Topic: Should I start Diablo Mining Company, a 1M BTC startup? - page 2. (Read 11013 times)

redirect the heat to a water heater, or maybe a snow-melt system for the sidewalk/driveway...

hot air popcorn popper? sell the popcorn?

-- Smoov

Start small. Get a better idea of maintenance and other costs.  

For wind turbines you need to research the power capacity factor.   Wind power is proportional to the speed cubed, so it is far harder for the typical property owner to use it efficiently than solar is.

The NREL did a survey of most of the United States regarding where the best locations for turbines are.   In Maine they are probably off-shore or on mountain ridges.  Unfortunately I couldn't find it when I looked, but this is a mapping site that I made that uses the data set (that does not include off-shore): http://www.energyjustice.net/t=ora340

I don't think I agree with this, the only time GLBSE starts to groan is when there is an IPO selloff, and everyone starts hitting the server trying to snipe each other.

I think volume on GLBSE would have to increase by 50-60x to start having an effect on speed.

Even with things as they currently are without any changes at all we could handle 30x the current volume.

Oh, don't get me wrong, telling the truth has NEVER made friends in the history of the world. But people have repeatedly attacked my plan without any logical reasons, pointing at the rest of the GLBSE companies and say that they're better structured, and I think I have a right to defend my plan and rationally explain why those companies can never succeed over the long term.

If I'm going be asking for a million BTC, I better be damned sure I have the best possible plan available, and it has to be geared for long term survival.

I think you've ignored the buyback clauses in the existing mining bonds. There's also the whole time value of money business that explains why it can be profitable to sell perpetuities.

Calling these things pyramid schemes and saying they're doomed to fail is not going to make you any friends. And I hate to say it, but if you want to raise money, you need to try to avoid pissing people off.

After a discussion on #bitcoin-assets I would like to make something clear.

Mining bonds and shares that have a fixed output value DO NOT WORK.

I have seen bonds that pay 1mhash forever. When the hardware fails, the owner has to, essentially, go out and sell more bonds and use that to replace the failed hardware, which ends up leading to a situation that you have zero mining company growth because essentially 100% of the profits are being paid out to bond holders and the only way to grow at all is triggered by hardware failure and new bonds are greatly diluted by old bonds. This is a pyramid scheme.

I've also seen companies that pay 100% company profits out as dividends. I'm going to say the same exact thing, hardware fails, zero company growth, sells new shares for more hardware, but this time, old shares don't dilute new shares, its the opposite, it screws old investors in favor of new ones and thats STILL a pyramid scheme.

These models are unsustainable, and I wish people would quit requesting that I change the contract to fit these models. This is why the contract makes shares have a non-binding voting mechanism, because this is probably the first thing that would be attempted to be voted on.

In addition, due to the perpetual growth model of my plan, dividend output can go up. Yes, thats right, it can go UP. Those figures in the plan? That is calculated for the original generation of hardware only. 0.21 BTC (post December) per share dividend annually means 0.21 BTC also goes to the growth fund. After two or three years, the size of the mining hardware installation can be doubled. And two or three years after that? Doubled again. If after five or six years I've managed to greatly out pace the growth of the network, then we could very easily be looking at 0.42 BTC (post December) per share (which also means people might be buying shares from the first generation of investors for twice what they were originally purchased for).

There is no other company on GLBSE that has a model that can sustain continued growth, every single company will be dead in the water within two or three years.

Yes, I will not deny this. I am hoping that the entire Bitcoin community will support me in my venture. We're all going to have to band together to get this one done, I think.

Unfortunately there's a big difference between a $5M startup and a startup that's asking for $5M.

Ok, those are fair answers to my questions.

One, the news of a $5m Bitcoin startup gracing the front page of every tech and financial news site would be worth its weight in gold; two, for those months that power generation profits exceed total operating cost I have to buy BTC to send them back out as dividends and at least some of that money is going to stay as BTC and not be converted back out; three, the aforementioned news of a $5m Bitcoin startup is going to bring a certain level of legitimacy to Bitcoin and is also going to attract more companies to bring their business here and start supporting it.

I honestly do think that someone investing into DMC is going to end up with a higher profit margin than if someone just bought and held 1m BTC alone. If I didn't think that, I wouldn't have bothered placing the plan in front of the community for their input to begin with.

If the value of the coins go up, then the investors should have just held on to the coins instead of invest in the company.

Also, why would BTC valuation be driven in part by DMC?

Its not that you did the math wrong, its that your valuation of coins has remained constant. Investing looks much more attractive in inflating fiat currencies, but Bitcoin isn't a fiat currency. What people are investing in here is a very large scale mining farm whos sole purpose is to drive the cost of mining down in a way that benefits everyone going forwards.

Lets say it takes them 5 years to get the investment back counting in BTC (not including any profit made from large scale green power generation exceeding overall power usage), BTC valuation might have doubled or tripled by then, partly driven by DMC. Not only that, they are guaranteeing themselves future profits which they may be unable to get themselves by mining by themselves due to residential power costs and the high cost of FPGA.

In addition, the DMC shares themselves might go up greatly in value if I can swing power generation profits far enough in our favor to make it an important part of the company and not just a way to stave off ever rising power costs (but thats a very long term outlook). Dividends don't solely have to be generated by mining alone if we're already investing heavily in green power.

