Bitcoin Forum

When do you anticipate seeing the first dividend from the bond?

Didn't find bfmines in the list of "awaiting approval" on BTCT.

0.004 is competitive now, but definitely not in 2 or 3 months time.

If difficulty continues to increase at 20% every 12 days for the next 10 weeks then the current value of a PMB should decline by around 67%.

Taking DMS.MINING at your figure of .0052 BTC/MHs currently, the value at the time of your IPO should be down to .0017

Hasn't the manufacturer of these miners already lost 100btc on a bet due to a missed milestone? I'm also reading that the rough initial testing of the chips didn't go well.

Even if they are luckier that most people before them, and don't miss anymore milestones, the mining difficulty is likely to be 3x-8x higher by the time these are delivered to you. This is compounded by the fact that when/if they do ship these, another large chunk of hashing will go online, increasing difficulty even further.
It's extremely likely that by the time these bonds are hashing, 1mh/s will be worth only 10-20% of what it is today.

Also, why would someone want to leave their coins dormant in escrow with you for 3 months? That is an opportunity cost, and one could easily out that coin into another stock or bond that pays 1%+ per month "guaranteed". Maybe you should have forgone the escrow and provided an interest rate?

Thanks for reaching out, TAT, I was expecting the competition to rear its head :-)

...and then the beanstalk will grow so high it will reach Mars!

Like I've said, in a worst case scenario, this is not as luxurious as in a better or best case scenario, but regardless it is already priced at close to half of other *AHEMTAT.VMCOUGH* PMBs, so for those that do not subscribe to "OMG Bitcoin mining is dead in two months, the difficulty is killing us all!" they at least get 50% of their investment back if they sell those other assets and subscribe to this.

This is far better priced and has a discount compared to options available today.

I have no problem with competition, it would be foolish for ANY mining asset to think they will be the last or dominant one. I just think you have earned the same scrutiny you provide to everyone else ;)

Belittle the projections all you like, but you and I both know difficulty is poised to raise by the range I noted, this is accepted across the mining industry, not some bit of paranoia. You have preached to no end about the impending hash onslaught while claiming gloom and doom to ASICMINER shareholders. Now you are joining the fray, welcome!

Also you don't have to mask your comparisons in coughs. TAT.VM pays its holders, and has been for weeks, BFMINES is selling promises on a moving calendar. There is no comparison, until you are actually hashing at least...

Untrue, there are other mining assets charging less for future hashes (AMC is a great example, and they even pay divs in the interim, using mining equipment they have already)

So, what you're saying is, don't buy this asset unless you think difficulty will stop going up? Sound advice.

For those of you that don't know, Furuknap and myself have had some lively debates over IRC, it's mostly just sparring, and I hope I don't look too petty giving him a hard time here, but in the end what he is selling is not deceptive or unethical (just overpriced! bazinga!) It's also not lost on me that I also sell a PMB, but I created mine partially to make it harder for people to overcharge for PMBs, including ones that seem more inexpensive..

This will be profitable, I hope it get accepted asap.

Thanks, tradefortress. The pricing is intended to be competitive. I want to have a reasonably priced PMB and this should be around 30% lower than current PMBs trade. Add to that a rougly 15-20% bonus dividend the first six months and I hope to see some interest.

On a price/mhs, BFMines will be the lowest priced PMB on the market.

https://i.imgur.com/ApJp8uv.png

If you're going to do comparisons you need to do them based on what they'd be charging when your hardware arrives.

Either that - or compare your price to their price minus the dividends they'd have paid whilst you waited for delivery.

Also this needs clarification :

" To compensate for this, the first months of operation will give approximately 20% higher coupons/dividends."

How many months?
Replace approximately with an exact definition.  It's a contract not a vague statement of general intent.

I'm not sure what's stopping anyone from setting up a 1 MH/s equivalent PMB with a price like BTC.002 and still making a killing. Even at 20% growth per period, the ROI for the next 9 months will only be around 65%...

Maybe I'm just on the bullish side for future difficulty increases, but nothing's come so far to make me think otherwise....

Would be very dangerous. If difficulty stalled or slowed for a long enough period you could be hurting. You'd also get miners selling off their hardware to buy your PMB, self-fulfilling your worst nightmare of diff not increasing.

That's why I priced TAT.VM above the cost of the cheapest hardware on the market.

I'm not sure what's stopping anyone from setting up a 1 MH/s equivalent PMB with a price like BTC.002 and still making a killing. Even at 20% growth per period, the ROI for the next 9 months will only be around 65%...

Maybe I'm just on the bullish side for future difficulty increases, but nothing's come so far to make me think otherwise....

PMBs can't sell anywhere near what they believe to be the break-even point or they're no longer guaranteed that they'll make a profit.

Despite pretending to be a bond (where the issuer bears the vast majority of risk and investors don't) most PMBs are actually making sure to price themself so that the investor has all the risk (in some cases to where it's guaranteed investor will make a loss).

That's also why you don't see PMBs trying to actually be bonds and guaranteeing return of at least initial investment by a certain date.

There is also risk in relying on difficulty rising a lot for quite a while when pricing.  Most such assessments rely on assuming other manufacturers, with no hardware yet, will reach market.  It wouldn't take too much of a fall in the price of BTC for some of those to no longer get to production - as they'd no longer be able to recover initial production costs from mining or sales whilst competing with those (ASICMINER and Avalon, maybe BFL) who have already recovered their NRE so can sell at a much lower margin.  People also look at the recent massive rises and ignore the earlier long, much flatter periods - forgetting that once a certain saturation point is reached growth will slow down again.

It's as dangerous to overestimate difficulty changes as to underestimate it - but PMB issuers in general make sure to overestimate by a TON so whatever happens they do well and maybe there's a slim chance investors will get back most of what they paid.

I'm not commenting specifically on this one's pricing BTW - just on what's generally been the case.

You may want to consider NOT calling it a bond - if you call it a bond it'll definitely make it harder for you to get moderator approval.

That's because it is NOT a bond - nowhere is there mention of returning capital at the end.  A few moderators will vote NO on anything that isn't a bond but calls itself one - as it gives the misleading impression that capital is secure and will be returned ('real' bonds have a face vaue that doesn't change - and which in nearly all cases eventually gets repaid).  Yeah I've heard the arguments that it IS a bond but is denominated in hashes - which fails the smell test immediately when the selling price isn't defined in hashes.

I'm staying out of the argument on price as, right now, I have no interest in defining, determining or arguing over what a fair price for PMBs is.  I AM pretty satisfied that furuknap isn't intending to scam.

Maybe a prediction of what you believe difficulty (and hence dividend) will be at expected delivery date would help make the value of this obvious?

If you're going to do comparisons you need to do them based on what they'd be charging when your hardware arrives.

Either that - or compare your price to their price minus the dividends they'd have paid whilst you waited for delivery.

Also this needs clarification :

" To compensate for this, the first months of operation will give approximately 20% higher coupons/dividends."

How many months?
Replace approximately with an exact definition.  It's a contract not a vague statement of general intent.

Upon delivery, any excess capacity from the mining hardware will be used to pay bond holders additional dividends for six months. The additional dividends is intended to compensate bond holders for not receiving dividends until the mining hardware has been delivered.

If you think you can sell more than 100,000 units are you going to buy more hardware (my understanding was that batch 1 was closed) or buy more hashing power from other device owners?

I very much agree, I would like to call it something else, but bond is the closest thing available as a definition.

I don't think it is.  I'd say fund is the closest of the three available (I agree it isn't exactly any of them).

What I do know, and have argued in a follow-up article (http://coin.furuknap.net/are-perpetual-mining-bonds-scams-not-really/), is that perpetual proportional growth isn't possible.

We see a meteoric rise now for the past few months of around 400% since February. If extrapolated, this would mean a quadrupling of difficulty every four months, and would mean network hashing power reaches 600 TH in September, 2.4 PH/s in December, and 9.6 PH/s in February.

To put that into perspective, the most powerful miner on the horizon now, the Jupiter from KnC, runs at 350GH/s and costs $8,000. KnC would need to sell 28,000 such devices to reach such a number, which would cost the market US$220 million. That's the absolute lowest number using current technology, and that number must be invested to get to a market which is US$131 million per year (at $100 per BTC). With equipment lifespan of 2 years tops, that means a massive investment with huge risks for a possible 8.5% yield per year, and even this assumes that difficulty rise stops in February, which is far kinder than a lot of the predictions the fear-mongerers claim. Go another four months with the doom-and-gloom predictions and you're at a point where you write June 2014 and the market would need to invest four times any possible return to keep the difficulty growth up.

