Topic: [GLBSE] BFLS - Bitcoin Mining & Sales - page 11. (Read 17925 times)

No need to complicate stuff, all shares should be under the one main "BFLS" asset.


When there is motivation for the acquisition of new equipment, a new sub-asset can be created if needed (as in the case of Mini-rigs, where the ETA is unknown), for example, "BFLS.MINIRIG", on which the shares will convert into the main asset "BFLS" when it arrives. This works similarly to making 2 different IPO's and merging them after, but in an easier way to implement.

Inaba, I appreciate your direct response and clarity. I hope and expect that this venture will do quite well.

Yes, there could be also some middle ground to the 2 extremes I presented, something like "BFLS.Singles" with X*200 shares and "BFLS.SomeotherFPGA/ASIC" with Y*? shares later. This might make it easier to sell shares with a different "hash rate" in the future.

Why go through the hassle of all this complexity? Do you really care that you own 3 shares in BFLS.BFLsingle1, 5 shares in BFLS.BFLsingle3, and 2 shares in BFLS.BFLsingle7? Or if you want to trade a share, do you really want to be forced to choose under which subticker to place an ask/bid? I'm not sure how GLBSE works, but I'm assuming there would be 10x more liquidity in an offering with 2000 outstanding shares rather than a subticker with only 200.

Isn't it much simpler to aggregate all like-resources (i.e. 10 Singles) into a single ticker of 2000 shares? Each share is identical. There is no concept of 'what Single this share belongs to', and investors don't care. They just care that they own X number of shares yielding Y income. A simple aggregate of 2000 shares for 10 Singles is simpler to buy, sell, understand, and manage.

tgmarks - that's what I'm trying to figure out right now. 


This was my thoughts as well.  I don't think there's any way to issue sub-assets, or if there is, it's non-obvious on how to do it. 

I think for now, I will run the IPO as is and see how it works out.  I will create another offering for the MiniRigs that will come with the understanding that the hardware is not in operation yet.

There will be one change to the IPO: There is a 45 day moratorium to exchanging shares after the IPO to prevent people from just buying shares and immediately exchanging them for Singles.  This both gives people a chance to get shares and/or trade them, as well as giving me time to get a rolling rotation of singles going.  If I can get a cycle going faster than 45 days, I'll allow exchanges before that.

With the shares being released tomorrow, please understand that I do not have possession of the hardware yet. I expected it to be in by now and I am expecting it any day now, so no dividends will be paid until the hardware is in my possession, and barring any unforeseen circumstances getting it running (thought I can't think what that would be). 

Inaba, are you thinking of changing things before tomorrow's ipo? If so speak up so I and other can decide if we still want our open orders out there.

To make management even more clear/easy you could either:

* use subtickers per mining entity (BFLS.BFLsingle1, BFLS.BFLsingle2, BFLS.BFLsingle3...) and hand out 200 (or how many ever) shares there individually
* release new shares as you buy new hardware in your main ticker (start with 1000 shares, buy a new machine and release 200 more shares, bringing them to a total of 1200)

The first method might be more tedious to pay out (I don't know the new interface to GLBSE in detail), the second one might be a bit less obvious to shareholders.
With the first method you could even pre-release shares (or raise money) for hardware you don't yet own on a case by case way ("I'll buy machine X as soon as 80% of these shares are sold"), with the second method you won't have so much micromanagement on GLBSE side and could focus more on mining + making your shareholders some more coins.

I think GBLSE has support for sub-assets, you can release them as BFLS.SEPTEMBER2012 or BFLS.MINIRIG. There are already some entries like that on the shares list for BTCBOND, https://glbse.com/assets

Doesn't sit well. It would be tying up investor $ for 4+ months without getting any significant return. It essentially dilutes the return of the 2000 'working' shares for a long (and unknown) period of time. There is also the risk that a MiniRig will not show up at all (or, if you prefer a less extreme scenario, be months delayed).

I don't mind buying some shares for non-existent hardware (the 10 Singles you have on order) because there is the understanding that they will be delivered very soon. But issuing/buying shares for hardware that is 3-4-5 months away doesn't sit well at all.

Does GLBSE not allow you to issue more shares under the same ticker symbol as more hardware shows up? That would be the ideal case. If not, an alternative would be to issue a separate IPO for the mini-rig (if and when it shows up) under a separate ticker.

I tend to agree, Vbs.  But how would I account for adding in the MiniRig since the hardware hasn't arrived as of yet?  If I issue, lets just say 6000 shares additional for hardware that isn't online, how does that sit with people? 

I think the number of shares required to exchange for hardware should be kept constant (e.g., 200 for each single, 6000 for a mini-rig, etc), so that you always know how much "hardware" you have. What would vary is the price of each share, based on BTC/$, equipment cost, etc. at the time they are issued.

What time is the IPO?

I think the intent is that the 15% would cover replacements. BFL offers a 6 month warranty and operating costs are pretty minimal (~$2-3/mo at ~.05 USD per KWH).

Its totally up to Inaba and I recognize that, but if the terms are going to change right now, their better be a delay of a day or two and the changes made VERY clear for all of us with current open buy orders.