After the block reward decrease in early December, you will produce 413910 coins a year assuming 1/3 of all GPU miners quit and no other new production than yours come online.  This is 0.4139 BTC per share, assuming 1M shares and full set of 4200 FPGAs.  Half of it will cover operating costs, leaving 0.2 coins for dividend.  At best, if you get this up really quick before block reward decreases, investors will have back what they paid for their shares after five years.  Then block reward halves again and profit, if any, will come really slowly.

And all this changes for the worse if less than 1/3 of current miners quit or other new production comes online.

I can't see how this could possibly be profitable.  The only factor which make your calculations work out to the positive is your assumption of doubling exchange rate.  To take advantage of that it would be safer to just buy coins.

I didn't vote.  It is up to you to decide what you want to do.  I'm just not going to invest in it unless I did the math wrong.

Phase-change subterranean heating works by forcing warm air inside the greenhouse under the ground during the day with fans. At night the process is reversed with warm air stored inside the ground keeping the air in the greenhouse a moderate temperature.

You'd only need to pipe fan-blown air from the mining house to the greenhouse floor and let the subterranean Heating Cooling system fans take care of moving it underground. You use drainage tubing buried 4-5 feet in the ground to disperse the air in the soil.

Fans don't use much electricity, are relatively cheap to purchase/replace, and people are already using the non-heated version of this system effectively in cold climates. If you add a "free" heat source on top of it you will be growing year round at full output, guaranteed. It's a market producer's wet dream. ;-)

-p

Thats the funny thing. A geothermal heat pump array is going to lose heat into the field, the more the closer it is to the surface. If I pumped enough heat into it I could theoretically put a green house on top and capture the heat.

Have you considered utilizing the heat output for something useful? I realize we're talking about FPGAs, but there still must be some useable heat by-product, especially if you have complete control over your building designs. We're not talking more than a concrete pad (maybe, concrete loses a lot of heat...) and a metal building with specially designed ductwork.

I have been brainstorming phase-change subterranean heating systems for greenhouse, poultry-house and barns using excess heat output from bitcoin mining. For half the cost of one of your proposed buildings, you should be able to incorporate a more sustainable business by raising local food products. Maine is a hotbed of such activity with Eliot Coleman being based there. You may find someone local willing to take over the growing and marketing operations.

You might consider the trifecta that integrated Poultry Aquaponics can bring: Fish, garden produce and chicken products and fertilizer.

Food prices, especially for healthy, locally produced items are only going up correspondingly with demand. Food feeds humans, and good food helps people. With an operation of the size you're talking about, you should have a leg up on everyone.

I want to do exactly this here as I already have the property but no capital, buildings, mining gear, etc. :-)

-p

I've updated the plan to further cover green cooling and power generation further.

tl;dr: Reducing operating costs is good, alternate income sources are also good, state and federal incentive programs are good as well.

One "green" program that is designed for new installations and not retrofits is LEED certification. I don't know whether they offer incentives of any kind though, or whether it is just a sticker or a plaque saying that you meet the guidelines.

There are Federal and State rebates for various green power setups for both residential and commercial setups.

http://www.epa.gov/greenpower/pubs/incentives.htm click on Maine

Efficiency Maine (our local program) will pay up to $4000 for qualifying new installations, in addition to loaning at 1% APR up to $35,000 for energy conservation setups (although I doubt that would apply to DMC since we're going as green as possible from the get go), and other program incentives.

There are probably even more grants and other things depending on how this unfolds, however I have not included them in the original plan because they can disappear at any moment or the government can just refuse to pay out citing some badly interpreted rule in the process and it will cost too much to fight them in court.

If I can use them, fine, if I can't, its not a huge loss. Also, a lot of programs ended before 2012 due to budget cuts and other government idiocy, so probably by the time DMC gets sorted out many of these programs will also have ended.

As for BTC prices going up or down, that is just something I'll have to deal with when I get there.

As for which exchange, I don't know. GLBSE is the largest exchange, and this is where I was originally going to IPO, however there is at least two other exchanges that will be opening soon that have also both shown interest in my IPO.

I'm afraid GLBSE just won't be able to handle doubling or tripling its daily volume, and I know the GLBSE owner is subscribed to this thread, so it'd be nice if he chimed in on this

ok, I voted for it, but, a couple thoughts...

have you done any research into what kind of breaks you can get putting up the turbine or solar or whichever way you end up going?

With the big push of our gov't for green, it wouldn't suprise me if the incentives for that would be substantial.

Also, it may be a better idea to just do an initial IPO for just the first round of costs you'd incur, and instead of holding onto the remaining BTC for so long, then do an SPO later on to bring in more funding later.

Could be a gamble either way. Full IPO now, hold onto the excess, and BTC goes up, netting youmore buying power later... or, IPO and later SPO, only to find that the BTC price has gone down instead...

Oh, and one more thing... have you put any thought into where you are going to be trading at yet? Got it down to a few choices? A big part of my decision to invest my meager amount of BTC would be based in a large part, of what exchange is involved too.

Anyways, wish ya lukc, and if you do this, I'll toss in a few BTC out of my 12 total

-- Smoov