Topic: [GLBSE] PureMining: Infinite-term, deterministic mining bond - page 15. (Read 39708 times)

Others have also expressed this sentiment, and it's great to hear - but it's moot if not accompanied by people actually buying.

It could be argued that I'm being impatient, but it's a fast-paced world, and I don't really expect more uptake later on if there was little during the excitement of the original announcement.

To be honest I was hoping to attract "old" investors who are currently invested in other mining assets. Also, GLBSE has its faults but I don't think the barrier of entry is too large. For me as an issuer it was a bit intimidating until I realized the "contract builder" is completely irrelevant. Once one creates an account it gets the job done.

Anyway, the trading platform used is one of the components that go into the measurement of level of interest. If there is interest but not on this platform, it subtracts from the valuation.

No idea, I think this is some sort of legacy thing. When GLBSE 2.0 is live I'll make more effort to get some relevant exposure.

Oh, don't assume that. This is by far the most interesting asset seen so far at GLBSE.

But GLBSE as a platform doesn't exactly make life easy for new investors. (Why is PureMining not listed under the "Listed Companies" link on the GLBSE home page, for example?)

The demo version of GLBSE2.0 has been updated.

Since this is going to be the system you guys will be using it very soon please go over to http://dev.glbse.com and give it a try.

Create a new share, sell them (create a fake account to test buying them), create some new motions, pay dividends and play around in general.

2.0 is a big step away from the current system, and it's important that you're ready for the change over.

Here's the release notes
https://bitcointalksearch.org/topic/m.781561

Thank you for your support. I'm still learning.

Thank you very much for the way you dealt with this, I was the person with the bids on 0.35 and I am very happy with the way you dealt with it. As I did not loose anything and got my shares at the price I wanted to So far you have been running this very professionally
//DeaDTerra

Well, it appears that the streamlined, deterministic nature of this bond isn't attracting that much interest. So I'd like to press further the advantage of the offering in terms of pure performance numbers. Re-evaluating my strategy of utilizing BFL products, it seems safe to offer bonds at a new, low price of 0.28 BTC. Since I'm still only issuing a small number of shares, I'm willing to take the risk that I'm wrong.

Once again I do not want early adopters (and current bidders) to be worse off than buyers at the new price. Given that there already are bids at 0.35 BTC, my exact order of operations was:

1. Pay a bonus 0.05 BTC per bond.
2. Issue at 0.35 BTC.
3. Pay a bonus 0.07 BTC per bond.
4. Issue at 0.28 BTC.

ROI projections for the new price:

Issue price - 0.28 BTC
Difficulty - 1496979 (recently increased by 9%)
Block reward - 50 BTC
Daily return - 672 uBTC (0.24% ROI) = 86400 * 50 * 10^6 / (2^32 * 1496979)
Weekly ROI - 1.68% (linear, non-compounded) = 7 * 0.24%
Monthly ROI - 7.32% (linear, non-compounded) = 30.5 * 0.24%
Annual ROI - 138% (compunded weekly) = 1.0168 ^ (365/7) - 1

This means that, if the current network parameters remain unchanged, the investment will more than double in a year. Of course, the parameters will not remain unchanged, so this will not be fully realized.

I will mention again that I am making a personal commitment to do whatever it takes to abide by the contract, regardless of the success of any mining operations I may have.

Coupon payment summary for February 2012:


In addition, 0.0015423250 BTC coupon for block 169343 was paid today.

There are no doubt many things I should have done differently. As I said this is still a proof of concept, the only thing I am committing to come hell or high water is to abide by the contract, anything else is prone to my newbie mistakes. I will appreciate if you bear with me and let me learn from my mistakes - and compensate for any losses caused by them - instead of writing me or the asset off.

So let's look at some of my recent decisions.

1. Offering at an initial price of 0.5 BTC.
This is arguably too high. As I said this seemed to me a fair price considering the alternatives, but I may have been mistaken in my evaluation.

2. Lowering to 0.4 BTC.
This seems like a reasonable thing to do given that there was little demand at the higher price. Please tell me if you think this is wrong.

3. Not offering a compensation before lowering the price.
No excuses, I just didn't think of it at the time.

4. Offering compensation after the fact.
I didn't think of the possibility that early adopters would have sold, and it still makes little sense to me. If you bought it at 0.5 BTC, it means that you value a guarantee to be paid the equivalent of 1 MH/s as more than 0.5 BTC. Why would you want to shortly after sell it at 0.4 BTC?
Under this assumption, compensation after the fact would have been more or less equivalent to compensation in advance. And as I said, I think some form of compensation is fair because early adopters shouldn't be penalized for my overpricing.