Well, technically, the bond will be repaid at some point (following one of the clauses in the contract). However, the full principal will not be repaid.

One last point.  If you're listing now but escrowing until hardware arrives (and refunding if it doesn't arrive) then what benefit is there to investors in buying shares now rather than when the hardware arrives?  If you waited until then you could look at ACTUAL difficulty and adjust your price in either direction to compete with the market - and likely output - rather than having to guess now.  Plus avoid all the lost transaction fees on sales if the hardware never arrives.  And the investors would have the cash to use - with no CP risk - for that period rather than it sitting around idle earning noone anything.

I realize that since I designed this and put it up for vote, DMS.Mining has dropped in price, but I believe that is a somewhat different asset as it effectively is a double-exposure asset because in difficulty drops, people will buy .Purchase to sell .Selling and keep .Mining and vice-versa. I find it an extremely fascinating combo, but one that carries additional risk and complexity that 'regular' investors may not easily understand.

.b

I'm not sure it's correct to say DMS.MINING carries additional risk - it has risks other PMBs don't, but also misses lacks risks in PMBs with physical miners.  In all likely scenarios it will pay out the same as a PMB for a long time.  The single notable exception is if difficulty stays the same, drops or rises by only a  tiny amount for a protracted period of time - when after about a year it would close down with a final lump payment of 100 weeks.  But if that happens it would almost certainly mean you never got your hardware - as its hard to see a scenario in which your miner gets shipped but difficulty isn't rising much.

Anyway, good luck with the asset.  The contract's clear - and it's certainly better value than a lot of other 'PMBs' around.  I'm not a moderator but if I was I'd vote yes - but with a note that it is NOT a  loan and that capital will NOT be repaid (there's no guarantee of it ever being fully returned - just a definition of a buyout option).  Beyond that investors have to do their own valuations and comparison shopping.

Would be very dangerous. If difficulty stalled or slowed for a long enough period you could be hurting. You'd also get miners selling off their hardware to buy your PMB, self-fulfilling your worst nightmare of diff not increasing.

That's why I priced TAT.VM above the cost of the cheapest hardware on the market.

A Bond and you bet all on one Horse Bitfury, and only one Miner ?
what if Bitcoins mines you ?
No Expansion Strategy ?
first Photos from his Miner reminded me of an old Refrigerator with some old Electronics inside, but maybe i'm wrong.

and Pajaka pays now 3Mh/s as far as i understand.

News update:
Bitfury has just announced that the chips that will be used in the BFMines asset has been shown to work, and work better than anticipated. Originally, the goal was to produce a chip that could hash at 1GH/s per watt of power, but the initial results show that with certain power configurations, the mining efficency is 0.39 watts per 1GH/s of power.

The final details are not yet available and testing is still underway.

Source: https://bitcointalk.org/index.php?topic=228677.msg2515472#msg2515472

In other news, the asset needs two more Yes votes from LTC-GLOBAL share holders (with more than 10 shares held for more than 7 days) before it is officially listed and trading can begin.

If you are such an investor, please review the contract and proposal and cast your vote as you deem correct.

https://btct.co/security/BFMINES

Thank you,

.b

Noob question, but how can I buy shares in the IPO?

The IPO is still awaiting peer approval, but check the first post in the thread for link to the asset.

.b

Ah, ok. So if/when it is approved the Instrument will be open for trade and you will place the asset for sale at the IPO price on BTC.CO, is that correct?

In summary, however, please note the following:

• The term bond is somewhat misleading because the debt never matures and it does not have a face value as such. It may be better to think of this as a mining contract but the term perpetual mining bond is understood in the mining community as having this particular behavior.
• This is a perpetual mining bond, not a share in a company. You receive no voting rights and no other income than the stated coupon/dividend.
• The mining bond is perpetual, which means it will continue to generate coupon/dividend until terminated following one of the below conditions. There is no defined repayment date of the bond.
• The mining bond pays the equivalent of income from 1 mh/s. Any excess payments not explicitly stated in this contract is solely at the discretion of the operator and should not be expected.

Someone voted no.

Indeed, they did, but one more also voted yes, so with one more yes vote, the asset should be ready for IPO.

If you notice in the comment, the No was based on price, and I believe the market will decide whether the reduced price and bonus dividends will compensate for that. In other words, I take the No vote to heart but I think investors will need to decide for themselves whether the price is too high, too low, or just right.

.b

I think voting guidelines should be better defined, myself... yes/no should not be on the basis of "can I personally make money on this?" but rather "is this security good for the exchange as a whole?" and "does this pass the smell test?"

I'm tempted to grab a voting stake just to offset "nos" that obviously come from people who simply don't want to invest and vote "no" instead of simply abstaining... but the dividend is too low to justify locking up 2000 LTC or whatever the current price is.

This argument has been had before.  Problem with defining guidelines is that they then have to be enforced.  If they're enforced then someone hasto decide whether the vote was correct or not.  If someone gets to decide that they may as well save time and just approve (or not) securities themselves.

Personally I wouldn't vote NO just because I believed something was likely to be unprofitable - but others may choose to and may be correct in doing so.  My main criteria (when I have a vote - which hasn't been the case for a while) are that the contract is clear and that I've no reason to believe the operator would act dishonestly or without integrity.  But to an extent I'm biased by self-interest - as I trade rather than invest so investments being unprofitable isn't that important to me.

Others may believe that an unprofitable investment is not just bad for investors - but also for the exchange (as it removes investment capital from play and potentially could put investors off further investment after they realise they lost money).  I see that as a valid reason to vote NO - if it's what voters believe.

If someone put up a bond with a clear contract that was going to sell shares at 1 BTC each but stated it would only ever pay back 0.1 BTC would YOU approve it?  If not, why not?  If you'd vote NO on that why would you approve one where investors would make a loss but it wasn't so clear? 

NOTE:  I'm NOT saying this is an unprofitable investment.  But if a voter genuinely believes it IS unprofitable is it actually wrong for them to vote NO?  Think carefully about my example where a bond was explicitly unprofitable - as it's very easy to fall into an irrational and inconsistent position where you'd vote NO to something explicitly unprofitable but vote YES to something unprrofitable but less obvious.  And that position, of course, would be directly rewarding deception.  And that's why whilst I wouldn't personally vote NO I'm totally fine with people voting NO where they believe something is unprofitable (AND they believe unprofitable investments are bad for the exchange).

And Furuknap always has the option of presenting a model explaining how it IS profitable - to persuade them to change their vote.  Far worse is where someone votes NO and gives no reason at all - as then the issuer can't do anything.

That's EXACTLY what I meant by "good for the exchange" - if it's never going to be profitable for investors under any circumstances, that's a bad faith issuer, and that's not good for the exchange,

But that's my point.  I read the NO vote as being that whoever made the vote (and I've no idea who it is) believed this investment would never make a profit.  In which case you must agree the vote is valid.  Whether you believe they're correct in that conclusion or not is irrelevant - you've accepted that if someone believes an investment is definitely not going to make a profit they should vote NO.

Or do you believe it's only right if YOU believe there's no chance of something making a profit?  If so, maybe all moderators should be told to PM and check with you before voting ...

You can't say voting for X reason is right - but then claim that a particular instance of voting for X reason is wrong just because YOU say so.  It's what the voters think that matters - that's why there's a bunch of them and not just you.

The vote explicitly says "This asset in almost guaranteed to be a loser for investors.".  None can ever be more sure than "almost guaranteed" - as with ANY asset there's always the chance of a profit if the issuer decides to hand out money for free.  If he's wrong then it doesn't make his reason for voting wrong - just the math he used to reach the conclusion.  And furkuknap OR yourself can easily disprove him if you want.  If an issuer doesn't explain how investors WILL (or CAN) make a profit then it's not fair to complain if people do the math themself and then reach a conclusion the issuer maybe doesn't like.  It's the issuer's job to sell the asset - to moderators then to investors.

Great point. :)

Why are you wasting your time and money trying to push this through at 0.004 BTC per share?  No investor will make a profit at that price at the current difficulty, never mind future difficulties. So, why would someone buy shares in your stock when they can already get better value right now from DMS?

