Topic: [BTC-TC] BTC Growth: Capital Growth via Hedge Fund-Style Investing - page 15. (Read 251637 times)

Ok I am reading through the document.

Do you think that a 0% per annum of AUM and 25% of profits would be a better incentive than the typical 2/20 hedge fund system?

I find it interesting that you could be losing us money whilst still making 2% year over year.

EDIT: Also how many hours until you close the IPO? I am interested.

I'll be looking for it, I will consider using it as a model for my next fund

There have still been plenty of questions that I didn't anticipate in the FAQ, though; there might even need to be an expanded version of the FAQ when all is said and done...

Haha, I like how you handled this in your FAQ,  these exact kinds of questions quickly derailed my fund offering as I wasn't prepared for them. I hope my High Frequency Trading fund IPO thread derailing served as a good case study in helping you form your FAQ

The fund is permitted to invest in businesses which are not listed on BTC-denominated exchanges, but given that our aim is capital growth denominated in Bitcoin, we would be looking for structures that enable us to reduce or eliminate exposure to exchange rate fluctuations.

A separate LTC-denominated fund wouldn't be out of the question, although we don't have any specific plans for one at the moment.

Separately, please note I'll be out of the office today, so any followups will be delayed until Thursday.

regarding excluded investments, is creating a separate "LTC-Growth" fund out of the question if not just incorporating a ltc denominated account into the existing BTC-Growth fund?

In order to keep the general discussion about the fund separate from the specifics of the initial offering, I've posted about the time, date, and mechanics of the offering in a separate thread:

https://bitcointalksearch.org/topic/btc-tc-ipo-details-for-btc-growth-272879

The fund was approved for listing on BTC-TC last night, so we can move forward with issuing shares at any time. However, the whole application process went very quickly and smoothly, and there is no particular urgency to getting the listing out the door, so what I'd like to do is leave the discussion open for another couple of days to allow any remaining questions to be answered and to give the exchange moderators extra time for any feedback they might like to offer.

I'll post again shortly with details of the specific date and time for getting started, but for now I'd like to thank everyone who has put time and effort into reading and evaluating the listing documents. Thank you also to those who have additionally provided feedback, both publicly and in private.

Congratz. The fund got approved at BTC-TC. One last thing: I hope you understand how careful you need to be with regards to security. Please, use 2FA everywhere and don't trade large amounts anywhere where this option is not available. Too many bots are browsing the internet in search of unprotected Bitcoins. Best of luck.

I don't think 5 days is enough for people to realize how horribly overpriced AM is (and it is on the cheaper side). Although the next 35% difficulty jump might provide a hint for some.


And they are trading at a reasonable price, unlike mining securities.

And difficulty futures have been available for a relatively long time on ICBIT, although liquidity is nearly non-existent, unfortunately.

We're now delving into company-specific details, which takes us pretty far afield from the general point I was offering; as of this writing, put options on ASICMiner are available at three different strike prices on BTCT.co alone. I cannot really comment on what would make them 'worthwhile' for anyone in particular, although I will say that in general, options premiums in the Bitcoin space seem to favour option writers.

Thanks. I know about those. You can earn 5% in about a month on them (based on the current asks; and the probability of diff not reaching 100M in Sep is prolly very similar to those 5%). Not worth it as there are better and safer investment options. If you could short shares like AsicMiner, ActiveMining etc. that would be a whole different story.


Have you talked to people who were willing to lend you shares of these mining companies whose share price will drop? I will give you all my money if you can do that (sorry, I mean, Bitcoins).

There are no worthwhile put options right now that I am aware of.

Slightly related:
Jurov created difficulty futures on BTC-TC (ending 18th September) and BitFunder (21st August, 18th September), also available for shorting. Related threads are here and here.

Fair enough.


There are multiple ways to short mining, either directly -- by borrowing shares (e.g., from someone who holds ASICMiner shares) and then selling them -- or synthetically, via options (e.g., buying put options on the underlying miner). More generally, however, "taking a position in mining" does not have to mean "taking a net long position with delta equal to 1". It might mean taking a short position, or it might mean taking a hedged long position, or anything in between. For example, many people buy exchange-traded shares of a high-yielding miner such as ASICMiner and immediately write calls against the position, yielding an overall position delta which is still positive but less than 1 -- potentially enabling themselves to net the dividend plus the option premium, and gaining a short-term hedge against a fall in the value of the underlying share. (Naturally, that only works if someone buys their calls, given the lack of market makers.)

Nobody has to say what they think you think. We already know what you think, because you have told us explicitly and emphatically: you think that "The question was straightforward...".

As far as I can tell, the only way that what you have already told us you think can be true is that either 1) you are grossly mistaken about what a good answer to the question looks like, or 2) you are spot on that the answer to the question is straightforward, I am grossly mistaken, and therefore your grasp of the territory is vastly superior to my own. (For the avoidance of doubt, note the asymmetry. If you grasp the simplicity where I can't manage to find anything but complexity, then I must be clueless. By contrast, if you are mistaken in your grasp of simplicity, then that implies nothing about me: I could still be clueless.)


