Topic: [BTC-TC and BF] MININGCO.ETF - Closed - page 17. (Read 48277 times)

The fee is reasonable IMO, given the additional homework management will be required to do on mining companies outside of BTC-TC.

As a small investor I'd be more interested in your fund prior to ASICs being released to potentially give me some exposure to mining companies and vendors I'm unwilling to commit relatively large sums to. I'd hope anyone investing in a mining ETF would have some inkling of the technological precipice we're currently resting on and understand the associated risks. After ASICs are released I'd be more likely to simply determine which mining companies will enjoy the greatest benefit and invest with them directly.

If you're going percentage based, a fair management fee (for me) depends on a ratio of (a) how much time you're spending on it, to (b) how much in dividends the fund processes.  With the goal being whatever percentage you choose should feel to you like a fair wage for your time spent.  I know that setting it too high will turn some people off, but anyone buying into the fund will want to make sure that you're taken care of so that you remain motivated to do a good job managing the fund.

With regard to releasing before or after ASIC's, you might just make sure that each company you invest in has a decent ASIC plan in place.  Then in theory everything else balances out because you are spreading the risk across multiple companies.

Those are my thoughts anyway.

Cheers.

Here is a summary of the thread so far for the tl;dr people:

Portions of the contract include:
A fund that includes Bitcoin Mining Companies. The companies included can be from any exchange, and in some cases, not on any exchange.
All companies included will be weighted equally. Dividends will be paid every week, or so.


Current issues:

• Is the management fee of 6.9% of dividends fair?
• Should the fund go live before ASICs hit the scene (potential to get good pricing, but much more risk). Or should the fund wait until after ASICs (less risk, pricing should stabilize).

I would like to get feed back on these issues.

I also found that amusing.

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I have also received some PMs about waiting to release shares until after ASICs come out. I would like to know what everyone thinks.

Would you be willing to buy in this fund if it started trading now? Investing in underlying assets that have pre-orders for various ASIC companies but no guarantees? Would you feel like the fund would be missing out on buying underlying assets at a discount if we waited; and prices would soar after the ASICs come?

I found that amusing. We have enough uncommitted funds on hand to order 3.75 more units and someone thinks shorting us is a good idea. I'd certainly think a mining company that put all of their eggs in one basket and has no reserves would be a far better target if the basket was found to have a hole in it, but I'm just a dumb miner.    

I have made a couple of more changes to the asset contract. I am still trying to address all concerns while still keeping it fair for everybody.

First, the fund received an Abstain vote stating:

I have thought about this point and voting in the best interest of the fund seems a better course of action than abstaining. I have changed the contract to reflect this, as well as offering a Proxy vote if shareholders request it.



These two changes have been implemented in the contract (as seen in the first post and on btct.co)

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The fund would have started trading very soon, but the entire ASIC drama has been a huge ? for just about everyone involved with mining.

With BFL at CES showing off an.. um.. incomplete product, and now with bASIC showing more signs of uncertainty, it would be irresponsible to start a fund with such a huge potential to almost immediately lose value.
There is even an ask for a short on creativex's BASIC-MINING asset.

I could start the fund now, but speculation is not something that I want to bring to this fund. Good solid results, with steady paying dividends is my intended main feature.

I am also interested on anyone's thoughts on the ASIC drama.

The limited number of possible assets will make things difficult at first.  Holding coin in reserve means it's not working for your investors - which will reduce dividends early on which in turn might negatively effect your asset price.

I'm not sure about your stance on "Underlying Asset Motions" and abstaining. As an investment manager and holding assets - your role is to ensure any assets you hold maximise their potential - which you influence through your vote.  While it may be politic to withhold/abstain - with your responsibility to your fund - positive action would be better in my mind.

All in all I think it looks good though.  You've a solid head and you look before you leap - so I've no doubt about your ability to manage the fund well.

Asset contract updated in first post. Let me know what you think.

Thanks for this valuable input. I will change the asset contract to include assets from outside of the btct.co exchange.
Although this introduces extra risk, I think it's the only way we can move forward with the fund.

I want this fund to be transparent, that is why I originally wanted to use only btct.co assets. Burnside made it easy for the fund's portfolio to be examined by the public.

After looking at how Bitfunder works, it's easy to show what assets the fund owns by publishing the public BTC address tied to the fund.
After speaking with OgNasty, the proprietary platform for NASTY "Fanclub" now also supports publishing shares held by a BTC address to the public.
As for other platforms, I don't know if publishing assets held will be possible.

Another change to get moving forward will be to increase the maximum amount of BTC that can be held in the fund to 20%. I don't plan on ever keeping this much BTC in the fund, but this will be required in order to balance assets across multiple exchanges/platforms.

The management fee will be increased to a total of 7.5% of dividends paid because of the added complexity of accessing multiple exchanges and proprietary platforms to keep the underlying assets in balance.

Motions will be allowed to be requested by shareholders to include new assets or remove existing assets from the fund.


I want this fund to be successful and fair for everyone involved. Let know what you think about the proposed contract changes.

I know it's more of a PITA, but I agree that the fund will have more value to investors on BTC-TC if it includes assets from other exchanges/sources.  Applying the moderation score requirement gets a lot harder, but maybe you can come up with an alternate list of requirements?  (must have been mining for X months? must release personal contact info? etc, etc.)

Cheers.

