Topic: Now seeking investors for BitCorp Mining Company [Now pushing 40 GH/s!] - page 6. (Read 17205 times)

So how can I give my money to a guy running a "mature" business who has a Will Ferrell avatar and get's hilariously defensive when people dare ask questions about his "share sale" he spent two hours coming up with?  Never change FlipPro/Vegetta!  

Why should you invest?  Let me answer with another question:  What are your alternatives if you are looking to invest BTC?  

Could you go set up your own mining farm and start hashing away?  Sure, but that takes time, resources, and the payback period is getting longer by the day.  Assuming you can build a 2,500 MH/s farm for $2,500, you would earn just about 522 BTC in a year.  At the current exchange rate, that would just about equal the cost of your farm.  But half of that (or more) is going to go to electricity!  So now you are looking at closer to two years (or more) for a break-even.  

Long story short, perhaps a 15% yield is not sufficient, but don't compare it to non-existent alternatives.  

Clearly someone who does NOT get what is being offered here.

It goes like this, for those who may have missed it...

There are risks, but like with ANY investment, there are risks. Even Fortune 500 companies with long track records manage to screw people over, so putting the risk and trust elements as equal, here's the rest:

You are not spending the Bitcoins. Everyone is talking like the 8BTC is gone and now you have to wait for your monthly dividends to make it back.
When you buy shares in a public company is your money gone or can you sell the shares? Is the dividend on top of the share value or is that now your only source of value in the purchase you have made? This is pretty basic stuff.

- You put in 8BTC for a share
- As long as you have a share you get a % of the mining production every month
- Should you decide to sell your share, any amount you sell it for above 8BTC is a profit and any amount below is a loss, minus dividends paid out

It's not that complex and it's pretty fundamental in terms of structure. The risk level is obvious.

OP's attitude towards some of the "brilliant" posts in this thread are certainly just.

What an amazingly well thought, well argued post. 

Thank you for giving me more reason to doubt the future of the human race. 

Why should I invest into that then? If you can not make back most of my money before the next risk cfactors hit (which are the 7xxx series and the drop in payout) then why should I invest?

Seriously, 15% isa good yield for a B style bond or a viable long term business perspectiv, but this is missing here - you will run into significant depreciations left and right and your mid termfinancial credibility is bad to start with. This is not a gold mine where gold will still guaranteed to bein demand in 20 years. I would expect the hardware cost to be recouped in a year or... the risk is too high.

Pardon my french, but this has got to be one of the stupidest investments I've seen. An investor ponies up 8 BTC for the chance (and I'd say a very low chance) of getting 1.2 BTC back in a years time? Idiotic. I'd be happy to offer double that return to anyone with BTC they want to get rid of invest.

lol.. geek

 

I'm glad you backed up all your points and counter-arguments. yochdog, I can see where SOME of your frustration comes form.

Bitcoin is supposed to be a "revolutionary" new form of currency yet so many people are caught up in very narrow forms of thought.

I think many people in this thread are not getting how this works or what is being presented.

Not a copout at all....you made a great case for how you would personally value the shares.  I really appreciate you taking the time to lay it out.  

I am going to go read it again, and then think it over some more.  

This is going to sound like a copout but I don't know.    The issue may be that for me any return high enough to warrant the risk makes the business plan nonviable.  I believe this is currently freezing up a lot of capital in bitcoin economy. 

Still if I had to guess lets compare it to me buying another mininig rig.

If I were to build a new miner.  Say 4x 5970s, 1500W powersupply, cheap MB, CPU, RAM usb drive running linuxcoin, open frame rig ... ballpark.  2.8GH costing $2800.   After electrical costs ($0.10 per kWh) I would net at current difficulty & price 30BTC or $150 a month giving me a monthly return of 5%.

So I could buy shares from you returning 1.25% per month or buy my own rig returning 5% a month.  Now obviously difficult may increase and/or price may drop but if it does it will affect my profitability equally if I own a rig or own shares so for now lets just assume the difficult/price relationship remains solid.

Now there are some difference between me owning/running my own rig and owning shares.
1) w/ shares I don't need to do anything. 
2) w/ shares I don't need to devote space/heat/noise to the venture.
3) w/ owning a rig I have material ownership of the assets (I can sell parts on ebay for partial return if things go south)
4) w/ owning a rig I have no risk of fraud.

