason that we'll have to rely on a single person/company to keep things legit.

These are all valid points about Bitcoin evolving and how it'd be actually good for the price. But if it's just a matter of good will/ rationality if somone takes over 50% of the hashing power I'm no longer convinced Bitcoin's design was such a great idea. You say it could have happened before when the switch from CPUs to GPUs happened. But we were lucky. So are you saying future or past, the system is only as secure as the benevolence of some of its users?

SgtSpike here is correct. You'll notice that in my criticisms of what Vlad is doing I'm not criticizing on the 51% attack route, because even Tycho, and before him ArtForz, understood the risk of being at 51%. It's actually *not* in a Bitcoiner's best interest to hit that point, because the value of Bitcoin as a currency itself drops considerably when a threat is actually present.

When ArtForz first brought his GPU operation online, he offered free transactions and downplayed the essential dominance he had once the difficulty reset to something less in his favor. It did, however, upset a number of CPU miners who had invested quite heavily into their own operations. Artforz could have brought enough GPUs online to have achieved 51%, but appears to have chose not to in order to preserve his best interest of keeping the value of his already mined coin high enough to continue to compete in the future. Over the next three months, as more GPU miners cut into his profits, the price of BTC rose.

When Tycho -- with his mining pool "Deepbit" -- cornered the Russian and Eastern markets of GPU miners, it upset a lot of the smaller pools that had relied on friends and family all mining to get a set amount of Bitcoin per day. He actually became such a present threat that someone actively started using their botnet to try to punish him and the other larger pools for not letting them mine on their networks. In other words, BTCGuild, Deepbit, and slush's mining pools *could* have achieved 51% with the help of the botnet, but chose not to in order to preserve their actual best interests, which was to keep Bitcoin prices viable. Over the next three months, more and more pools began operating in more languages in order to cut into Deepbit's advantage, and some pools outright allowed pool hopping that I'm sure at least one botnet operator took advantage of. The price of BTC rose.

We've been without a major innovation since. Now I understand FPGAs and the more Bitcoin-targed BFL Singles are innovation, but unlike CPUs and FPGAs they don't have any dual-use purpose which means they are less and less viable outside of Bitcoin, itself. This has cause major trepidation on the part of some of the more serious Bitcoiners, who want to have a reason to throw a few thousand USD into something they would call an "investment" with an easily-measurable liquidation fee once they are out-of-market viability. This is especially true for European and US coast miners, who would operate FPGAs at a higher cost-per-watt than those in the US Midwest, or other remote country with a significantly cheaper electricity cost.

All in all, I think the biggest problem with Vladamir's operation (presently) is that he didn't bring enough technical details on the mining equipment itself, and instead jumped into how easily he'd be willing to spend funding trying to secure it in the most secure data center he could find. That's something that someone with a good sense of security would do, but without technical details, specifically what kinds of Megahash/joule, we'd be investing in something that is more of an idea than certain to be a reality. That said, if someone does come up with a major innovation that gives just one person an advantage, the price of coin with significant rise, just as it has in the past due to Bitcoin scarcity.

To answer your first question, yes, he absolutely WOULD idle some % of his hashing farm to keep himself below the 30% cap (or 40%, or whatever % below 50% he chooses).  The reason being, all faith in Bitcoin would be lost if a single person owned and controlled more than 50% of the hashing power of the network, causing a price crash.

1800 BTC/day @ $5/BTC is a heck of a lot more valuable than 7200 BTC/day @ $0.05/BTC.

I agree that it could be more profitable to sell ASIC miners, as it wouldn't reduce confidence in the network/cause a price drop, and he could continue selling them until the market is completely saturated, but that choice is certainly his.  If he wants to be the only one with ASIC miners to increase his own BTC take, then I can kind of see that as well.  Also, there's something to be said for being able to generate mostly passive income.

So if he builds 3TH/s (30% of current network) and through higher difficulty and lower block rewards difficulty falls to say 6TH/s he is going to idle some % of his multi-million hashing farm to keep himself below the 30% cap?  Really?

Given how variable network hashing power is (min of 3GH/s, max of 15GH/s, avg of 8GH/s just in last year) do you really think a <30% of total network cap is realistic?

The stupidest part is that once designed the per unit cost of an ASIC is negligible.  So he pays the massive upfront cost, takes all the risk and then intentionally limits the # of chips he produces ensuring he has a high cost per chip, lower profit and more risk?  Combine all that higher cost and risk with the need to idle some % of farm based on what other people (he has no control over) do with their hashing power?

Some people will believe anything.  IF one wanted to maximize the # of units, the amount of hashing power, and profits they would simply produce 10TH/s of chips and sell them on the open market at a 300%+ markup.  The network would be more secure, more efficient and no player would have more than a couple % of network hashing power.

The only limits Vlad would be facing would be market demand.  So the question is why isn't he doing that?  To take more risk for less profits?

You should change the phrase under your pic from "building a huge ASIC mining farm for investors" to "intending to build a huge ASIC mining farm for investors"

FUD spreading much, hein?

Yes, sell sell sell!!!

dropt, thank you for your effort.

Most things that you consider as inconsistencies I do not consider as such. Other quotes are taken out of context and I will not respond on those. Some facts are not disclosed intentionally, some statements are made intentionally vague.

One thing that you have completely missed is that whatever I say in this thread or elsewhere publicly is not an investment prospectus. I am not addressing or informing any shareholders or investors here. I am not inviting anyone to buy any shares (those shares are not even issued yet). This is not an annual return or pre IPO documents either.

Just informing public about our intentions, no more, no less. Treat it accordingly.

Which is it: Management Company, or Mining? Public or not?




So wait, it's not feasible that you'll have a monopoly, but you might be the biggest player on the network and you intend to have at least 1 digit of TH/s of power?



You're intending for what now?  700MH/s for 250W (5970) is 2.8MH/W * 10^3 = 2.8 TH/W?





So you have "concluded" a long-term contract with a manufacturer, yet you intend to purchase from various other suppliers over the long-term?  What about the supposed long-term contract you've already drawn up?  How much do you plan to buy? I thought you weren't aiming for a Monopoly.




Why?  What is the monthly colocation fee for "the vault"?






Wait, so you are or you are not going to allow your IP to be sold to the public?  I say *your* IP because you specifically said subcontractor.  But you've dodged any definitive answer on this.





Are the masks done or not?  If they are, why do you need capital.  If they aren't, why are you spreading fallacies regarding your current project progress?  Or are you trying to cover your ass in case your first run fails?



Not trying to be an ass, just trying to patch up some of your inconsistencies and holes so I can make sense of this.

Also, feel free to use this template and your responses for your FAQ post at the beginning of the thread.

That's not quite how it is. Directors are required to act in the interests of shareholders, but those interests are not necessarily the maximization of profits.

Here's a specific example. In Google's IPO they stated that Google would do lots of "cool stuff" that would not necessarily make money. Therefore, Google's Board is free to do that without fear of a shareholder lawsuit. Google also stated that the share price may go down, "even over the long term", so Google's Board has no legal pressure to keep the share price high. They also stated in the IPO that they would not focus on quarterly earnings, so again there is no legal pressure.

If you don't want to read the lengthy prospectus from Google's 2004 IPO, you can get a taste of what's in it by reading Google's IPO letter from their S-1 IPO Registration Statement:
http://investor.google.com/corporate/2004/ipo-founders-letter.html