Do you traders not understand anything about mining? By setting the value for these bonds at idiotic prices, all you are doing is trying to rip off your investors. You can compare your stock to TAT.VM and claim that you offer a competitive value, but that's just ignoring the fact that TAT.VM was insanely overpriced to begin with.

I challenge you right now to show how an investor could make a profit from your stock at 0.004 BTC per share.

Hi,

Thanks for your comment and challenge. I believe I have responded to the question on profitability already and why I'm hesitant to provide scenarios for profitability. However, I can tell you that I've run the numbers based on the same analysis model I did with 100TH (http://coin.furuknap.net/can-100th-really-be-the-next-asicminer/) and used that to design the asset to be fair to investors, with a reasonable chance of reasonable profit.

Obviously, if investors believe in the perpetual proportional growth theory, they should not invest in anything mining-related; there is no way for any mining investment to ever make a profit, including assets like ASICMiner (they won't have enough BTC income to pay off new investments in roughly 2 years, unless BTC/USD price reaches $1000).

.b

If we assume a 10% difficulty increase per round, then the next 10 rounds will take just 12.7 days each, so say 13 days of dividends for each round. So, over those 130 days, a total of 0.00207722 BTC would be mined. In fact, with a constant 10% difficulty increase each round, over the next 57 successive rounds (next 2 years), only 0.00336580 BTC would be mined.

A reasonable price right now would be around 0.002 as that should actually allow investors to make a profit. If you insist on that 0.004 BTC share price, then all you are going to do is waste 5 BTC on the listing fee.

Difficulty doesn't need to increase for such a long time to deplete your asset. If we'd have another few weeks with difficulty increasing 15%+ each change, it doesn't matter if it normalises afterwards to e.g. an average 5% increase. The asset will be exploited already (meaning dividend and price will be much smaller).

To that point, any mining investment, hardware or security, would suffer exactly the same fate.

Keep in mind that 10% perpetual increase per change is insanely huge. In fact, if you extrapolate that, the network will reach 240+ PH/s by the next halving. Assuming that would be bought with the most efficient hardware scheduled today (KnC Jupiters) at a 50% discount, that would mean mining investments of $2.7 billion dollars, for an economy that is barely a third of that.

In fact, if you just account for 20% monthly increase over the next 12 months, you'll need $200 million worth of Jupters in fresh investments, or just over $15M per month. That will completely dwarf any mining investments so far. Even the 10K USB miners that AM spend 2 months not selling completely would be a drop in the ocean (20K BTC = $2M). You would need to sell the cash equivalent of 3,000 AM Erupter Blades per month for 12 months for that to happen.

Also keep in ming that a lot of the growth we see now has been sold months and years ago. Even combined, the entire natural growth of the network was wiped out when AM went down for service for a few hours.

I've previously argued against the perpetual growth theory in this article:
http://coin.furuknap.net/are-perpetual-mining-bonds-scams-not-really/


That will be your choice, and others will make their choices based on what they think is reasonable. Again, if you believe in the perpetual proportinal growth theory, stay away from any mining investments, hardware or assets.

.b

There's plenty of profit to made, even if difficulty did increase 10% each round. You just have to stop trying to make obscene amounts of profit for yourself. A Metabank BitFury provides 120 Gh/s for 2,160 USD. You'll be offering 100,000 shares at 0.004 BTC for a total of 400 BTC.

Hello furuknap,
I have a few questions for you:

1) I remember that you defended the PAJKA.BOND several days ago (at the time it was cca 0.08 for 3 MH/s share), are you still holding the shares? Or did you managed to sell them with profit or loss?

2) What is your estimate of avarege difficulty rise in 3-12 months?

3) What is your estimate of difficulty rise from now to August when you start mining?

4) What do you think is the probability that the amount you can gain from IPO would be bigger than the total amount paid in dividends? (the price of share will fall unless the difficulty drops, which is almost impossible with ASICs arriving).

You are, of course, free to buy a miner yourself, host it, maintain it, replace it if it fails, leave aside buffers for unforeseen maintenance, and essentially commit yourself to always be online during difficulty changes for as long as the bond exist. You must also always leave a buffer large enough to pay for at a minimum one week of dividends, which will be around 30BTC. Your estimates are way low, but of course this is turning a profit for me. Do you think I would give it away at cost and work for free just to be a nice guy?

You'll need to find someone willing to sell, of course, who would be fine with accepting that paying for a pre-order with the risks involved (remember, I paid for this before the chips were done and anyone knew whether they would work at all) will not yield a reward. Investors could have accepted that risk when they had the chance, but they didn't.

Of course, you are comparing raw materials to finished product. You must feel cheated when you buy a car that is made of $1000 worth of aluminium and you have to pay 20x that much. After all, car manufacturers are trying to make an obscene amount of profit for themselves.

What you are arguing is that investing in a potential gold mine is a waste of time because the mine owner should just sell the mine once gold is discovered for the rate he himself paid. The risk the mine owner assumes by buying a license, not knowing whether there is gold or crap in the ground, should not have any upside, according to you.

But the final argument is really this: If I believe this mine will turn a profit at 0.004, why on earth would I sell it for less? I would give money to investors that I would otherwise mine for myself.

So, your opinion and objection is duly noted, in public, and I believe investors are capable of both reading and making informed decisions based on your arguments and mine.

.b

I've been mining since 2011 and have no problem maintaining my own hardware. I also have ASICs on order. You try and make it sound like running a miner is difficult, but it isn't. It's no more difficult than running a PC. If you think that is worth 360 BTC then you are quite clearly insane.

I'm not comparing raw materials to a finished product at all. That's completely ridiculous. You are buying a finished product for x and trying to sell it for 10x, so stop trying to obfuscate this fact by talking nonsense.

If you believe that your stock will make a profit selling at 0.004 BTC when your miner wont even be online till August at the earliest, then you are obviously delusional. Why would anyone buy your stock when they can buy the exact same offering from your competitors at a lower price?

Thanks for your input again, I believe I have responded to these comments already, so I'll leave your characteristics for others to evaluate.

.b

You claim to have answered the questions I've asked, but I can't find those answers. So could you give us a summary. I'd like to know the following:

How much would I have received in dividends by the end of the year according to your predictions?
What do you expect the share price to be at the end of the year?

Like I've said on several occasions, both in this thread and elsewhere, I am hesitant to provide predictions on difficulty. If you asked someone six months ago to predict the difficulty today, you'd have answers all over the board (including such from 100TH who said a minimum of 600TH on June 1). Trying to predict six months into the future now is as futile as it was then.

The price and earnings of mining contracts depend greatly on the difficulty evolution over time. If you believe in the perpetual proportional growth theory, you shuld not invest in any form of mining, mine included.

If you believe that suppliers will not be able to keep up proportional growth in the deliveries, then investing in mining makes sense, mine included. I lean towards this scenario far more than I lean towards the perpetual growth theory.

Keep in mind that for example BFL's or Avalon's effects on mining is also proportionally smaller with the same deliveries when difficulty grows. What seemed like a complete marketbreaker when BFL announced their minirigs at 1,5TH is now merely a Meh! Deliveries need to keep up with difficulty growth for the growth to continue. Has Avalon increased their predicted deliveries by 700% since February? If not, their predicted deliveries will now have a 700% smaller impact on the difficulty growth when they arrive. The 100TH mine was more than five times the total network hashrate when announced; now it's around 40% and dropping.

In short, I believe the difficulty growth will slow down over the next few months. How much is beyond my abilities to predict. Anywhere between those two scenarios, and it's a much more complicated question and those predictions tend to be all over the place again.

.b

I believe I have responded to the question on profitability already and why I'm hesitant to provide scenarios for profitability. However, I can tell you that I've run the numbers based on the same analysis model I did with 100TH (http://coin.furuknap.net/can-100th-really-be-the-next-asicminer/) and used that to design the asset to be fair to investors, with a reasonable chance of reasonable profit.

Earlier, you said:


So, what answers did that analysis provide to the questions I just asked? You keep saying you've done the maths, yet I'm asking you to show me and you refuse. Why won't you show us your numbers?

I agree that perpetual proportional growth theory is flawed, especially for the later periods. For the next couple of months though, I think we'll see at least a few 10% increases per round. The current round is just over half way through and is just over a 5% increase. Now, factor in that BFL started shipping Minirigs last week which may not be online yet. The difficulty for the next round will definitely see at least a 10% increase.

