Topic: Question to buyers, want shares in an operation, or individual rounds? (Read 1182 times)

Having a group buy that reinvests a portion of earnings, but doesn't take on any new buyers after the round ends is impossible - no hardware generates enough revenue on its own to purchase additional hardware while still making any significant payouts to the shareholders.

I don't see any better sides compared to option #1 + reinvestment. It has absolutely same benefits, as you mentioned. But if you buy shares of ants hardware and in 4 years they broke down and Bitmine got shut down/bought by another company/etc, then you will pay for your buying. Not somebody else, who has no idea, why he should pay for your buying.

Broken gear get's sent back to the manufacturer for a replacement if it's unrepairable and during the downtime the loss of hash rate would be shared among all shareholders until it is repaired or replaced by the manufacturer. "Obsolete" gear can be sold on ebay usually for more then market price /gh I believe because people on ebay are either dumb or ok with the paying a bit more because they can buy it easily with fiat. The proceded for the sale gets added to the RIF meaning less shares would need to be sold for the next gen gear and that sale benefits all current share holders. 

Good job You passed "earlier" obstacle. There is exactly only 1 number of shares per situation, where you can balance single round to make it at least the same as other ppl will offer. Too many things should match. And it should run with organizer with good math.

Now compare it with option #1 + same reinvestment. Add "5Ths for 5000$" machine in market (same $/gh rate).
..
Exactly the same Both rounds have 26 GHs per share. But now you can open rounds with any ammount of shares and any hardware. And you don't need math skills to balance everything out each time.

Back to option #3. What happens if hardware broke? Or became inefficient to mine (high W/GH) and can only be sold under market $/GHs rate. How to balance everything out? Somebody should pay for it.. New shareholders (overpriced shares) or old shareholders (steal from RIF) or some poor guy on eBay, who has bad knowledge of btc hardware or it should go from organizer wallet.. Which path will you go?

People in later rounds will buy shares, that include obsolete gear. With absolutely no better sides compared to other GBs or option #1 + reinvestment.

Simpler version (example only, not saying this is definitely happening if you're one of my R1 buyers!)

Round 1 bought shares at 0.1btc for 10GH/s

I'm about to launch round 2, let's say it's 0.09btc for 10GH/s

Total hash rate doubled, so did the number of shares, it breaks even.
Round 1 people paid more for shares but they also got additional payouts before round 2 happened so they're happy, and both groups know that even of either machine goes down, during that downtime they're still earning SOMETHING.

Now as  upgrades are purchased with the upgrade fund (in the option 3 scenario) that estimated GH/share (10 to start) goes up, but new shares are generally always sold at a reasonable rate for the time.

The shares that came before you and come after you are added insurance and nothing gets too tricky until that first round of hardware goes obsolete.

At that time, the hope is the resell value of that hardware (it would be non-0) plus whatever's in the upgrade fund buys more hash rate, almost definitely greater than what the now-obsolete hardware was providing and all existing shareholders gain hashing power, without the "being bogged down by previous shareholders" issue that seems to be your concern.

I'm trying to figure out where I screwed up.

R1: 3Ths for $10000 = $3.33/gh  300 shares 10Gh each $33.33/share
R2: 10Ths for $10000 = $1/gh  $5000 RIF + $5000 raises by selling 150 shares at $33.33 each 13000GHs/450shares = 28Gh/share $1.17/gh
Hmmm...  
R2 revised "The Complicated Way":  $5k from R1 RIF money and $5k from 150 300 new shares at $33 $16 in R2 money each round gets 5Ths to split so R1 members now have  26Ghs/share and R2 members now have 33Ghs 16Ghs/share.
Double Hmmm...



I think I need to go back to 10th grade to understand but I think there's a way you can structure the number of new shares and the cost of each new share to balance everything out.

EDIT:
R2 Revise again "Te easy way": sell 192 shares at $26 each and now everyone has 26GHs.
Done!!! Take that Mr. 10 grade math teacher guy!!!  LOL

Yes, they can and will sell shares/hardware cheaper because they dont have old investors and have access to the new hardware. It's hidden trap, that will need to be passed somehow. Look at tripppn example. Try to make any other example. In most examples you will see how people at the start will have most profit, while people at the end will buy overpriced shares.

