So, if I understand this correctly, shareholders
do not own the mining hardware so essentialy we are just buying lottery tickets with the mining revenue, which decreases each difficulty change thus buying less tickets each week
So in the end its better for the people who likes to gamble to buy their own tickets (at canada or any other lottery) and not through mining dividend.
PS:
THE CHANCE OF WINNING A LOTTERY IS 0%, SO DIVIDEND RETURNS ON THIS ASSET WILL ALSO BE 0%Strange kind of business
Greetz
The contract I sent to Nefario must have been too long-winded to include on the IPO posting, and the detail about what share ownership included must have been omitted. See this link for the official contract:
http://www.bitcointrading.com/forum/glbse-investment-companies/(glbse)-bitcointrading-com's-canadian-lottery-mining-company/So that having been said, yes the shareholders indeed have ownership over the hardware and other assets owned by the company.
- We are buying lottery tickets with mining revenue, you are correct about that. However, you say the chance of winning the lottery is 0%, which it is not. Winning all 6 numbers correct would be nice, but what if we get 3 or 4 numbers correct? If there are $500 and $1000 winnings, even the $5 winnings here and there would give dividends, and regular lower-winnings are almost ensured.
- You don't understand how we will be spending the money I think. So imagine, now that BFL has announced even higher numbers, we will expect higher returns on each unit.
So let's say we order our units, they eventually arrive, and each BFL Single does 60 GH/s. We order, say, 6 of them (360 GH/s), so at the current difficulty we will make 114 BTC
PER DAY. That's 798 BTC
PER WEEK. At the current price, $9,895 per week and we only bought 6 units, leaving the other money to invest elsewhere, other GLBSE tickers.
So we make $10k a week. Difficulty will clearly get higher, so week 4 make we're only making $8000 a week, week 8 maybe we're only getting $6000 a week, and the number will continue to get smaller. But we only need to spend $50 per week to survive indefinitely. Each week when we buy a ticket, it is valid for 3 months, so even just spending $50 per week we have more and more sets of numbers in each draw.
We will increase our spending from 1 ($50) ticket per week, to two tickets, three, and so on as long as we have enough money to continue for a long time. If 1 ticket is $50 CAD, at $12.40 per BTC, so 4.03 BTC spent. If we are sitting on 100 BTC in revenue, that means we are sustainable for 24 weeks. If the next week we spend 4.03 BTC on ticket #2, but earn another 100 BTC, that means we have (100 - 4.03 + 100 - 4.03) = 191.94 BTC left, and sustainable for 47 weeks now. See what I mean? If we make more money than we spend, it means we sustainable for that many more weeks. Once we are sustainable for >1 year, it is easy to justify spending more each week. On week 20, who knows, maybe we are buying 10 tickets per week ($500) and still be sustainable for a year. If all of a sudden our revenue goes way down (difficulty gettiing nutters), then we reduce spending to a level where we are sustainable.
It's hard to imagine that on 360 GH/s we can be 'not sustainable' to purchase lottery tickets.
If 1 year from now, bitcoins are worth $20, which is very plausible, now the $50 tickets are costing us 2.5 BTC each. As BTC rises in value, our costs go down. Price will not follow difficulty directly, but it's safe to assume bitcoin will increase in value in the next 2-3 years. If we have enough funds to maintain this lottery, then we will almost get an infinite number of tickets on a small $8000 investment.
If we took $8000 and spent it ALL on lottery tickets on the first day, we would probably lose. But since we are investing the money and only spending revenue, I see it as a bulletproof company.