July is set see 100TH and Avalon based systems come online. August is set to see AMC's Avalon based Fast Hash systems come online and Metabank's BitFury 120 come online. September is set to see KnC come online. You'll see difficulty spikes for all those periods so 10% increase per round for the next couple of months is entirely plausible.

On the other hand, if, let's say network hashrate flattens out at around 1PH/s, the asset yields far more profit (around 30% per year after initial price being repaid). If it continues to grow to 50PH/s until 2016, which is a 15% per month perpetual growth, the asset is not profitable (nor is any current mining investment) but flattens out at a return of 99.82% of initital investment.

Just as a follow-up on why I chose the 1PH number; we're currently at ~170TH and know about 200TH from Bitfury (100TH and Metabank/private investor). Further, I think I read that KnC has sold around 800 Jupiters, which is another 300TH. AM claims another 100TH is coming online from their next wafer. This comprises 670TH.

Avalon is a bit of an unknown because we don't know how many devices have already shipped and are thus already accounted for in the 170TH. Same with BFL; we know a large portion of their orders are Jalapenos ordered last summer, and BFL claims all those have shipped (the ones prior to August). We don't know what the remaining portion comprises. I really don't know how to evaluate BFL, but if we hipshot their deliveries at 50% of all the other mining, that comes out to just over 1PH/s.

At that point, we're talking about everyone having to move to next-gen technology and that may take months or years due to the increased difficulty of smaller processes and higher NRE cost. I would say all bets are off about whether there will be growth at all, and maybe we'll see less profitable miners (like AM BE Blades) being switched off, reducing the difficulty again.

Although minor, we also know that GPU mining has now finally reached the point of 'not worth it' for a lot of miners, so there may be some decline based on GPUs either stopping or moving to other coins. This, however, is likely a small number, perhaps <10TH/s which was half of what was running in February when AM started deploying ASICs.

.b

The 3 Avalon batches come to around 100 TH/s and chip orders come to around 150 TH/s.
AM claim that 200 Th/s will be incoming, 100 TH/s is just the first part of that.
For BFL, there's an unofficial pre-order list which shows around 400 Th/s incoming, their initial 75,000 chips come to about 300 Th/s though.

This may very well be correct, and there are likely unknowns as well. Like I said, speculation is on whether all of these will be delivered in reasonable time (or at all). I don't have all the answers which is why I do not wish to speculate.

However, consider too that mining hardware will rapidly become unprofitable. For example, BFMines is already cheaper than buying AM blades and that doesn't even account for the cost of operating blades. This is, as far as I know, the first mining contract that IPOs below the price of available ASIC technology, which I feel it must be to offer a real alternative to operating your own mine.

.b

All AM hardware in insanely overpriced so that comparison is completely meaningless. AM's USB miners have just been reduced in price though to 1 BTC and they do at least 330 Mh/s, so they now offer better value than your stock and are readily available.

Then I strongly suggest you buy those if you value them higher.

.b

You say that like it's just an opinion of mine and not actually a fact. Those USB miners are clearly better value than your stock. You get at least 330 Mh/s compared to the 250 Mh/s you'd get from spending 1 BTC on your stock. You also get to start mining BTC now, not a couple of months from now.

Prices right now:


But anyway it's doubtful if BFMines will get approved, it's waiting for another YES vote since days...

I'm sorry, what was that? BFMines is still the cheapest contract on the market. DMS.* carries additional volatility risk, which is likely going to be of concern to those that are the targets of these types of assets (investors who would want an option to get out, not traders who would speculate on short-term price shifts).

And really, I'm sure you're not comparing running your own hardware with having someone run the hardware for you. Or are you OK with farming your own wheat rather than buying flour in the store?

My point with previously comparing the hardware cost to mining contracts is to show that they are real alternatives (and, to some extent, that ASICMiner in particular is charging ridiculous prices for hardware) not to indicate that there is no extra cost or risk involved with running hardware.

The final vote, however, is of less concern now as there are wheels in motion to come up with an alternative. I will announce news on Friday June 28 regardless of whether the vote comes in.

.b

The comparison to mining bitcoins would be asking a Star Trek food replicator for wheat.

Only if you assume that replicators are free of maintenance, risk, and energy cost :-) I'm sure there are some interesting episodes in Voyagers to speak to that alternative.

.b

I may very well be misunderstanding the offering or maybe I am just daft. Is this mining bond really just selling shares of a 120 Gh/S Bitfury for initial market value of 400 BTC?

No, this is a mining contract for 1mhs per contract initially sold at BTC0.004. There's more to it than just shares of hardware, but technically, these contracts can be backed by anything.

I've addressed this to some extent in my latest article (which should be mandatory reading for anyone considering purchasing contracts):

http://coin.furuknap.net/bfmines-bitcoin-mining-contracts-ready-for-listing-heres-how-you-should-evaluate-investing/

.b

DO NOT BUY!! RIPOFF!!

For those that don't know, furknap sold all his ASICMINER shares for 1.7btc and apparently used the proceeds to purchase this miner. He must, by now, realize his folly, and that there is an almost 100% likelihood that buying this miner is a losing trade and will never earn back what he paid.

He is trying to pass on this loss to bitcoin investors like you by launching this offering.

Although the asset has been approved, I strongly encourage people to stay away as it is a guaranteed money loser. IE: You will NEVER earn back in divs what you will pay for it. Furknap knows and is basically offering a way overpriced PMB.

-helixone

On the positive side, I think your contract is clear and complete.

On the negative side, your asset is (just like nearly all other mining bonds) overpriced.

Please tell me, how high would the average difficulty increase allowed to be at a maximum, if I want the profit to be at least as high as with coinlenders? (27% APR)

Mining Bonds are simply a bet of the issuer against their own investors. One side has to lose, and I doubt it'll be the side who makes the rules...

In what timeframe?

Whatever you like, just use 6 or 12 months. You also don't have to use "perpetual proportional growth" numbers, you can take whatever numbers you want for the difficulty jumps. It only has to generate more profit than coinlenders in the same period and the numbers should be valid (thats to be discussed I guess).

That discussion is not really interesting because we're talking about two vastly different assets. However, to please your inquiry, assuming 350TH/s netowrk hash rate and mining start in August (mining could also start in September), BFMines makes more money (about double) than coinlenders for the first 6 months with a difficulty increase of 10% per month.

DO NOT BUY!! RIPOFF!!

For those that don't know, furknap sold all his ASICMINER shares for 1.7btc and apparently used the proceeds to purchase this miner. He must, by now, realize his folly, and that there is an almost 100% likelihood that buying this miner is a losing trade and will never earn back what he paid.

He is trying to pass on this loss to bitcoin investors like you by launching this offering.

Although the asset has been approved, I strongly encourage people to stay away as it is a guaranteed money loser. IE: You will NEVER earn back in divs what you will pay for it. Furknap knows and is basically offering a way overpriced PMB.

-helixone

You can of course believe what you want, but there is no reason to be a douchebag about it. What does the fact that he sold ASICMINER at 1.70 have to do with anything? I sold a bunch at 2.20 and sure, while it in hindsight was a bad sell I also purchased them under 0.50 so why cry over making 5x your money?

It also doesn't much address comparing his contract to alternatives.  It would have been more useful had it provided formulae to work out return for standard scenarios (e.g. difficulty rises steadily to X until end of year then stays constant - what is return by end of 2014, so people could plug in different X).  But noone else provides that so no reason why he should.

I will, later today :-)

.b

Seems you won't  ::)

Are we not at 6PM UTC?

so spending 12 btc would be like having a miner of 3ghs?

Pretty much, except you don't have to pay for electricity, maintain or configure it, risk it breaking, or suffer the noise or added heat.

.b

for how long will I be having it?is there a deadline?

Nope, you keep it forever or until the asset closes for one of the reasons outlined in the contract. In short, as long as I'm alive (or I die and someone takes over) and as long as the contracts produce a positive cashflow (meaning mining minus expenses is positive), the contracts remain.

.b

Pretty much, except you don't have to pay for electricity, maintain or configure it, risk it breaking, or suffer the noise or added heat.

.b

How will you deal with the difficulty?

If i get 12 btc of bonds so 3 ghs miner in one week I will produce 0.50 btc,that's ok for now but if the difficulty keep going up with my 3ghs miner I won't do much.So that means that  I should be getting more bonds if I want to keep producing a decent number of BTC.

And you don't get any transaction fee money either.

Why wouldn't he get that? This is a physical miner that does real mining work; any income from the miner will be distributed, regardless of whether it is block rewards or transaction fees.