Basically your argument of why this won't work is because someone else could offer the exact same thing, but make it a better deal somehow?
Isn't that true of ANY group buy anywhere, where someone else could sell the same hardware cheaper?

Again, another group buy offers absolutely same rules and reinvestment details as your group buy. These shares worth same as your group buy shares. But they offer 150 GHs for 30$ at start (for comparison to your 110 GHs 30$). They can make it, because they don't have old investors and have access to new hardware.

Then, their R2 shares will rise to 200 GHs, while your R4 shares will rise to 155 GHs.
Then, their R3 shares will rise to 300 GHs, while your R5 shares will rise to 250 GHs. Another company pop up with 30$ for 350 GHs shares.

It's just the example, but you should get the point. These problems you could meet in future and come to the point where you couldn't open new rounds.

To use tripppn's example, your "value" changes over time...
In the example he gave that R1 buyer had  $33 for 10GH/s, by the time R3 comes around, that R1 buyer still only ever paid $33, but now he's gotten 110GH/s hashing for him. And when R4 happens he's up even more...all for that single early one-time investment of $33. Even the people who buy in at R3 getting 110GH/s for $33, by the time R4 happens his investment that was already made is increased.

You buy in another group buy and after 3-4 months your investment is done. How much is that share worth as of month 5 or 6? Nothing.

This is admittedly something that has to be explained more clearly, BUT it's something that would provide a lot more long-term stability to investors, and a steady increase in hash rate meaning that your investment continues earning after the first piece of hardware is obsoleted.

In first example, $30 for 110 GHs is overpriced because it is 0.27$/GH. At the same time $10k for 50 THs is selling for 0.2$/GH. 0.27$/GH > 0.2$/GH. People will go in another group buy, that offers absolutely same shares/rules, but 150 GHs per 30$ share.

Second example in your post. 100 THs for $10k. Market value 0.1$/GH. R3 now offers 200 GHs per share at price of 30$. It is 0.15$/GH. Which is overpriced, because you can buy 0.1$/GH on market/GB/another mining operation.

But these mining organizations will pop up and offer better deals, because they will have new hardware and won't have old investors (as I mentioned in previous posts). If you can make example, where they won't have better deals (your shares won't be overpriced), it would be appreciated.

I'll be launching something next week

Crap... this has me thinking and now I want to put it to the test with an S1 to start off with and break it into 10 shares.

That's the problem with the way you're thinking about this...
You wouldn't be buying a set number of GH/$
You'd be buying into a mining organization that pays out regular dividends to shareholders, with the goal of dividends + the price you eventually sell the share for being greater than your initial investment. This isn't a short-term 2-3 month deal where you hope to make a bunch of cash and it's over, it's ongoing.

How is $30 for 110Ghs overpriced?   In the example if the equipment costs $10k for 50THs that's exactly what the Ghs is being sold at when broken down.  We don't know the cost/ghs is in 4 months so I'm throwing numbers out there.  Would it satisfy you is in R3 The KnC X2 is 100THs for 10k so now everyone is getting 200Ghs for $30??? Of Maybe the X2 is 1PHs  and everyone gets 1 Ths for $30... Who knows.
We don't know what hardware will cost at that time but in my example no one is being overcharged for shares when it's the exact same price as the equipment when it's all added up.  That would just be simple market value.

@tripppn, In your example both R2 and R3 have overpriced shares. Can you make another example, where shares won't be overpriced (and hardware will be sold at market GH/$ rate)?

I think the flaw with your reasoning that "obsolete" means completely worthless in your opinion.  Block Erupters were obsolete months ago yet they still sell.  Hell I consider Cubes to be obsolete but they still sell for 300-400 bucks and don't get me started on stupid jallys.  Just because it's useless as a hosted piece of equipment doesn't mean it's worthless to someone who lives somewhere with cheap energy that can host it in their house.  There is no reason you would have to steal from the reinvestment fund or overcharge for new shares.

Somebody (Asicminerr #2) could pop up today and say: "Hey! I'm selling 0.5 BTC shares with 0.04 dividends." Can he? Yes, hardware allows. Do shares have ability to be resold? Yes. Do Asicminer shares overpriced? Yes. Do his shares overpriced? At the moment no.