If Inaba just mines forever, he owns 15% of shares, income from that should cover operating costs.  However, if a unit fails, it won't cover replacement, so it shouldn't be treated as a contract, it should be treated as a company that buys back shares with capital (the singles), but an in production single that fails shouldn't cost Inaba if there is no replacement available.  This woud be the only reason for the GH/s per share to change.  However, the terms of the IPO don't necessarily state that, and they don't really state that the value of a single vs it's USD value will be used to peg (and adjust, if necessary) additional offerings.  That's why I said he may want to change the terms and delay the offering.  Changing the terms now will certainly upset some people whether they have a right to be upset or not (even though technically he holds all shares and can do that, someone with open buy orders might not get the chance to close them if time isn't given).  The other issues solve themselves with these changes, as long as Inaba understands he may hold 200 shares for a while after a rotation if the price is pegged.  He'll get the dividends for the shares, so that is fine.

The way I see it, you are buying a piece of equipment +cost of operation+maintenance upfront at a fixed price. If it turns more profitable later or not, it doesn't matter, because you already paid for it. You can even give it away for free later, if you'd like, because it's paid for when you bought it. My big question here is if Inaba has his "perpetual" running costs covered if there is no rotation of equipment.

1) New shares must not be sold at market value, but at the equipment+run+etc "perpetual" cost value, at the time of purchase of said equipment, so that 200 shares reflect the current USD price of the "complete package". If someone gets a BFL Single at a discount, then it's because others were willing to, as the Single was paid at the original time of purchase.

2) If needed, new equipment is only bought after Inaba sells the shares for the last equipment.

3) Rotation is really the question here, are you depending on it for this mining op to be profitable Inaba? What happens if people just want to buy shares and let you mine "forever"?

If you don't want to change your original contract, you could start with ($persingle/170/$perbtc).  This gives you a 15% overhead and makes shares .7BTC if a BFL is $600 and a BTC is $5 (and you take in $600 per single in the IPO).  However, I'd be very afraid to do this the way you have suggested and would recommend delaying the IPO and rewording the contract (possibly changing the ticker to make sure everyone is aware of the changes).  Why?  Because unless market price for the shares stays roughly proportional to the current share to USD ratio (or increases vs. that proportional difference), you risk losing money.  I see the following scenarios happening based on watching other shares:

1) $perbtc drops and shareholders who have received payments sell to break even in BTC (or at original purchase value in BTC, which is less $) and switch to a new security that looks better, buyers at the lower $perbtc get shares at a discount and therefore get BFLs at a discount if you are selling them and starting new units, which you publicly re-offer 170 shares for (keeping 30) at market value (meaning the $170 shares don't pay for the newly added unit and 200 coming back might not)

2) shareholders undercut your additional market offerings when they want to sell and they don't want to wait fro the 170btc ask wall to be broken, so either the additional single isn't paid for, or losses from scenario described in one et greater faster as you lower the ask for that offering

3) $perbtc increases and shareholders don't sell lower accordingly, so the share value in BTC is stable, but the $persingle gets higher and the BFL rotation doesn't happen

These are just examples of the problem with share price being in BTC while singles are sold in USD.  Even if the security was for something truly sold in BTC, the value of BTC hasn't ever been stable, so it is still like you are selling a commodity priced on another commodity instead of selling an item based on a currency.  This is just risk, if you are comfortable with it, that is fine.  Another good concern was brought up earlier in the thread though, that there wouldn't be any shares left in the wild after roughly 66 units were sold.  This assumes you don't sell the extra 30 shares you earned rotating BFLs, though, which you could.  Also, in order to keep dividend payments consistent/accurate for shareholders, you need to make sure shares are transferred to the correct account according to the farm's size (if
you sold a unit for 200 shares and didn't get another one started, the shares should go to the issuer account [where they won't receive dividends] until another one is started, but anytime all units are operational, all shares should be in your possession [or in public possession] so that 1 share is always worth the same GH/s until/unless newer better (mini-rigs getting more GH/sperUSD) equipment increases the average GH/s per share [at which point it should be kept stable at the newer GH/s of the bigger/better farm]).

I'm afraid I haven't issued any assets on GLBSE, so I'm not sure exactly how the verification process works, but AFAIK you just send Nefario proof of phone, proof of email, proof of identity (copy of driver's license or the similar), proof of address, and show him Facebook/LinkedIn accounts if you have them. You can do none to all of that. I don't think it's that complicated; gigavps did it for his similar "perpetual MH/s" offering and seemed satisfied with the process.

As for share layout, I'm always glad to offer suggestions.

My initial thoughts:
- Shares priced at 1 BTC (~5 USD) (If you want higher priced shares, just multiply.  )

Why: Easy round number, not ridiculously small but not too large. (I don't think really anyone would buy less than 1 BTC worth, but speak up if I'm not correct in that assumption.)

- Take the USD new price for a single/box, add ~10-20% depending on your wishes (estimating what you'd be comfortable with based on your previous stated prices) and set that as the trade-in price. (so, say, ~140-150 shares per single, ~3600-3800 shares per mini-rig, equivalent to ~5.5-5.9 MH/s per 1 BTC share)

Why: Flexibility for investors, some profit for you assuming USD/BTC stays fairly stable.

$1 per share worked fairly well for someone else recently 

Get me a mini-rig pronto Inaba  -- seems you are a more public voice than BFL