Topic: [BTCT][BFMINES] - Mining Contracts Now Available - Bonus Divs First Months - page 7. (Read 26419 times)

DO NOT BUY!! RIPOFF!!

For those that don't know, furknap sold all his ASICMINER shares for 1.7btc and apparently used the proceeds to purchase this miner. He must, by now, realize his folly, and that there is an almost 100% likelihood that buying this miner is a losing trade and will never earn back what he paid.

He is trying to pass on this loss to bitcoin investors like you by launching this offering.

Although the asset has been approved, I strongly encourage people to stay away as it is a guaranteed money loser. IE: You will NEVER earn back in divs what you will pay for it. Furknap knows and is basically offering a way overpriced PMB.

-helixone

No, this is a mining contract for 1mhs per contract initially sold at BTC0.004. There's more to it than just shares of hardware, but technically, these contracts can be backed by anything.

I've addressed this to some extent in my latest article (which should be mandatory reading for anyone considering purchasing contracts):

http://coin.furuknap.net/bfmines-bitcoin-mining-contracts-ready-for-listing-heres-how-you-should-evaluate-investing/

.b

I may very well be misunderstanding the offering or maybe I am just daft. Is this mining bond really just selling shares of a 120 Gh/S Bitfury for initial market value of 400 BTC?

Update: BFMines Approved - Trading Commences July 3, 2013, at 1800/6PM UTC
I'm happy to report that the BFMines mining contracts have been approved for trading on BTCT as of today. Trading will commence on Wednesday, July 3, at 1800/6PM UTC.

As previously announced, here is what's going to happen over the next couple of days.

First the date: Trading will commence on Wednesday, July 3, 2013, at 1800/6PM UTC.

The asset is now available for bidding. You can place your bids now, presumably at BTC0.004, on the exchange site at https://btct.co/security/BFMINES. You can place orders for as many contracts as you like.

When the countdown reaches zero, an ASK order of 100,000 contracts at BTC0.004 each will be placed on the market. The ASK will remain on the market until filled and at the BTC0.004 price.

Please review the contract carefully before investing, do your own research, do not invest more than you can afford to lose, and feel free to reach out should you need clarification on anything.

.b

Potential Private Listing and Suggestion for New Buy-Back Clause

Because LTC Global voters can't seem to get their act together, I'm contemplating listing BFMines as a private asset and later issue a PT asset for BTCT.

However, before I finalize the plan and post an official update, I would like to request your opinion on a new idea for a buy-back clause.

In case of a forced buy-back as per the original contract, rather than base the buy-back price on a trading price on BTCT, the buy-back price will be based on a formula which is listing price minus 125% of paid dividends. In other words, if the asset is listed at BTC0.004 and has paid out BTC0.002 by the end of a year, a forced buy-back if required would happen at 0.004-(0.002*125%)=0.0015.

However, if the asset produces more than BTC0.0032 during it's lifetime, the buy-back would be negative and closing of the contracts would not be possible. To avoid this, the minimum forced buy-back price is fixed at BTC0.00001 or 0.25% of listing price.

Obviously this creates an incentive to close the contracts early. If a contract is closed after producing BTC0.002, the full return the contract holders would get is 0.0035 or a loss of 0.0005 per contract (and an equal profit for the asset issuer). As such, a new clause will be introduced in the buy-back provisions of the contract.

In case of a buy-back, the dividends paid per contract must have been below 0.1% of listing price per month for no less than three consecutive months. At this point, the contracts will return less than 1.2% per year.

I would like to stress that this clause is to protect contract holders from early buy-back and that buy-backs are still at the discretion of the issuer and not guaranteed to happen at any time (assuming I live forever or can't find a replacement operator when I knock on hell's door).

I would also like to stress that although the buy-back based on dividends paid gives some insurance to investors of not losing their entire contract price, there is still a risk that investors may lose some of the investments if difficulty rises perpetually.

Please let me know what you think about this new idea. I understand this introduces much more risk to me, but should also assure investors that I am willing to put my money where my mouth is when I say that I think mining contracts (formerly known as PMBs) can make money for its investors.

.b

Update Delay

I was supposed to have completed a plan by this evening and post information today, but sadly I've run out of time. I'll continue to work this weekend and post the update as soon as possible.

In the meantime, if you know of any LTC-Global voters that have not passed their votes yet, feel free to give them a gentle nudge and ask them to review the contract and asset.

Thank you,

.b

Why? Are you assuming that mining devices are free of maintenance, risk and energy cost? Because that's what you're saying with that statement.

Only if you assume that replicators are free of maintenance, risk, and energy cost :-) I'm sure there are some interesting episodes in Voyagers to speak to that alternative.

.b

Would you be OK trying to solve blocks using pen and paper as that would be the more apt comparison to farming wheat. The comparison to mining bitcoins would be asking a Star Trek food replicator for wheat.

Anyway, it's good to hear you've come up with an alternative.

I'm sorry, what was that? BFMines is still the cheapest contract on the market. DMS.* carries additional volatility risk, which is likely going to be of concern to those that are the targets of these types of assets (investors who would want an option to get out, not traders who would speculate on short-term price shifts).