Absolutely correct. I can peruse historical graphs of difficulty, total network power, and BTC vs. USD, and I can also read prognostications about how many terashashes are about to hit the network; anybody can do those things, so if you're looking for me to restate the obvious, you've come to the wrong place. If you're looking for someone who knows what the future will be, you've also come to the wrong place. And if you're looking for me to offer you a step by step introduction to the risks of shorting Bitcoin to acquire fiat-denominated mining hardware, then once more you've come to the wrong place.


I have no idea how it is that you think I have poked fun at you, but for any misunderstanding I may have created that led you to infer that, I certainly do apologise.

In any case, I would strongly recommend that you do not participate in any fund where you believe the fund manager's grasp of the territory is so flawed and inadequate.


This is grossly mistaken. Let's assume for the sake of argument that taking a long position in mining is going to lose money; then, skipping over borrowing costs for the sake of simplicity, it is straightforward to make money -- not lose it -- by taking a short position in mining. Even if you had a perfectly functioning crystal ball telling you the future of mining, you cannot have any idea whatsoever whether a fund is going to win, lose, or break even on exposure to mining unless you know what kind of exposure it is.

You say that you don't care too much about hedges and derivatives, and you seem happy to ignore the difference between a long and a short position -- now sweeping the entire distinction under the carpet by switching to talk of investing in mining rather than the original topic, which was taking a position in mining. That provides one strategy for taking a complex topic and turning it into something "straightforward", but doing so moves the discussion far away from the realities of the Bitcoin economy, not to mention the fundamentals of investing.

EDIT: Updated with a parenthetical on asymmetry, lest I be accused again of poking fun at anyone.

Wow, I am really allergic to when people say what they think I think. Please, don't do that. There is no possible way you can have any idea and this will never change (certainly not from a couple of lines I've written in a foreign language). It will be much better if you stick with writing about things you DO understand, like, say, investment theory.

Yes, the listing document, your earlier comments, and the 2000-word article left me unclear about your thinking on the topic. You keep repeating what instruments you can use to avoid risks, you know what the risks are and you show good understanding of how investing works. You wrote little, however, about where things currently are in Bitcoin. You seem to have no idea where mining is heading and what the future will be. Your posts are very informational when it comes to topics related to investment, but the same cannot be said when it comes to current developments in Bitcoin.

I have no idea why you think that poking fun at others will win you an argument. I don't believe that a "long term position" and a "long position" are interchangeable - I made a mistake. Drawing conclusions from that would be dumb. I don't think my grasp of Bitcoin is superior to yours - then again, I am not starting a fund and I won't be risking money of anyone else but my own. I have been around for about the same time you have - and I know I am still missing a lot of things. You must have a superb learning curve if you think you are not.

Anyway, I am writing to this topic for a simple reason - your fund was the first one I briefly thought about investing in. I still might put in some coins in the hope that you will learn quickly. You do understand investment, but there is a lot you need to catch up with concerning Bitcoin and cryptocurrencies.


EDIT: I don't want to lose my money in a fund that invests in mining (which will almost always cause losses in the long run, unless they sell equipment to people who are even more dumb or have a huge technological edge). That's why I asked. I don't care too much about your hedges and derivatives as long as you are aware of that.

Glad to be of service, but I can't really take credit; it's paraphrased from comments levelled at other people by one of our rather colourful colleagues here on the forum...

The listing document, my earlier comments, and the 2000-word article left you unclear about my thinking on the topic; you still believe that the original question is straightforward; and now, apparently, you even believe that a "long term position" and a "long position" are interchangeable. You also suggest that I am now trying to avoid your question, and that had I merely taken the time for "answering it properly", I would have been able to prove to you how deeply I understand Bitcoin economics.

As I indicated in the listing document, I have no intention of attempting to prove anything to anyone. Given the superior grasp of Bitcoin economics which you have asserted for yourself, the most important question has been answered: you should not participate in the fund.

(Clearly you believe your grasp of Bitcoin economics must be far superior to my own, since I have already indicated why I do not find it straightforward to analyse the Bitcoin-demoninated NPV of a Bitcoin-denominated revenue stream from sunk cost mining hardware, as contrasted with either ongoing partial reinvestment in fiat-denominated mining hardware via a Bitcoin-denominated revenue stream or a new purchase of fiat-denominated hardware. Nor do I find the question even to be intelligible, let alone straightforward, in the absence of specifying the form and duration a "long term position" might take and how it might be hedged -- a net short position, a net long position, or some variant in between -- both with respect to the mining operation itself and with respect to the value of BTC versus fiat and, if such hedging were available more efficiently, with respect to difficulty.)