Topic: [BTCT][BFMINES] - Mining Contracts Now Available - Bonus Divs First Months - page 9. (Read 26423 times)

This argument has been had before.  Problem with defining guidelines is that they then have to be enforced.  If they're enforced then someone hasto decide whether the vote was correct or not.  If someone gets to decide that they may as well save time and just approve (or not) securities themselves.

Personally I wouldn't vote NO just because I believed something was likely to be unprofitable - but others may choose to and may be correct in doing so.  My main criteria (when I have a vote - which hasn't been the case for a while) are that the contract is clear and that I've no reason to believe the operator would act dishonestly or without integrity.  But to an extent I'm biased by self-interest - as I trade rather than invest so investments being unprofitable isn't that important to me.

Others may believe that an unprofitable investment is not just bad for investors - but also for the exchange (as it removes investment capital from play and potentially could put investors off further investment after they realise they lost money).  I see that as a valid reason to vote NO - if it's what voters believe.

If someone put up a bond with a clear contract that was going to sell shares at 1 BTC each but stated it would only ever pay back 0.1 BTC would YOU approve it?  If not, why not?  If you'd vote NO on that why would you approve one where investors would make a loss but it wasn't so clear? 

NOTE:  I'm NOT saying this is an unprofitable investment.  But if a voter genuinely believes it IS unprofitable is it actually wrong for them to vote NO?  Think carefully about my example where a bond was explicitly unprofitable - as it's very easy to fall into an irrational and inconsistent position where you'd vote NO to something explicitly unprofitable but vote YES to something unprrofitable but less obvious.  And that position, of course, would be directly rewarding deception.  And that's why whilst I wouldn't personally vote NO I'm totally fine with people voting NO where they believe something is unprofitable (AND they believe unprofitable investments are bad for the exchange).

And Furuknap always has the option of presenting a model explaining how it IS profitable - to persuade them to change their vote.  Far worse is where someone votes NO and gives no reason at all - as then the issuer can't do anything.

I think voting guidelines should be better defined, myself... yes/no should not be on the basis of "can I personally make money on this?" but rather "is this security good for the exchange as a whole?" and "does this pass the smell test?"

I'm tempted to grab a voting stake just to offset "nos" that obviously come from people who simply don't want to invest and vote "no" instead of simply abstaining... but the dividend is too low to justify locking up 2000 LTC or whatever the current price is.

Indeed, they did, but one more also voted yes, so with one more yes vote, the asset should be ready for IPO.

If you notice in the comment, the No was based on price, and I believe the market will decide whether the reduced price and bonus dividends will compensate for that. In other words, I take the No vote to heart but I think investors will need to decide for themselves whether the price is too high, too low, or just right.

.b

Contract update:

As per the discussion with Deprived, I have clarified the contract summary to include a clarification of the somewhat misleading use of the word bond. The summary now reads:

Yes, that is correct :-)

.b

Ah, ok. So if/when it is approved the Instrument will be open for trade and you will place the asset for sale at the IPO price on BTC.CO, is that correct?

The IPO is still awaiting peer approval, but check the first post in the thread for link to the asset.

.b

Noob question, but how can I buy shares in the IPO?

News update:
Bitfury has just announced that the chips that will be used in the BFMines asset has been shown to work, and work better than anticipated. Originally, the goal was to produce a chip that could hash at 1GH/s per watt of power, but the initial results show that with certain power configurations, the mining efficency is 0.39 watts per 1GH/s of power.

The final details are not yet available and testing is still underway.

Source: https://bitcointalksearch.org/topic/m.2515472

In other news, the asset needs two more Yes votes from LTC-GLOBAL share holders (with more than 10 shares held for more than 7 days) before it is officially listed and trading can begin.

If you are such an investor, please review the contract and proposal and cast your vote as you deem correct.

https://btct.co/security/BFMINES

Thank you,

.b

I'm not certain I understand your questions. I understand that English may not be your native language, but could you try to rephrase or post your questions in your native language so I could use Google translate?

Thanks,

.b

A Bond and you bet all on one Horse Bitfury, and only one Miner ?
what if Bitcoins mines you ?
No Expansion Strategy ?
first Photos from his Miner reminded me of an old Refrigerator with some old Electronics inside, but maybe i'm wrong.

and Pajaka pays now 3Mh/s as far as i understand.

This is a valid point but effectively only applies in larger scales. A single PMB like BFMines will be responsible for around 100GH/s, which isn't enough to drive difficulty anywhere. Unless people start churning out similar assets at lower than hardware cost plus overhead, I don't see the difficulty being affected in any way.

The fact that this asset is priced cheaper than ASICMiner blades is only because it uses hardware that's cheaper than AM's but not widely available. AM still is the only widely available ASICMiner. Setting up an ASIC-backed PMB by buying AM hardware will not be profitable using today's prices, so I don't fear any widespread adoption until cheaper miners are widely available, if ever.

.b

Thanks again for your valuable feedback and I'm sure potential investors find it equally valuable.

I'll leave the discussion on DMS.* for another thread :-)

.b

I'm not sure it's correct to say DMS.MINING carries additional risk - it has risks other PMBs don't, but also misses lacks risks in PMBs with physical miners.  In all likely scenarios it will pay out the same as a PMB for a long time.  The single notable exception is if difficulty stays the same, drops or rises by only a  tiny amount for a protracted period of time - when after about a year it would close down with a final lump payment of 100 weeks.  But if that happens it would almost certainly mean you never got your hardware - as its hard to see a scenario in which your miner gets shipped but difficulty isn't rising much.