You bring up a good point, though. I'm not sure how TAT.VM handles this as a virtual mine; his contracts only states the block reward as basis for reward. I'll ask him.

BFMines, however, pays out what is actually mined.

.b

I stand corrected then, if you do pay out transaction fees then I think your security is the only PMB that does so.

Is it me or there is almost no information about the hardware ordered?

What is is, who is making it? What reasons do we have to believe they will deliver (and deliver hardware that work)?

edit: is it https://bitcointalk.org/index.php?topic=226846.0 ?

You can of course believe what you want, but there is no reason to be a douchebag about it. What does the fact that he sold ASICMINER at 1.70 have to do with anything? I sold a bunch at 2.20 and sure, while it in hindsight was a bad sell I also purchased them under 0.50 so why cry over making 5x your money?

The point is that a fixed hash PMB has to be bought below a certain point to have any chance of even breaking even. With ~6-9 difficulty rises expected between now and the promised start of mining, it's highly unlikely investors will make much more than HALF their money back if they pay the IPO price.

Furuknap, you asked for discussing it here.
Most people think your offer is just a ripoff.
It's an offer for those who can't count.

It is 0.004 BTC for 1 MH/s, so it is 4 BTC for 1 GH/s.

For 4 BTC one can buy, for instance, one BFL 5 GH/s miner - shipping end of August.
Or one can buy something from the second table here: http://decentralizedhashing.com/bitcoin-mining-equipment-table/, getting up to 10 GH/s - shipping planned in August.

Better: the KnCMiner Jupiter model has a ratio 0.25 BTC for 1 GH/s - sixteen times better than yours.
There are many group buys or bonds for this device, for instance: https://bitcointalk.org/index.php?topic=226319.0.

For the 120 GH/s device (the same as yours) there are such initiatives too: https://bitcointalk.org/index.php?topic=224332.0
And new ones are starting...

So, you think that it is five months until October.

I'm sure you trust the numbers you come up with, so you should just avoid buying these contracts. If those are your expectations, as I said, there's no point in you gambling against those expectations.

.b

P.S. - If you honestly think this isn't a bad investment for buyers of your security, and aren't trying to rip people off, you *really*, *really* need to do your homework. (They ARE going to lose money.)

I can see no rational basis for assuming a 15% rise per month in the next 2 months for difficulty.  Even a quick look at current trends shows that in recent months the rise is consistently around double that.  That's with only 3 companies providing ASICs - and one of them (BFL) only just really getting going.

The argument you've made a few times about difficulty having to stop rising because of the cost of hardware ignores three things:

1.  The price of hardware WILL fall - and massively so.  Current prices are a massive markup on cost (after NRE has been recovered) and will inevitably drop through competition once supply becomes reliable and demand becomes somewhat satiated.

2.  If the price of Bitcoin rises then that immediately allows more hardware to be added without problem.  Long-term the price of Bitcoin has to rise or it will stagnate and die (the cause/effect is actually the other way round).

3.  All the time people can sell unprofitable bonds/shares to the public they'll continue buying hardware and selling shares in it.  That it isn't rational for investors to buy their crap doesn't make it irrational for them to sell it - and it will continue even if mining is unprofitable before the issuers have taken their own (risk-free) cut.

You've put your credibility on the line for a very small sum - I hope that works out well for you.

And if all Bitcoin mining investments are unprofitable, do you then think that Bitcoin will survive?

What happens if the mining equipment is never delivered?

Or if it is significantly later to be delivered (like BFL)? At what point will you return the IPO money to investors, if at all?

Like I said, that number isn't really relevant in terms of comparing mining assets which was the point of that article. The number is relevant in terms of evaluating mining investments as a whole only.

I'm not bashing DMS.Selling for never being able to return 100% ROI

I know you said that - and you were wrong the first time you said it.

That number is VERY important when comparing a security not mining yet (yours) to ones already mining (the ones you compared it to).  Saying it a second time doesn't make it true.

Easiest way to explain why it's relevant is to consider an extreme example - a ridiculously extreme example.   Imagine that difficulty rose by 1 million % at every difficulty change from now until delivery of your hardware.  You say that doesn't matter for comparison purposes - yet it rather obviously does.  As the income mined before the next difficulty change for things already mining would exceed what yours would mine from now until you died peacefully of old age.

When comparing yours to ones already mining the key to consider (as you can't compare them purely on price) is how much extra will they mine compared to you in the period before your hardware arrives.  Rather than considering it in terms of difficulty it's easier to explain when considered in terms of earnngs (those are inversely proportional to difficulty so conclusions drawn are valid).

If earnings/day now are X
Earnings per day at delivery now are Y
days to delivery are Z

Then we can approximate earnings (by assumign a steady change in difficulty or earnings) extra from a competitor before yours arrive as being  Z*(X-Y)/2 - i.e. the number of days times the total change/2.  Rather obviously as Y gets smaller (difficulty increases more so earnings reduce more) that number increases.  But not only does increasing difficulty make Y smaller (and the difference in earnings greater), it also makes the starting difficulty for YOUR mining higher - meaning your bonus is smaller AND is competing against a larger deficit.

I'm not seeing how you could possibly reach the conclusion that difficulty change BEFORE your hardware arrives doesn't matter for comparisons.  It's CRITICAL when comparing.  Difficulty changes AFTER your hardware arrives are, indeed, not all that relevant for comparisons - but that's NOT what you were asserting as you were specifically referring to difficulty changes BEFORE your hardware arrives.  And those are the ones that are obviously wrong - and in a direction which unjustly favours your own security in comparison to ones whose hardware (or virtual hardware) is already mining.

Hm, I'll need to recheck this when I get back. You may be right and if so I'll update the article.

Where do I find the other price adjustments? I can see only one adjustment from 0.004 to 0.003582. Price adjustments have to be made for every future difficulty increase, for dividends and for the asset itself.

The running your own hardware versus investing in a mining operation has been discussed to death already so I'm not going to go over it again. I'm sure you and other investors are perfectly capable of reading through a thread before you or they make up your mind.
(...)

*¤&%&%&!!!

I just spent three hours writing a full response, and the browser crashed. *sigh*

OK, here we go again, luckily most of the work was in validating the numbers...

I checked again, and you are wrong. However, by forcing me to recheck everything, you pointed me to a mistake I had made in my first model. I'll explain that and post the updated numbers, but let me first explain why you're wrong, and let me do so with the extreme example you had.

In my model, I am deducting the dividends earned by the competing contracts from the prices of contracts currently mining. This means that in the analysis, any dividend earned works in favor of the competitor. I believe you mentioned this wasn't fair and that one couldn't compare minig with a non-mining asset, but you may have misunderstood the model as it already accounts for this.

However, If difficulty goes up 1 million percent then no dividends will be earned at all, so no price deduction takes place.

Of course, this also means that everyone loses everything, so the question really becomes who pays more for their shares because that determines how much an investor will lose. Because BFMines is priced lower than competitors per mhs, that means investors lose less with BFMines (they would lose 0.00468 with TAT.VM and 0.00400 with BFMines).

To be accurate, this depends on when the difficulty goes up by a million percent. If that happens next week, then dividends earned until next week will reduce the loss.

To err on the site of caution, for my model, I have actually assumed that no difficulty changes happen in July at all. This favors competitors, due to the balance between the BFMines bonus being lower and the decrease in reduction from the competitors, the effect isn't too great (a percentage point or two). If I include the changes during July, it favors BFMines.

Now to my error.

In my first model, I had wrongly reduced the dividends by the same rate as the hashrate increase. In other words, if hashrate increased 15% then dividends would decrease 15%.

This is obviously wrong, because if the difficult went up 100%, the dividends would then be zero, when they should be 50%.

In the fixed model, I now correctly use the growth in difficulty to calculate the returns. Although not entirely correct for a physical mining operation, I have used the formula from DMS.Mining, as I'm sure you'll approve of that being correct (or at least equal for all).

I should mention that when designing the contracts, I used the correct method.

So, the results...

My statement from the article is that the chosen difficulty shouldn't affect comparing the assets 'too much' (only mining investments in general). The 'too much' is of course a relative term, so let me show you what it means in practice.

Here are the results from the updated model using 15% as the monthly change:

https://i.imgur.com/qNjC65e.png

Here are the results from the updated results using 30% as the monthly change:

https://i.imgur.com/3EYN0zr.png

As you can see, the change from 15% to 30% affects TAT.VM competitiveness by 1% point only. This is due to the reduced price reduction countered by the reduced bonus. I'm thinking this is within the limits of what you can call 'not too much'.