But when he will try to open new rounds, he will end up with fundamental problems earlier or later (overpriced new shares or "steal from reinvestment funds"* to avoid it), that I was trying to explain in last posts. Again, due to obsolete of hardware.

If there will be no new rounds. Everything will work fine.

PS *steal - means (for example) take 10 BTC from reinvestment funds to buy 5 BTC hardware.

You're not taking into account the value of the share itself, its inherent ability to be resold, and the fact that unlike group-buys where you're strictly concerned with $/GH/s, this isn't a one-time, 3-months-and-it's-over sort of deal

This is overpriced shares. You can find much higher dividends hardware/GB for 0.5 BTC today. This model will live as long, as you could find investors, who will buy overpriced shares.

ASICMiner sells shares in their total revenue (which is basically what this option 2/3 would be)
Is that selling shares in limited lifetime hardware? No.
And are they overpriced? Last I checked their shares sold for .5 BTC each and the dividend payments were something like 0.02

You'd be buying shares in a mining entity. Granted in this case I wouldn't be manufacturing hardware but rather acquiring whatever hardware is available with the potential for positive returns, and without the insane overhead of R&D costs

I don't think 2k for 3Th in 4 months is out of the realm of possibility.  People are buying jallys on there for $200 all day and 200 Gh miners are selling for over 2k right now.  I don't consider ebay buyers to be "normal people"... I think there's another word for it....   

In your example, at R3 you can't sell 3000GH for 2000$ (0.67$ per GH), when 50k for 10k$ (0.2$ per GH) comes out.
And even then you are going to sell R3 shares at 0.27$/GH rate, that normal ppl won't buy.

Yea, you can play with arbitraty numbers.. but in the end, you will either sell overpriced shares or steal from old shareholders (option #3 + some tricks with numbers).

It happens because of: you are selling infinite lifetime shares for hardware, that has limited lifetime.

Edit: you can make reinvestment in Round. And it will work good. But, when you merge and add new rounds, somebody will always pay more. And it will bring fundamental problems for operation earlier or later.

@tripppn:

That's the closest example to what I was thinking...
Right now these buys have shares sold with the idea that let's face it, most hardware is obsolete in a few months. So I began wondering how can we enable better investments  that aren't quick money grabs that either do or don't profit based on simple shipping delays.

I'm not sure why you would have to sell shares at higher rates.  The rate would depend on how much that hardware costs.  

Let's say R1 was a batch 2 Neptune and sold 300 shares at $33/share.  3000 Ghs for 10,000 so $3.33 per ghs (10Ghs/share).  The coop runs it for 2 months paying out dividends of 50% to the shareholders.  Now the coop has let's say 5k worth of btc in a reinvestment fund.  

R2: The KNC X comes out around that time and it's 10Ths for $10,000 so this new hardware costs $1 per ghs.  so the coop takes their 5k and 150 more shares are sold at $33 each.  

Now the pool is up to 13Ths with 450 shares and now everyone who owns a share is running at about 29Ghs.

R3: A couple months later the neptune is obsolete so we sell it on ebay for $2000 and KnC puts out the X2 which is now 50Ths for $10k.  So there's 5k in the reinvestment fund plus 2k from the sale so now we need to raise 3k.  100 shares at $30 ought to do the trick now we have 60Ths divided by 550 shares so 110Ghs per shares.

I see no reason why this model would die as long as BTC is alive and well.

Obviously I'm throwing out arbitrary numbers but I think it makes the point I'm trying to get across.

FYI:  By R3, R1 has made their roi collecting 50% and they are now just sitting back collecting dividends.

1st option. There are many hidden traps, when you go with securities of total operation. Most people only interested in GHs/$ rate. And if you are going to compensate hardware failures/obsolete from total operation, then you will need either: 1) sell new shares at high GHs/$ rate (that nobody will buy) or 2) sell shares that include both new and obsolete hardware. This will again decrease value of your sells due to (for example) increased power consumption. And nobody will be interested in buying obsolete hardware, when enough good offers will be around. There are plenty of these kind of companies and most of them are going to dead end.