Anyway, good luck with the asset.  The contract's clear - and it's certainly better value than a lot of other 'PMBs' around.  I'm not a moderator but if I was I'd vote yes - but with a note that it is NOT a  loan and that capital will NOT be repaid (there's no guarantee of it ever being fully returned - just a definition of a buyout option).  Beyond that investors have to do their own valuations and comparison shopping.

I've limited the risk with the escrow and attempted to compensate for a modest rise in difficulty by lowering the price. As such, investors do not earn nothing; they can buy bonds today at a higher price with immediate return or buy bonds from this asset with a 'guaranteed reward' (and I use that terms in the loosest sense) in terms of a lower price. I'll happily admit I targeted TAT.VM as a likely competitor, and compared to selling prices today, that would mean a ~40% reward, which is higher than the expected yield of TAT.VM during the same time.

I also wanted to offer an alternative to ASICMiner blades. AM blades are rated at 0.005/mhs with effective speed mostly being slightly lower, so going just under that will give miners who do not want to run their own equipment an equal playing field.

I realize that since I designed this and put it up for vote, DMS.Mining has dropped in price, but I believe that is a somewhat different asset as it effectively is a double-exposure asset because in difficulty drops, people will buy .Purchase to sell .Selling and keep .Mining and vice-versa. I find it an extremely fascinating combo, but one that carries additional risk and complexity that 'regular' investors may not easily understand.

.b

Nah it won't be repaid.  It'll be bought out.  Not the same thing.

I'd certainly agree that there's people who over-estimate the likely growth of difficulty as well as those who underestimate it.  Most of those argue based on a period of time starting when ASICs began arriving - and ignore the much flatter period before it.

I think it would be a mistake, however, to assume costs now reflect where prices will be in 6 months time or even in 3 months time.  Pricing now is set to try to cover NRE - and to try to milk as much cash as possible from the shortage of actual ASICs (as opposed to vapourware ones).  Once NRE is recovered, costs per unit after that are pretty tiny compared to current prices - so there's definitely scope of heavy price cuts.  And those who have recovered NREs are likely to make such cuts - in part to cripple any attempts from others to enter the market.

The argument that people would need to spend more than the value (in terms of output) of ASICs would warrant is meaningless.  Just look at what's happening right now - people are happily buying bonds, shares and hardware that will never pay for itself.  Don't underestimate the willingness of Bitcoiners to throw away coins in pursuit of the delusion that mining is automatically profitable.

And don't discount the possibility of a rise in price of BTC - which changes all the math.

But yes - there are overly pessimistic views as well as the (far more common) overly optimistic ones.

As you make no claims that investors will make a profit that isn't, in my view, an issue in assessing whether you can list or not.  Investors have to make their own decision on that.

One last point.  If you're listing now but escrowing until hardware arrives (and refunding if it doesn't arrive) then what benefit is there to investors in buying shares now rather than when the hardware arrives?  If you waited until then you could look at ACTUAL difficulty and adjust your price in either direction to compete with the market - and likely output - rather than having to guess now.  Plus avoid all the lost transaction fees on sales if the hardware never arrives.  And the investors would have the cash to use - with no CP risk - for that period rather than it sitting around idle earning noone anything.

Well, technically, the bond will be repaid at some point (following one of the clauses in the contract). However, the full principal will not be repaid.

Like I said, I would prefer mining contract or something along those lines. Effectively, what the person is buying is a contract for me to mine on their behalf until such a time as it is no longer profitable for them, at which point they will receive the remainder of value (which may or may not be zero) paid back.

Of course, theoretically, the full principal can be repaid too; if difficulty drops further and I die the day after release, the value of the bond will be higher than the principal paid. Assuming a fair market, that means 110% of average trading price will be higher than the principal paid. The difference being that this asset and others like it are not time limited.

The value will likely go down with and due to increasing difficulty, though, but it would still be wrong to say that it will go down as an absolute statement.

A new term is needed and I propose "Mining Contract". Not sure where to put it on BTCT, though.

.b

I don't think it is.  I'd say fund is the closest of the three available (I agree it isn't exactly any of them).

Bonds are debt - you certainly aren't selling debt.

You're selling equity in hashing power owned by the company.  If you consider the hashing power to be an asset then investors are buying it and being paid based on its performance (albeit an idealised performance rather than an actual one).

If you look at what the key elements of bonds are this (and other PMBs) don't match at all.  A fund is closer - as each share represents ownership of an (intangible) asset which will vary (usually downwards) in value over time and generate income.

It's by no means the only term being widely abused.  Just look at how ROI is being widely misused.  A few people use it incorrectly (apparently believing it means Return OF Investment), sheep trying to look clever parrot that use without any real knowledge and now it's widely used to mean the period it take for investment to be returned.  When of course it stands for Return ON investment and cannot be specified as a period of time.

I don't have any plans to expand this asset. It would complicate things for existing investors and effectively manipulate the market. I'll explain why, but if I decide to expand, I would likely add a second asset.

Two reasons make an expansion difficult. First, the market will price bonds/shares how they want. To launch new bonds, I would need to decide a price, which would limit the markets ability to decide that price. That would be similar to what tytus did with 100TH and let me just briefly summarize my rant on that with: "it just plain blows and sucks at the same time".

Second would be to correctly calculate the hash rates. The initial bonds receive a bonus for six months, but it may not be possible to yield the same bonus for new bonds. The situation would greatly depend on how the new hardware is acquired; would it be pre-order like now? Would it have a similar buffer as the initial hardware?

Based on these two caveats alone, expanding this particular asset would be very complicated to make fair. I'm leaving the option open in the contract, but I can't really see how it can be done fairly, at least not for many months.

.b