The overall effect on mining profitability, however, is reduced by just over 14% for all assets.

I had spent a long time describing the formulas before my browser crashed, and I can't be bothered to rewrite it all again, so I've uploaded the Excel sheet to Google Drive so you can verify the formulas yourself.

https://docs.google.com/spreadsheet/ccc?key=0Am7kSNaxKrIMdGg1WnI1ZFp2RTh1ZXp2NVpCNkxIVGc&usp=drive_web#gid=0

I should point out that if updated with today's prices and the reduced dividend payout time for competitors until September 1 (still not accounting for price drops), BFMines is again the cheapest mining investment per mhs on BTCT:

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

This does not include any transaction fees, however, which would further favor BFMines by a percent or two, depending on what the transaction fees are. Of course, if the transaction fees goes through the roof, that further increases the benefit to BFMines contract holders, as unlike TAT.VM at least, the dividend is based on real mining rather than a return formula.

Speaking of which, and slightly off-topic; does DMS.Mining pay out transaction fees?

The effect you mention with your extreme example slightly affects the analysis if the increases are within normal expectations only, but the effect is so small that I call it, with good conscience, 'not too much'. For a doubling from my chosen numbers, the effect is around 1%; for a quadrupling, the effect is another percent.

However, from there on, the effect is turning around and is eventually cancelled out, so if there's an increase of 240% per change, BFMines is faring better again, and with a change of 1 million percent, the effect is all but cancelled out. In other words, BFMines, with its lower price and bonus is effectively priced at the same level as TAT.VM was when I wrote the article.

With the price rise on TAT.VM today, BFMines is the cheapest mining contracts on BTCT, regardless of whether you include any of the factors that would further favor BFMines.

.b

No matter what, 15% estimated difficult increase is far too low, probably by a factor of 2, like Deprived said. This next difficult increase is going to be around 15% just by itself!

Thanks for the detailed reply - now I'll have to do some math as well (or maybe not).  A few points I can comment on without even doing math:

1.  I agree that at current prices, if you make the assumption that your PMB will be profitable then it represents better value than the PMBs you compared to at their current prices (possible exception being PAJKA if their extra hardware arrives very soon - and I make no comment on comparisons to assets that aren't PMBs).  However : your whole basis of comparison assumes profitability - by measuring it based on selling price rather than on returned capital.  Specifically, if yours makes a loss (and if it does, so do the other PMBs you compared to) then the small difference becomes increasingly larger as a percentage of any of returned capital (total dividends paid), loss made etc.  I don't make this point to argue you should project total earnings - that would be unreasonable and I dont think ANYONE can do that accurately (certainly not for any model which involves profit being made) - just to point out that the whole basis of comparison you use assumes profitability.

2.  At a cursory glance it appears you may have mistakenly forgotten to apply the difficulty change to your bonus calculation.  Increased rate of change doesn't just change the value at the start of September but also the rate at which it drops DURING september hence having a double-whammy impact on it.  Rather obviously when your miner arrives so will be the rest of that load - so there should be a spike in difficulty not a levelling out.  That won't have a huge impact on anything - though if the difficulty change-rate were continued over the whole period in which the bonus was generated it would have a more significant impact.

3.  Annual yield appears to be calculated as though once your Miner arrives all ASIC manufacturers will immediately stop producing ASICs out of sympathy - i.e. there'll be no further difficulty rises for a year.  Calculating an accurate annual yield would be hard - but implying that difficulty will never rise again is rather horribly misleading.  The column is misleading giving an entirely false impression of what returns investors could expect in a year.

4.  You asked about DMS.Mining and transaction fees.  DMS.Mining does NOT pay any equivalent of transaction fees.  Nor do any existing PMBs (that I'm aware of).  That's because all current PMBs pay based on theoretical output from mining rather than actual output from mining.  That means no transaction fees but also no Stales, no orphans, no reductions if net connection dies, no reductions if hardware breaks down etc.  You now appear to be saying you pay based on actual mining results - are you saying if the hardware breaks down you'd suspend dividends?  If not then how would you be calculating transaction fees for periods when your hardware was inoperational?  The approach I took with DMS.Mining (and taken by all current PMBs that I know of) if that the loss of transaction fees is more than compensated for by 0% down-time and 100% efficiency.

5.  Your repeated references to "cheapest on BTC-TC" should be changed to "cheapest of the ones on BTC-TC I chose to compare to".  That you choose not to compare to DMS.Mining is your choice - and your right (even if the stated reason - price volatility - is debatable and irrelevant for investors rather than speculators).  But you can't make a claim about "cheapness" that includes it (which any claim relating to "all" does) when you chose not to include it in your comparison.  NO PMBs (unless yours is an exception) are actually mining securities - as ALL of them have payouts defined independently of the output (or even existence) of mining hardware.  The ones that actually have hardware only have it as proof of capability to pay - not as the source of dividends (as they ALL are committed to paying out even if the hardware fails/is stolen).

So I doubled it. Results were the same, like I said.

I quardupled it. Results were the same, like I said.

At 250% growth per change, guess what, the result were the same, and I use 'the same' as being within 2%.

In fact, if I ran the extreme examples of one million percent, it favored BFMines compared to the others by 'more', being defined as 4%.

I'm wondering when people will realize that there are other people that aren't just out to scam everyone, but who actually builds something meant to benefit all in a fair way.

.b

I don't like any of the PMBs. In any case, you can't compare them to BFMINES based on price if you aren't even mining yet.

Even with a 15% difficulty increase, with you receiving the equipment on 10/1 (which is optimistic), each share will only produce 0.00087677 BTC before 1/1/2015!  ::)

Clearly furuknap believes as we do that nobody who invests in BFmines will actually make their money back, as this is how he profits in the first place. He has to make a face in public in order to trick people into wasting their money on his bond. Arguing with him is pointless.

Even with a 15% difficulty increase, with you receiving the equipment on 10/1 (which is optimistic), each share will only produce 0.00087677 BTC before 1/1/2015!  ::)

And like I've also explained several times, if you believe in the PPG theory, no mining investments will ever make sense.

.b

You have to add the remaining shareprice to the sum of all received dividends to calculate the overall profit or loss (not that this would make it significantly better for the investors).

Updates to Contract - Upcoming Motion

I will be posting a motion to update the BFMines contract today. The changes to the contract are done for a few reasons.

Technically, no motion is required as contracts do not have voting rights. However, I wish to include contract holders in the decision process.

In summary, the changes are the following:

• New Clause for Further Changes
  I'm introducing a new clause for implementing contract changes in the future. The clause will allow me to change the contract unilaterally only if those changes are to the reasonably perceived benefit of contract holders or are of no consequence (such as a name change, spelling corrections, and so on). If changes are required that are not to the benefit of contract holders, changes must be accompanied by an offer of a buy-back as per the terms in the contract.
• Rebranding as a Mining Contract
  Although I took care to explain mining bonds as part of the contract, it is apparent that not everyone has understood the differences between a traditional PMB and BFMines. As such, I have removed references to PMB and bonds in the contract, to be replaced with the term mining contract. To elaborate on the differences, I have written an article and I ask you to review that before casting your vote.
  http://coin.furuknap.net/comparing-bitcoin-mining-contracts-and-mining-bonds/
• Removal of Named Hardware Provider
  The initial contract stated Metabank as the hardware provider. However, to allow for replacement providers in case of issues with Metabank and to support future expansions as per the contract, I have removed the reference to Metabank and replaced it with a general reference to hardware.

No other major changes are done at this time, but changes that benefit contract holders are in the planning stages.

Although BFAssets is still the majority share holder, I will not trumph these changes. However, my recommendation is that you vote Yes to approve these changes.

.b

When you enter a contract with someone NEITHER party has the right to unilaterally change the contract.  These aren't shares in a company - where there's shared ownership - they're contracts/bonds.  Removal of voting rights only means investors have no say in actions you're allowed to do WITHIN the contract - it in no way, shape or form, allows you alter the contract itself.

You're right, that was badly worded by me.

The contract changes will be done to include the ability to unilaterally change the contract, but also to ensure that contract owners that do not approve of these changes will be given a contractual right to a buy-back. I should have included this in the initial contract, which was an oversight on my end in the heat of battle. I was more concerned with protecting contract holders against bad events than opening for the chance of good events.

