Topic: Lab Rat Data Processing, LLC (LabRatMining) Official Announcement - page 90. (Read 452224 times)

If bonds stay at 300MH/s (that is, pre-split value), then yes they are worthless. I think many are operating under the assumption that more bond splits are coming in proportion to future hash rate. It's wishful thinking but is the only logical conclusion that you can get at if LR wants to be fair. Sure, there'll be lots of debate on that, but we'll have to wait and see.

luckily, i have no more bonds ;-) but i'm looking for good deals, and this may turn in to one...

I don't know the specific problem is, the proposals address legal issues around what is a contract and what is a stock/bond - but it doesn't address anything about FinCen (i don't even know if this is a FinCen issue or not). The originally structured offering didn't really follow any legal precedence - it was a hybrid stock/bond/derivative/contract. That might cause problems with SEC and IRS since you can't pick and choose which rules you operate under from those four, you have to pick one set and go with it. I think it is possible for LR to figure this out fairly and for the company/offering to be much improved next week compared to two weeks ago.

I think he's turning this into how a "real" company should work, but that will probably piss a lot of people off and share value will drop as there is a market correction. Shares were possibly overvalued since no one could do a proper valuation since so much of the offering was invisible to investors (how much hashrate incoming, how much BTC was spent on what, how many BTC are left, what are rent/utility bills, what is LR's fee). The sad thing is that the majority of investors thought they were undervalued because of lack of liquidity (I was even ridiculed at one point for suggesting shares were overvalued because it was "obvious" to some investors that the only reason why they were trading so low was because bitfunder collapsed). The new system (if LR does something like system 2) makes everything extremely transparent and easy to know what you actually own.

I've been very critical of how everything about LRM has been handled and am the one that posted about sendmany within hours of the fee debacle (when LR kept all dividends of low-share count accounts after bitfunder collapsed). Even though i've been very critical, I think LR actually cares and wants to fix this - and there are ways that can fix it to be fair. We'll have to see if he can find a way to do it.

I think he will distribute the coins mined by all future new hardware to original bond holders. And I think he left that impression earlier if not mistaken.

Besides, if he were to let investments decay, that would be corporate suicide b/c a lawsuit would be imminent. Why? Because there would be no point in watching investments go to being worthless, when liquidating could return to investors about BTC0.04+ per bond.

Notwithstanding his apparent confidence that LRM would win a lawsuit,  I think LRM would easily lose. And eventually, if threatened with a lawsuit, that would become apparent to LR when the lawyers report back to him that he should settle out of court. So, I think, not paying proportionately on all future hardware would be a bad decision.

You guys are missing the main points of all this.

The bonds are worthless.

The BF delivery is going to be setup and mining BTC this week but LRM has no obligation to distribute mined funds now or even in the future as it currently stands.

It will take months/years for any legal issues to be resolved (Lab Rat can hide behind this indefinitely).   

Lab Rat has not supplied his lawyers details

I could get behind that, especially if  we could see the blockchain activity from mining.  we would know exactly what was happening.

Some questions that would be nice to have answered concerning Due Diligence LR performed on executing the old bonds/contracts/mining shares (whatever we want to call them now) and the change to new ones:

• What is the problem?
• Did this problem suddenly happen? (I assume no, since you said you've been working on this for 2-3 months)
• If not, why are we addressing it right now with partial solution?
• Why didn't we address this earlier?
• Why didn't we discuss the problem prior to taking action?
• Can we have a copy of what the lawyers had to say on the issue and the solution?
• What agency is exerting pressure on LRM, if any?
• Why tell us the purchase of new hardware was going to give us 2 gh/s per share, if you already knew there were problems with the shares being legal?
• Why sell more shares, if you already knew about this?

maqifrnswa

Great post. I hope it doesn't get overlooked. It's nice seeing people think about solutions. Even though the problems aren't well defined to many of us. But it seems you have some familiarity with what is going on in terms of legality issues - which has an effect of relief because it seems to mean you'd might concur with (or be understanding of) LR's dilemma. Correct me if I'm wrong on that.

301MH fixed?  

Ok, just kidding, don't get any ideas.

By the way, here's a solution to some of the tension. A problem that has been a problem since the beginning. Your fee structure should not be built into the 25%. It causes concern as there is no transparency. And one of your stated goals/intentions in the was to be transparent.

Instead! A fine solution if I must say so myself.

You should eliminate any Labrat fee terminology... and in place of it create 5000 new bonds for yourself, and call the dividends from that as your fee for management.
That way 100% of the 25% goes to electricity and new hardware, and less speculation on what is going on behind the curtain. Your pay would be very fair and dependent upon performance of LRM - along with everyone else. You claimed you wanted to operate more openly/transparent. This is a very fine opportunity to do that and win support in the midst of any legal wrangling. You'd receive about 8% of all dividends - isn't that plenty fair if not very generous? I'm willing to bet this idea receives a lot of welcome b/c it shouldn't affect your pay and it peels back the curtain a bit.

By the way, the video above of Dave's PH farm was scary. LR, are you ready to handle that kind of facility?

Well that's something I suppose. 

None of which would fix an issue with FinCEN

here are two example systems that follows the spirit of LRM's initial IPO and should be fair and legal. I strongly prefer system 2, which is modelled after ADDICTION which successfully did that for the purchase of 22+ KNC Jupiters in 3 separate group buys purchased weeks apart, but trade as the same security. The difference is LRM wants to do reinvestment.