And really, I'm sure you're not comparing running your own hardware with having someone run the hardware for you. Or are you OK with farming your own wheat rather than buying flour in the store?

My point with previously comparing the hardware cost to mining contracts is to show that they are real alternatives (and, to some extent, that ASICMiner in particular is charging ridiculous prices for hardware) not to indicate that there is no extra cost or risk involved with running hardware.

The final vote, however, is of less concern now as there are wheels in motion to come up with an alternative. I will announce news on Friday June 28 regardless of whether the vote comes in.

.b

Prices right now:


But anyway it's doubtful if BFMines will get approved, it's waiting for another YES vote since days...

I say that as if it is your opinion. Other's opinions may differ; they may not have a stable environment in which to mine, they may not want the burden of mining, they may have expensive electricity, they do not want the risk of hardware failure, they may not like the colors offered, or they may simply not like AM at all.

I'm not going to judge your opinion or that of anyone else.

.b

You say that like it's just an opinion of mine and not actually a fact. Those USB miners are clearly better value than your stock. You get at least 330 Mh/s compared to the 250 Mh/s you'd get from spending 1 BTC on your stock. You also get to start mining BTC now, not a couple of months from now.

Then I strongly suggest you buy those if you value them higher.

.b

All AM hardware in insanely overpriced so that comparison is completely meaningless. AM's USB miners have just been reduced in price though to 1 BTC and they do at least 330 Mh/s, so they now offer better value than your stock and are readily available.

This may very well be correct, and there are likely unknowns as well. Like I said, speculation is on whether all of these will be delivered in reasonable time (or at all). I don't have all the answers which is why I do not wish to speculate.

However, consider too that mining hardware will rapidly become unprofitable. For example, BFMines is already cheaper than buying AM blades and that doesn't even account for the cost of operating blades. This is, as far as I know, the first mining contract that IPOs below the price of available ASIC technology, which I feel it must be to offer a real alternative to operating your own mine.

.b

The 3 Avalon batches come to around 100 TH/s and chip orders come to around 150 TH/s.
AM claim that 200 Th/s will be incoming, 100 TH/s is just the first part of that.
For BFL, there's an unofficial pre-order list which shows around 400 Th/s incoming, their initial 75,000 chips come to about 300 Th/s though.

Just as a follow-up on why I chose the 1PH number; we're currently at ~170TH and know about 200TH from Bitfury (100TH and Metabank/private investor). Further, I think I read that KnC has sold around 800 Jupiters, which is another 300TH. AM claims another 100TH is coming online from their next wafer. This comprises 670TH.

Avalon is a bit of an unknown because we don't know how many devices have already shipped and are thus already accounted for in the 170TH. Same with BFL; we know a large portion of their orders are Jalapenos ordered last summer, and BFL claims all those have shipped (the ones prior to August). We don't know what the remaining portion comprises. I really don't know how to evaluate BFL, but if we hipshot their deliveries at 50% of all the other mining, that comes out to just over 1PH/s.

At that point, we're talking about everyone having to move to next-gen technology and that may take months or years due to the increased difficulty of smaller processes and higher NRE cost. I would say all bets are off about whether there will be growth at all, and maybe we'll see less profitable miners (like AM BE Blades) being switched off, reducing the difficulty again.

Although minor, we also know that GPU mining has now finally reached the point of 'not worth it' for a lot of miners, so there may be some decline based on GPUs either stopping or moving to other coins. This, however, is likely a small number, perhaps <10TH/s which was half of what was running in February when AM started deploying ASICs.

.b

Like I've explained, I don't know what those numbers are. I designed the asset to that it is reasonably proitable from somewhere in the middle of the perpetual growth and the 'everything is going to hell' theories.

For example, and I would like to stress that the following are merely examples and not predictions, starting with a 250TH hashrate on August 1 and seeing 10% per month growth, the full issue price will be repaid in June 2014 (one year) and yield a 47% profit over three years (until halving in 2016), the equivalent of ~16% per year. This is merely one example, and again, if difficulty goes up significantly (thus making any mining investment less profitable) then both the share price and dividends will go down.

On the other hand, if, let's say network hashrate flattens out at around 1PH/s, the asset yields far more profit (around 30% per year after initial price being repaid). If it continues to grow to 50PH/s until 2016, which is a 15% per month perpetual growth, the asset is not profitable (nor is any current mining investment) but flattens out at a return of 99.82% of initital investment.


I have already calculated in a growth of around 30% until August 1 which represents slightly under 10% per change until then.

.b

Earlier, you said:


So, what answers did that analysis provide to the questions I just asked? You keep saying you've done the maths, yet I'm asking you to show me and you refuse. Why won't you show us your numbers?

I agree that perpetual proportional growth theory is flawed, especially for the later periods. For the next couple of months though, I think we'll see at least a few 10% increases per round. The current round is just over half way through and is just over a 5% increase. Now, factor in that BFL started shipping Minirigs last week which may not be online yet. The difficulty for the next round will definitely see at least a 10% increase.

July is set see 100TH and Avalon based systems come online. August is set to see AMC's Avalon based Fast Hash systems come online and Metabank's BitFury 120 come online. September is set to see KnC come online. You'll see difficulty spikes for all those periods so 10% increase per round for the next couple of months is entirely plausible.