Bitcoin Forum

Curious to hear what opinions are out there on Bitcoin Group (http://www.coindesk.com/bitcoin-group-makes-third-attempt-to-ipo-in-australia/). They've asked me several times to become a shareholder, I'm considering investing a few k

Is their business model profitable in the long term? Currently 60% of their revenue comes from arbitrage but they're trying shift towards solely doing mining. By February they expect to control 10% of the hash rate. 98% of the mining is done in China because of the lower cost of electricity.

Here's the prospectus (http://www.bitcoingroup.com.au/wp-content/uploads/2015/09/BCG_prospectus.pdf).

their prospectus says they have about 1% of the hash network. which means
roughly 0.25btc per block=13140btc a year (before cost)

which at australian dollar value.. is just shy of $5mill a year (before costs) (based on no hashpower/difficulty increase).

most miners know that difficulty increase reduce production unless you endlessly add more equipment
so im going to suggest that it would be more like $1.5mill from mining.. (before costs)
so now to take into account the cost of the equipment itself. leaves $500k
then the office, staff, legal costs and regulatory costs.. the money will soon dry up.

i would not suggest investing into the mining side of it. even if they increased productivity by 20 fold.. it still wont be enough to break even, even after a few years.

as for the 'trading' well, the prospectus has bad terms.. says theres no cooling off period and a few other naughty words traders shouldnt use.. and the number one rule of trading is that you can lose.

lastly their 'Australian Securities and Investments Commission' search results show they filed something in february.. and thats it.. nothing more, no updates, no progress,

If you invest, you can't expect any return within 3 years. In crypto world - that's eternity. Then, they may, or may not declare any dividends.

Although they're giving away voting control to the new investors (>60%), so technically it's possible that those investors can enforce dividend payment earlier (assuming they are able to communicate with each other and are independent of current directors).

as per reading the prospectus and the replys , i assume investing in the minning group is not usefull instead of with that money we can do trading or better play sports betting and earn 20% daily.

Did not know about it, thanks for sharing that.

In my opinion, there should be more reasons (other than arbitrage and mining) for joining the group. Both things are not really tangible services. Yes, they produce money and all, but nothing with "real" value. It would like investing in a company that only does forex trading and money printing (if that were possible) without producing any real good of services.

Not to say it is bad or cannot work to do so. But I prefer something more tangible for a big investment.

Another thing that I've thought about... How are they even paying their staff currently?

There's at least 16 employees but they're hardly profitable (http://www.bitcoingroup.com.au/2015-annual-report/)

http://www.bitcoingroup.com.au/wp-content/uploads/2015/07/Family-home.jpg

Also, here's their predictions

https://i.imgur.com/lvsTrEK.png

Exactly this! Three years is way too long. Keep your coins in your cold storage and be happy that you have them and control them! There is just too much scam nowadays, I wouldn't trust anyone!

Just my 2 cents though!

That's quite common, and disturbing, thing among most of the Bitcoin-related startups. Haven't got off the ground yet or have low profit margin business plan, but yet they often have overgrown teams/employees of 10-15+.

Although employee doesn't have to mean full-time staff, employing yourself, friends and family members is the easiest way to get your hands on investors' funds, whether or not your business makes profit.

I'm reconsidering... I can't make a subscription application anyways because I live in the US. I'll watch the stock price for a few months after the IPO before I make a decision.

I do not recommend investing in this IPO. All they are doing is raising capital and throwing that money to bitcoin miner manufacturers. Can you already see the flaw in this? They are not manufacturing there own miners! If the manufacturers knew that it would be more profitable to mine their own equipment, wouldn't they be doing it? The real winners are not the people who buy the equipment but the people who make them.

I haven't gone through their website but the sole fact you mention about them basing their business on crypto arbitrage is enough for me to pass on this offer. You cant make serious money on arbitrage to support venture of that size. 

the golden rule applies: don't invest in IPOs ICOs or whatever name they come up with paying for something upfront. this is even more true in our crypto world.