System 1 (more closely in line with the spirit of the IPO, but I don't like this since fees are still opaque):
1) shares were 300 MH/s, and split 3x so they are currently 100 MH/s. The total number of shares outstanding equals 75% of the current total hashrate.
2) When new hardware (that has already been ordered) arrives, shares split again so that the total number of shares outstanding equals 75% of the total hashrate.
3) LRM purchases hardware and pays bills with the remaining 25%
4) when new hardware arrives, every shares splits to keep it so that each share is 100 MH/s

System 2 (more economically/financially "correct" but people may not like it. System 2 is much easier to calculate share valuation, and easier to put economic pressure on LR to make good decisions):
1) shares were 300 MH/s, and split 3x so they are currently 100 MH/s. The total number of shares outstanding equals 75% of the current total hashrate.
2) When new hardware (that has already been ordered) arrives, shares split again so that the total number of shares outstanding equals 75% of the total hashrate.
3) At this point, LRM purchases new hardware by one of two methods:
3a) Raise funds from the community at a rate LR finds fair and covers expenses, and issues shares to those that invested at a rate of 1 share per 100 GH/s. For example, if in the future he wants to buy a 1 TH/s miner, her can sell up to 1000 more shares at whatever price he wants to sell them for and keep the rest (1000 minus what is sold) for himself/LRM as a fee to pay expenses (this is fair and expected, if he takes too much the market will reject his offering). The shares ARE NOT ISSUED (thus no dividends or dilution) until the hardware arrives and is mining. Risk and reward are placed directly on investors that want to increase the mining hashrate and think it is a good deal.
OR
3b) LRM buys hardware with internal funds and sells share on the open market at 100 MH/s. Here the assumption, for LR, is that he can sell the hashrate for more than he bought it for to cover expenses. LR takes all the risk and reward in 3b.
4) An exchange is set up so users can choose what they want their reinvestment percentage to be. If you liked the original 25%, then 25% of your dividends will buy new shares. These new shares are either from LRM (3b above) or from other users and acts to properly set the market for how much LR should pay for new hardware. If you don't want to reinvest (i.e., don't trust LR), then make it 0%. If you think LR makes great decisions and will make more money in the future, set it to 100%.


In both of the above cases, the value per share is continuously decreasing, but the number of shares you own is increasing to keep up with LRM growth. The first case is pretty much the way LRM was set up from the start, the second case I think is a much improved and probably more "legal" solution - and it allows market forces to control how much hashrate is bought for how much money. LR won't like system 2 because it takes control out of his hands and puts it into the market and investors.

EDIT: one economic error with system 2, the total number of shares outstanding should account for >75% of the hashrate since reinvestment should occur through automatic dividend reinvestment instead of through LRM owning hashrate. It should be something fair that can cover expenses and LR fee - maybe 90%?

*face palm*

I can't provide reassurance without giving information that I can't give until things are in place.  All I can say is that I'm working on the permanent solution and believe I have found a reasonable and legal way to provide over 300MH.

and not being sarcastic, if future posts about the company could satisfy this basic criteria

http://en.wikipedia.org/wiki/Five_Ws

It would prevent a lot of the flurried question sessions we continue to have after every announcement.

Thanks for the heads up on that.  

wouldn't a better solution be creating a proper corporation and distributing non-voting shares (class B & C) while labrat retains the voting shares (and control of decisions).  This has proper legal standing to continue on without all these yoga like gyrations


source: http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R001.pdf
page 3 paragraph 1

this would closer to emulate what we had previously and still give LR full control of the company and assets. I hope he considers this option seriously.
It would be nice know if he will or will not.

I don't need, or even strongly desire, a concrete answer right now.  I, and I think most people here, would be perfectly satisfied if he simply committed to continuing the original intent of the "bonds".  All he needs to do is reassure us that we are not stuck with 300 mh permanently, but rather our hash rate value will continue to grow with the company's.  

I don't understand why he would suddenly say your bonds are now a fixed hashrate, and then not clarify any of the details, if he intended for us to benefit from the future hashrate growth.  Why say anything at all, he clearly had no problem being silent before now.

I hope he does come back with something better in a couple of weeks.  That would be terrific.  I just don't have my hopes up very high.

Not sure how you'd know one way or the other... but hope it's true.  It would calm some concerns I had about the bitfury deal.

o.O

For the record:  I tend to be a bit of a smart-ass in person, and will joke and be sarcastic about just about anything.  I find it overwhelmingly tempting to do so here.  I understand that people (myself included, which makes it particularly difficult to behave) are upset, and I apologize in advance if I let it out in the future.

With that said.

Lab_Rat announced some changes on Saturday.  That announcement has upset quite a few people.  In addition to the options previously considered, there have been a number of suggestions made in the last couple of days.  So, from what I can see, he is trying to find a way of restructuring LRM (a solution) that will keep Lab_Rat out of jail, his investors relatively happy,  and LRM out of court.   Probably (my opinion) in that order.


grnbrg.

hahaha, true enough, well good thing I don't check those . . .

Prepare for an almost endless stream of PMs with P.O. boxes LOL!

And again your answer has nothing to do with question.  Are you just randomly answering things and quoting a comment from me?
Also, you are not LR, your answers are speculation, I'd like some facts.

As far as my panties are concerned, I'll mail a pair for you to fap to, if it stops your out of context replies and lack of meaningful contribution