The planned changes are to the benefit of contract holders only and will be published in advance with due notice. I intend to give contract owners a chance to sell back contracts if they strongly disagree that the changes are in favor of them. I wish to be very relaxed on execution of this policy, but included the phrase 'resonable' to avoid exploitation.

However, the way the contract is formulated now, there is no chance for me to improve the terms. For the sake of an extreme example, if we suddenly got 1000 Metabank miners instead of one as a nice gesture from Metabank, that would be great and I'd love to improve the hash rate of the contracts, but right now I cannot.

Another example (not planned, just an example) of a change that would not be clearly in favor of contract holders would be to permanently include the excess hashing power in dividends. This would give contract holders better dividends, but because this also introduces more risk of loss due to hardware failure, it is not completely and undeniably a benefit and would thus be implemented only combined with an offer to buy back contracts from those that wish.

.b

First there's the weasel words of "the reasonably perceived benefit of contract holders".  Reasonably perceived by whom?  If by contract holders then why are you trying to allow it unilaterally - when there's voting system that allows factual determination of what the perception of contract holders is.  If you mean "reasonably perceived" by yourself then it's meaningless - as it gives you free reign to do anything you want so long as you claim it's "reasonably perceived" by yourself.

In any event, any change that tries to make the bonds/contracts into some kind of communal ownership asset - where some holders can vote to change the rights of others - should NOT be allowed for anything claimed to be a bond.  It removes the certainty of expectation that holding a bond should deliver.

The second part appears to be attempting to remove your obligation to pay the equivalent of 1 MH/s of mining output and instead replace it with the actual output of your hardware.  That removes all guarantee of payment - and changes the entire nature of payouts from being PMB-like to be equivalent to owning shares : just with a much larger management cut than things openly admitting to be shares charge.

A 1.1% transaction fee bonus in no way compensates for stales, orphans, loss of net connection, equipment breakdown etc.

Even in your article you appear confused over this yourself - on the one hand saying invnestors get what's mined and on the other saying (in big type) :

"Note: During the first six months, while the hardware is still under warranty, the surplus mining power  in BFMines is paid out as a bonus to contract holders, meaning that for half a year, contract holders get more dividends than guaranteed."

What's guaranteed if it becomes a contract?  What is the absolute minimum investors will get paid per dividend?  There isn't one.

The third change is the worst of the lot - it would be fine with one change.

As your proposal stands, if the original hardware doesn't show up you could then order from someone else - and evenn if it didn't arrive for another year investors would be locked in at the same price and receive minimal return when hardware finally arrived.  If you want the flexibility to use other hardware then a fair change would be to allow other hardware to back the bonds/contracts so long as it was operational by the end of September (the originally defined target time-scale).  That removes the loophole in your proposed change where you can keep changing proposed hardware sources until either hardware prices are tiny OR market price is so low you can just buy back per the contract and pocket a fat profit without ever having mined anything.

[Reasonable is a fairly well-understood term and is perfectly usable in legal contracts. The term "beyond a reasonable doubt" is an example of this. It will not be unilaterally determined by me as I can be very unreasonable at time. That is why the intent is to publish changes well in advance.

More specifically, your hardware will generate some number of coins over its lifetime.  Some portion of those will go to your investors - and the rest to you.  It's therefore the case that any change in what investors will receive is going to have an opposite impact on what you receive (this is obviously a simplification).  It's thus impossible for you make decisions on their behalf - as you have an explicit conflict of interest.  That's why contracts for bonds/contracts should (in general) never be allowed to be changed other than unanimously as there's no shared interest between the issuer and the counter-parties.

Now there ARE exceptions to the above - areas where the amount to be shared out can potentially be increased for example.  The contract shouldn't be covering those areas in the first place - so, for example, your contract (rightly) doesn't define which pools you'll mine on as there IS a shared interest there for you pick whichever gives the most income.  In general anything which changes the basis on which payments to investors is calculated will have a conflict of interest - where it would be entirely inappropriate for unilateral changes to be allowed.

FWIW your clarification of how you intended to change from a PMB to a contract (where you guaranteed PMB minimum payments) definitely IS a change in favour of investors.  But why are you having the vote before you've finalised the new contract?  Get it all done at once THEN have the vote.

Actually, this is not quite the case with BFMines. All revenue from the mining operation goes to the benefit of contract holders. I get nothing, except from the proceeds of the contracts I hold myself (and like previously disclosed, I do hold contracts).

The surplus of the mining (the 15-20%) does not go to me, but is used to cover expenses, provide repairs or replacement hardware if required, cover unforeseen events, downtime, and so on.

I do not use this surplus to pay for backup hardware. I pay for that from my own funds and while that hardware is mining, I get the proceeds from that. Because I bear the responsibility of downtime with BFMines, however, it is in my best interest to use my own hardware as backup in case of prolonged downtime or catastrophic failure (until contracts can be repurchased).

If using my backup hardware is required, I intend to charge the cost of that (ie loss to my personal income) to the funds accrued from the excess capacity in BFMines, but beyond that, I get no other benefits than other contract holders have.

That's a lot of waffle to totally miss the point.

Either the changes DO alter what investors get or they don't.

If you're saying they get extra but it doesn't come from you then where is it coming from?  Or was there some cash that would be sent to a null address in the old contract?  The surplus is used to cover costs that YOU have responsibility for - so anything coming from that IS coming from you indirectly (as YOU have to cover the costs - so if less gos to that from the surplus then more has to go to it from you).

And it isn't legitimate to have a motion where the content of the motion is hosted elsewhere and so able to be amended during or even after the vote.  The contract to be voted on should be posted in the motion OR cryptographically signed and the hash posted in the motion.

Contract


Overview
 
BFMines is a perpetual mining bond (PMB) mining contract backed by physical hardware. The contract pays a dividend equivalent to 1 megahashes per second (mh/s) of mining power.
 
Note: The initial term used for this type of asset was perpetual mining bond, but as the term is somewhat misleading, I have rebranded it as a mining contract.
 
Please read the following article to understand what mining contracts are:
 
http://coin.furuknap.net/understanding-mining-bonds/
 
In summary, however, please note the following:
 1.This is a mining contract, not a share in a company. You receive no voting rights and no other income than the stated dividend.
 2.The mining contract is perpetual, which means it will continue to generate dividend until terminated following one of the below conditions. There is no defined termination date of the contract.
 3.The mining contract pays the equivalent of income from 1 mh/s. Any excess payments not explicitly stated in this contract is solely at the discretion of the operator and should not be expected.
 
A total of 100,000 contracts will be issued backed by no less than 120 GH/s of mining power. The excess mining power will be held in reserve to account for operational cost, hardware failure, or other problems. Revenue from the excess mining power will not be paid out to contract holders.
 
Each contract pays exactly 100% of 1mh/s of BTC mining power. All expenses related to the operation will be carried by the operator.
 
Changes to Contract
 
This contract may be updated at any time by the operator if it is to the reasonably undeniable benefit or of no consequence to contract holders. Changes that do not work in favor of existing contracts may be implemented only if the changes are accompanied by an offer to buy back contracts at the terms specified in this contract.
 
Operation and Buyback
 
The mine will operate perpetually and pay daily dividends, to be scheduled at or around the time of difficulty changes.
 
The term perpetual is unlikely for practical reasons, and as such, there exists provisions to close the contracts for one of the following reasons:
 1.The operator becomes incapable of operating the contracts over an extended period
 2.The overhead of operating the contracts becomes greater than its profits
 3.Permanent and irreparable damage to hardware
 4.The operator must close the contract for other reasons
 
If the contract must close for any of the above reasons, the operator or a duly appointed representative, in case the operator is permanently unavailable, can buy back contracts at no less than 110% of the average trading price at BTCT over the previous 7 (seven) days.
 
Please note that this buy-back is a right of the operator, not a duty. Any buy-back is solely at the discretion of the operator.
 
In any case of permanent and irreparable damage to hardware, the operator will pursue any means available to replace hardware as quickly as possible at no cost to contract holders. However, if replacement hardware cannot be obtained at reasonable costs, the operator may choose to suspend operation and dividends and start liquidation of the contract as explained above.
 
Pre-Release Terms:
 
Please note that these terms apply only until the mining hardware has been delivered. Upon delivery, these terms will be removed from the contract.

The contracts are backed by miners that have yet to be released. The scheduled release is September 2013.
 