Honestly I don't think the pros of shares outweigh risk of shares but lets say an investor considers them equivalent that would put fair return @ 60% annually.  The company wouldn't need to pay all of that as a dividend as long as it has a plan to build out capacity but I would want to see at least half that as a dividend.   

So 30% would be the minimum for me (personally) to consider it.  Given the higher risk I think it would take a return of 40%-50% before I would consider it. 

What would be the right price in your mind?

I wasn't confused about that.  Just to be clear A 15% annual return is insufficient for the risk of the deal.  Paying out dividends in the short term doesn't materially mitigate risk.  If the company/deal folded after a say a year 85% (instead of 100%) of capital would still be lost.    No doubt you will get some people to sign up but they are being under-compensated for the risk they are taking.  

My comparison to Angel investor of VC is accurate.  I mean you aren't a "blue chip" mining corporation with a lock of low cost way of mining and paying a solid low risk dividend.  It is a startup in the venture capital phase.  Adding a dividend doesn't reduce the risk.  Total return adjusted for risk is all that matters.   Nobody investing in something this high risk needs the cashflow that a regular dividend provides but they do want to be compensated for the risk of losing their investment.   15% is simply insufficient even for a "normal" company startup.    Combine that with the anonymous & irreversible nature of bitcoin and the inability for anyone to do any true Due Diligence you are just behing dishonest with yourself if you can't see the VC comparison as valid.

I like what you are trying to do but a good idea at the wrong price is still a bad deal.

I was not claiming to be the next Google....I was pointing out that comparing a VC funded company that pays no dividend to one like BitCO that pays a 15% divi is a bad comparison.  Two totally different things. 

Wildly successful IPOs happen when there's a market-changing product/service. Google took over the world of search. Groupon started a new trend in advertising.

I don't see how mining bitcoins is going to become wildly successful. You might make some small profit here and there, but there's not much that will be able to change your output massively, at least not in a positive way. Sure, you can buy more rigs, but it's still going to be very slow and steady. There is no critical mass, unless you're going for the 51% or writing your own mining code. Small potential for appreciation, high risk, low return.

ETA: risk/appreciation/return etc

You are assuming no capital appreciation.  VC's hit their home runs with wildly successful IPO's, not steady dividends.

Also, please (this aimed to everyone), be fair in your presentation.  It is priced for a 15% return PER YEAR.  Not total return.  I love how you cite a 1 year dividend yield and compare it to a 4 year total return for a VC investor.  Not really an apples to apple comparison. 

JohnJ brings up some good points.

A 15% return is not an acceptable risk to reward ratio for an investment with this level of risk.

Average return on an angel investor or venture capital deal is usually >200% over 3-4 year incubation period.  No VC don't achieve those kinds of returns because ... most deals fail.  The few deals which are highly profitable offset the majority of deals which are a total loss.

A 15% return simply doesn't justify the risk of capital especially for a first round offering from an unknown entity.

You make some great points.  We think we are positioned well to make our company a success.....however, like any investment, there are risks. 

One thing you don't consider is difficulty.  What if it keeps falling?  Suddenly our production numbers go way up and we can aggresively raise the dividend.  Nothing is static with Bitcoin.....both to the negative AND positive. 

Thanks for the insightful and well thought out post....we could use a few more like yours. 

At current rewards/hardware, it'd take 6.6yrs to recoup the initial investment.  During these 6.6yrs, the mining reward is expected to half itself twice.  The main 'oomph' from the next-gen 7x AMD is a massive reduction in power consumption, with little predicted mh/s increase.  But as your power is already not included, the next-gen hardware upgrades won't increase yield (as much).

If transaction fees -don't- recoup the lost mining rewards, after 1 yr my expected break-even time becomes 11.2yrs. 5yrs into that it halves again, leaving me still at ~12yrs.

All this based on an idea (Bitcoin) which hasn't been around along as the initial investment return period.

I'm not fancy at math or nothin, but I don't see how I this current proposal would be a good investment.  Maybe I'll end up with egg on my face, who knows.

Why would we give away the company like that?  If we are going to pay a 150% yield, we will keep the shares to ourselves. 

Strange people who come out to comment indeed.