5. Not trying to find early adopters and paying them directly.
That would have been cumbersome and there's no way for them to prove they were indeed early adopters.

6. Not announcing the compensation in advance.
That would have just invited freeriders who would then buy the shares and receive compensation, for an effective price of 0.3 BTC.


I would like to clarify that I am not committing to anything but what is stated in the contract, and potential buyers should base their decision first and foremost on the contract. The future traded price at GLBSE, which could be affected by my decisions, should be secondary. But if anyone else feels they have been wronged by my decisions, please let me know and I will try to set things straight.

Also be aware that it is entirely possible that the issuing price will decrease further in the future, and that I will handle it better that time (again, I'm not guaranteeing that there will be compensation to current bondholders).

To avoid any confusion, I do not currently have a policy of making a post about every coupon paid, only about any news and such. Scheduled payment history is available at http://bitcoinpuremining.com/ ; blocks marked as paid are indeed paid, otherwise they are listed as "Pending" (in theory a technical error could cause wrong stats to be displayed, but I make an effort to maintain accuracy). So far coupons have been paid for blocks 168335, 168671 and 169007.

I've paid a bonus 0.1 BTC per bond. Because of the recent price drop from 0.5 BTC to 0.4 BTC, I don't want early adopters to be penalized for their support. This guarantees that people who bought at 0.5 BTC are not worse off than people who buy now.

Note that I reserve the right to change the price at which bonds are offered without any compensation given to existing bondholders.

First coupon, for block 168335, has been paid. Should have been 0.0015883564 BTC per bond, except I misunderstood how payment works in GLBSE, so bondholders can enjoy the larger amount of 0.01443959 BTC per bond.

In other news, bonds are now offered at 0.4 BTC per MH/s.

The article now lists PureMining with a generic "Mining" title - but it's worth noting that this bond is quite different from most mining assets, and in fact in some sense antithetical to them. One of my long-term goals is to commoditize mining - as mining is, after all, a commodity - and to move away from the infungible "Please invest in my mining farm!" model. Rather, people and companies who wish to mine, should employ basic instruments according to their needs:

1. If they are willing to take the risk but in need of immediate cash for the purchase, borrow X BTC and commit to repay Y BTC at a later time (this would require some form of reputation and/or accountability). Borrowing USD can also work, and in all cases hedging against BTC/USD volatility should be considered.

2. If they have funds but don't want to have a stake in the long-term prospects of mining, sell short a generic mining bond, offering BTC as collateral. (There could be markets which allow negative mining bond balances and automatically deduct BTC coupons)

3. If they have some or all of the required funds and want to take some or all of the risk, do some combination of the above or similar instruments.

This of course does not preclude public investment in companies which mine (with or without additional activities), but the existence of an efficient global market for speculating on the generic, idealized profitability of mining, can help focus such investments on advantages specific to the company, by investors who are in a position to evaluate them.


All that said, for the time being the bond merely acts as an alternative to investing in mining companies, which streamlines typical costs into the valuation.

Sorry, I'd missed this thread and forgot to add it to my article, I'll update the article to include PureMining.

Nefario

I priced it by considering both my own costs and risks, and the attractiveness of competing offers. If there is not enough interest at this price I'll consider offering at a lower price, admittedly there's some room for this. The price includes many things when compared to direct hardware purchase, as described in the OP.

This is something which I have considered but unfortunately GLBSE doesn't offer a good solution. My payment cycle is every 2.3 days, most mining companies pay every week. The fluctuations would at worst be about 0.34% which are likely much less than the spreads.

Labor costs? What on earth are you talking about?

The idea of this is, in essence, an investment against difficulty increases. If difficulty goes up a lot, it will devalue. If difficulty goes down, it will increase in value.

hmmm
$2.5/MH is a bit overpriced, but I guess it includes labor costs...

Right, I wanted to include that figure but forgot, you beat me to it. Everyone should agree that 4.45% monthly return is good on one hand, but that the difficulty will increase on the other hand. By investing in this, you are betting that the difficulty will not increase too much.

The Ticker symbol is PureMining, the asset ID is 3cc7f4be83ff553ecbe53e57e55e5a672397a1d15b7bf7548ec07d996e76971b.

In practice I will likely buy back all the bonds sometime in the next 50 years, either at market rates or via my contractual right. But this should still leave you with a total value which surpasses what the contract would provide to infinity (it's approximately a convergent geometric series).

This isn't quite the same thing, but http://en.wikipedia.org/wiki/Perpetuity might be of interest to people wondering about the time terms.

This is really cool!  Whats the symbol?  I am definitely going to buy some of these!

That is easily the most intriguing venture I have seen in a long time. Following. (BTW, for anybody interested, at current difficulty you would get ROI in about 22.5 months)

(reserved)