In other words, problem of option 2 and 3 is: you can't sell shares, that have infinite lifetime. (only exception: if you are selling overpriced shares and somebody still buying them. Then they will live as long as you could find investors).

LOL!!! Well that's one way to do it... personally I like complicated as hell   

True but you could do it the easy way.

Before new equipment every share has 10GB and 1000 shares have been sold = 1TH

new equipment is ordered adding say 1000GB to the gb. 50% goes to the old shares makeing them worth 15GB each.

500GB/15GB= 33 new shares worth 15GB but these shares will not get a dividend untill the new hardware is hashing.
The new shares are sold at a resonabule price even being offered to existing share holders.

rinse and repete

Would more shares be sold for option 3?  If so what percent of the new machines would be reinvestment from current owners and what percent would be new shares?

Option 3 seems to make the most sense to me but the math could potentially become very complex.

IE: If new hardware would be 50/50 would current holders of 1 share now own 1.5 shares and new share buyers have 1?  By round 6 your going to have spreadsheet a mile long.

I much prefer option 3.

20% retained for upgradeing means your hash rate will be protected and may even grow. All old/outdated equipment could be sold and the BTC used together with the upgrade fund to by biger and better.

Option 3 also alweys for new shares to be sold to help fund new equipment but the new shares would not have a payout until the new equipment starts hashing. Once it has started hashing the new shares sold would act just like shares bought at the start

Total operation, but I want every btc paid out!

Appreciate the feedback so far - I just figure if I'm going to try to provide a service here I should find out what it is people really want!

With options 2 and 3 you'd definitely be able to re-sell shares to others.

And in regards to buying in after round 1 with those options remember that shares will be getting cheaper over time, because the value of 1 GH/a this week is less than it was last week...

I like the idea of keep the hardware going, but I'm in a few other reinvestment GBs that seem to be a headache waiting to happen, like PETA. With Option 2, it is up to me if I want to reinvest or not. With option 2, I would also allow people to sell their shares, so if they want out they can get out at anytime.

If I had shares in round 1 I'd love option 2 or 3. But I'd never buy into later rounds.
So my vote is clearly on option 1.

So I started my first round a couple of weeks ago, and as I'm about to make the first payout to shareholders and launch a second round I began to wonder...what is it share-buyers actually want?

I have 3 options I'm thinking about moving forward with...

Option 1
Start a 2nd round that's completely separate from round 1.
This means there'd be new hardware setup and running just for this new group. It also means each round ends when that 1 piece (or set) of hardware is obsoleted. Hosting fees for 1 round are what they are and generally won't change (unless I renegotiate total hosting costs) and in general, what you buy when the round launches is what you get, and if the hardware for your round happens to be down for repairs then your earnings drops sharply.

Option 2
What if instead of making round 2 a real separate round, we just add more power to the pool, and add more shares to compensate. Currently with round 1 each share is 10GH/s. We could either keep that going, or convert 1 share to be 1GH/s for easy math (converting all existing buyers) and then selling more shares whenever new hardware is brought online.

When we double the hash rate (and double the shares sold) people can expect the same payouts, BUT it means that as new hardware is added on people get an extension on the life of their shares. If by the time I add round 6, round 1's hardware is now obsoleted (no longer able to cover it's hosting cost) then the people in round 1 don't lose out, they still have shares. While total earnings goes down, everyone who's bought in still earns their percentage. It also provides protection against hardware failure as if any 1 machine dies, the rest keep earning for everyone.

Option 3
Similar to option 2, you're buying a share in the mining operation. But instead of the full earnings paid out to everyone every payout date, a percentage (to be determined) is set aside and used to purchase more hardware. In this case, month-over-month the operation's total mining power increases, further extending the life of each share already sold.

Option 1 would be the short term investment.
Option 2 would be a longer-term move.
Option 3 is I suppose the longest-term investment option here.

Options 2 and 3 would also allow re-selling of shares should you choose to get out in the future and have someone lined up.

In any case, when hardware is no longer able to pay for itself it would be sold off and either used to purchase new hardware (option 3) or paid out to shareholders (options 1 or 2).

I realize this is a bit of a wall of text, but I'm curious what it is people here want before I start up this next round (which will be launching most likely next week, after round 1 buyers can verify they've been paid).