I think having outside assets makes a lot of sense.  Otherwise, people using BTCT.CO could easily invest in the same companies as the fund and cut out the middleman.  Having exposure to outside assets brings something new to the exchange, that users otherwise wouldn't have exposure to.

Well, this is unsettling news.

It's looking more and more like "outside" assets will need to be used.

Not sure if it would meet your criteria actually.  Although its contract says it's a mining company in fact its only asset (other than a few BTC) is a loan to BitBond.  So it doesn't own mining hardware - just passes through to an actual mining company.  If contract is being followed other than that (no idea if it is) then namworld will be taking a 10% cut for electricty/maintenance despite there not being any hardware needing electricity/maintenance.

Then go look at Bitbond and see that it stopped paying dividends against its contract and the issuer is now totally unresponsive and shortly to be reported for a scammer tag.

Pretty sure the BTC-Mining loan to it is part of the 85% that DID get old dividends (normal investors have had zero for the period since GLBSE went down).

But with the operator of the asset to which BTC-MINING is effectively a pass-through breaking his contract and BTC-MINING not being a mining company I don't think it fits the criteria of what you intend to invest in at all.

A 10% fee just to loan your money to someone else isn't exactly great value for money anyway.

Oh and Bitbond is a fixed-rate bond - so a pass-through to a fixed-rate bond (with a 10% haiir-cut on the way) is 100% not what you want to be investing in.

As mentioned Glari Mining Project on crypto is the best there. I believe he's got some FPGA to Avalon upgrades coming. Tempted to delve a little deeper and potentially invest a few BTC myself, though liquidity on cryptostocks is frequently a problem.

Edit: Another interesting aspect of adding GMP to your ETF is that you would then have a stake in all three shipping ASIC vendors. Truly a representation of the market.

I have thought about that. Holding 20% of a few assets + the rest in BTC would follow the btct.co terms. But I can't pay dividends on the BTC. I don't know how many people would be willing to buy into a fund that holds that much BTC. That's why I put a limit on how much BTC could be held in the fund.

But it certainly would allow me to start the fund much faster.

I would like to hear the thoughts of others. What about allowing the fund to hold up to 40% in BTC (cash)?
I would also like more opinions on adding "foreign" assets into the fund (Assets from other exchanges).

Cash + 3 or more mining assets and you'll be fine. BTC balance is obviously an asset that belongs to investors and is just as obviously not limited to 20%. It's a balancing act for any long term transparent fund, but with a properly designed spreadsheet it's a breeze.

The share buybacks will be offered on a very limited basis at 90% of the current Net Asset Value per share buy placing bids on the market.
Only a very limited portion of the Bitcoin Reserve will be available for buybacks. The Bitcoin Reserve's priority will be for balancing first, and then buybacks. I would rather have the fund's shares be traded on the open market, but I know that's not always possible. So, I hope a buyback policy will help in a very limited way with some investor's liquidity.
("Very limited" 3 times in one paragraph.)


Sounds good. It's a pay cut, but does keep things simpler.


The asset contract will be modified with the buyback policy and the management fee change when we can determine how to add underlying assets whilst keeping below 20% for each asset.

This is what we call a snafu.

I admit, I got caught up and I wanted to start a new asset with the New Year. I may have jumped the gun getting this asset created, but there is more than one solution to this problem.

To keep things simple (as I originally planned) we can simply wait for additional companies to meet the criteria.
COGNITIVE and BASIC-MINING already meet the criteria. BTC-MINING, if and when namworld gets it going again would qualify after a few more YES votes. I urge any other mining company from GLBSE to move to btct.co and take advantage of the waived asset creation fee.

Deprived posted this while I was composing my response:




And this is the other option. Changing the contract to allow for companies off of btct.co to be included in the fund. I originally did not want to do this. It makes things much more complicated. I also wanted to be able to prove ownership of underlying securities by making the fund's portfolio public. I wouldn't be able to do that as easily with assets from other exchanges (or proprietary platforms).

If we were to go the off-btct.co route:
NASTY looks like a good candidate. And I have also been offered a way to publicly display shares owned by the fund using their proprietary platform.
There may be a few others.

None on Bitfunder that meet his criteria - if there's any on Crypto they aren't traded at all.  GMP is nearest thing there - but not seeing a whole ton of transparency from it and the dividends don't look particularly appealing.

Problem with investing in less than a half dozen or so is that there's simply no diversity, so investors aren't really getting anything out of it.

Which isn't to say the fund can't be approved now then start selling shares once there's more offerings around.  Now would be a terrible time to start it anyway - ASICMINER's ASIC chips passed their tests yesterday, shuld be packaged today and they'll be hitting the network within the week hopefully.  At which stage expect a lot of tanking of prices of BTC mining securities in general - especially those with no ASIC upgrade path who were gambling ASICs wouldn't arrive (it shouldn't hit others TOO hard - but it will mean no early-starter bonus for any of them for being in first batch of ASICs plus depressed dividends until they get their own ASICS, which should mean lowered prices).

Probably have to get some from off the exchange to start.  We don't have 5 yet and as Deprived pointed out, over 20% of any single one would not be allowed.

Are there any other good ones on BitFunder or CryptoStocks?  Or maybe you could mix in some Asicminer or something else not being traded?  Honestly, I think pulling in some off-exchange companies actually brings more value to the table for your fund investors.

Cheers.