All funds received as part of the IPO process at BTC Trading Corporation (BTCT) will be held in escrow until said mining hardware is delivered and made operational (the release date). In case the mining hardware fails completely, all funds will be repaid fully at the listing price of 0.004BTC/bond.
 
No dividends will be paid until delivery. On the release date, the IPO funds will be released from escrow.
 
Upon delivery, any excess capacity from the mining hardware will be used to pay contract holders additional dividends for six months. The additional dividends is intended to compensate contract holders for not receiving dividends until the mining hardware has been delivered.
 
Expansion of Operation
 
This contract will always be backed by real mining hardware or equivalent mining assets. In case of expansion of the contracts, those contracts will be offered at a rate not lower than the lowest trading price at BTCT over the previous 30 days. Any expansion will be backed by mining hardware or mining assets.
 
Caveats
 
Please be aware of the following before investing:
 
A mining contract decreases in value as Bitcoin mining difficulty climbs. The biggest return on investment will happen early in the contract’s existence and gradually decline as the Bitcoin mining climbs.
 
Mining contracts are not shares, they are effectively contracts where the mining operator mines bitcoin on your behalf, to be rewarded in dividends based on mining power. The price paid for a mining contract will under normal circumstances not be repaid so your sole income will be from the dividend paid daily.
 
Due to the buy-back clause of this contract, please be careful of paying too much for this mining contract, especially when there are sudden price spikes. The operator may choose to buy back contracts at 110% of trading price so if you pay more than this, you may theoretically lose anything you pay above that.
 
Pre-release only (will be removed once mining hardware is operational): This contract does not pay dividends until the release date. To compensate for this, the first six months of operation will give approximately 20% higher dividends depending on the final performance of the miner. In case the hardware fails completely, the contracts will be repaid for 0.004BTC per bond.

They don't. The contract states (and will state, barring undeniably beneficial updates) that investors get the mining output from 1mhs of Bitcoin mining power.


How the asset is backed isn't really relevant to what contract holders get. I could be growing pot in my back yard to get funds for all the contract is concerned (sans the transaction fees and luck, of course).

I included the backing as part of the contract as an added insurance to contract holders that I have taken steps to ensure an operating margin so that there won't be any nasty surprises. Like I said, I designed this with the attitude of protecting contract holders.

I'm surprised you don't ask what happens to the surplus funds if or when the contracts terminate, however. To be pro-active, I'll answer it in any case and say that I don't want to discuss the details of that at this point.


Agreed, I'll post the proposed changes here, and ask someone to quote it for reference. I realize that because this is a self-moderated topic, I can delete those quotes, so feel free to post the quote below in other threads or elsewhere for the record if someone feels that is required.

The proposed new contract is as such (I'll remove the note on rebranding and the stricken out use of PMB from the BTCT contract if approved).
 

How the asset is backed isn't really relevant to what contract holders get. I could be growing pot in my back yard to get funds for all the contract is concerned (sans the transaction fees and luck, of course).

I included the backing as part of the contract as an added insurance to contract holders that I have taken steps to ensure an operating margin so that there won't be any nasty surprises. Like I said, I designed this with the attitude of protecting contract holders.

I'm surprised you don't ask what happens to the surplus funds if or when the contracts terminate, however. To be pro-active, I'll answer it in any case and say that I don't want to discuss the details of that at this point.

just curious, can someone explain the lack of capital inflows into this fund?

it will currently cost around 250 btc to fund this.

people pay more than that for preorders, although for more megahashes

but the restructuring away from the bond thing changes all of that I assume?

Very simply. With expected difficulty increases through the remainder of July, August and part of September, this asset is not competitively priced with the best priced assets available.

As an example, DMS.MINING shares, which each represent 5MH, are selling for 0.016499 btc or 0.0032998 per MH. DMS.MINING is also paying daily divs TODAY. So DMS is selling for less and you will get at least six weeks of additional dividends before the expected date of hardware release for this asset.

Also, these types of assets aren't as popular as they once were.

TBH, I have no idea how any shares were sold considering the situation.

-helixone

Very simply. With expected difficulty increases through the remainder of July, August and part of September, this asset is not competitively priced with the best priced assets available.

As an example, DMS.MINING shares, which each represent 5MH, are selling for 0.016499 btc or 0.0032998 per MH. DMS.MINING is also paying daily divs TODAY. So DMS is selling for less and you will get at least six weeks of additional dividends before the expected date of hardware release for this asset.

Also, these types of assets aren't as popular as they once were.

TBH, I have no idea how any shares were sold considering the situation.

-helixone

I didn't ask because it's already implicit in the contract that you get any surplus.  That's because, as you noted, above all investors are entitled to is the output of 1 MH/s.  Any payment above that (other, debatably, than the surplus for first 6 months) is effectively a gift from you to which they have no entitlement and in respect of which they should have no expectation.

I'd recommend investors vote YES to the change btw - now it's quoted and can't be changed.  There's a VERY significant benefit to them that hasn't been mentioned at all (and is pretty subtle).  As undoing it would very definitely be against the interest of investors that can't be done unilaterally.

but the restructuring away from the bond thing changes all of that I assume?

4. BFMines guarantees no bad luck in mining. If the variance of luck is 10% and only good luck counts, BFMines adds an additional 2.5% on average. If you feel lucky, that may be higher. However, bad luck would be taken from the above excess capacity, so I'm not adding that to the 'idle speculation', even though good luck would be paid out.

None of these things are part of the contract and cannot be at this stage. They are in no way guaranteed and may not even be likely. However, I'm somewhat confident that these factors are part of what people evaluate when they look at BFMines compared to straight-forward PMBs. I discourage this; it is very likely that these numbers won't be real. We're not guaranteed more than 120ghs from Metabank; we have no idea whether Bitcoin will rise again; we do not know whether even a cent of excess capacity can be paid out after hardware risk.

.b

This is where there's still a problem.

On the one hand you say "BFMines guarantees no bad luck in mining."
Then immeidately after you say "None of these things are part of the contract and cannot be at this stage. They are in no way guaranteed"

Guarantee should mean the same thing in both places.  Is no bad luck guaranteed or not?

I read it as an unfortunate misuse of guarantee in the first instance where it really should have said "BFMines intends not to pass bad luck on to investors but can't guarantee it."

I believe it's bad form in general to try to promote a security on the basis of benefits which investors have no contractual obligation to.  Investors should not be put in the position of needing to rely on an issuer delivering more than they're contractually obliged to.  I appreciate you hope or intend to put such commitments in the contract - but investors would definitely be advised to wait until they're actually in before investing (unless they're happy with what they'd get without them).

Your new post says the following :

"One particular case where this becomes apparent is with DMS.Mining. DMS.Mining, although an interesting speculator’s tool, is designed to fail if mining is profitable. The dividends you get from DMS.Mining is the same funds you pay when you buy the shares.  If it turns out that mining difficulty does not grow indefinitely, DMS.Mining will close down because it won’t actually have more funds to pay out. "

That's not accurate.  The funds available are MORE than what you pay when you buy a DMS.Mining - depending on how you look at it, they're either ~400 days of current dividend OR the funds from the sale of one DMS.Purchase OR the funds you pay PLUS the funds someone buying (or holding) a DMS.Selling paid.  All three descriptions amount to the same thing - however you look at it, DMS.Mining share at any point in time are backed by significantly more than what they sell for and ALL of those funds are available to DMS.Mining investors if difficulty change is favourable.

The dividends you get from DMS.Mining is the same funds you pay when you buy the shares plus what someone else (or you) have paid when acquiring the sister asset DMS.Selling.

That's not accurate.  The funds available are MORE than what you pay when you buy a DMS.Mining - depending on how you look at it, they're either ~400 days of current dividend OR the funds from the sale of one DMS.Purchase OR the funds you pay PLUS the funds someone buying (or holding) a DMS.Selling paid.  All three descriptions amount to the same thing - however you look at it, DMS.Mining share at any point in time are backed by significantly more than what they sell for and ALL of those funds are available to DMS.Mining investors if difficulty change is favourable.
 
Your paragraph pretty much states that all they can ever get back if what they paid for the share - that's a lie when expressed as a generality.  If Difficulty immediately stopped rising now then DMS.Mining shares would receive back well over double the price they currently sell at and would probably receive it all within the next few months.  Conversely, if difficulty keeps rising rapidly for a long time then when difficulty finally levels off they WOULD receive a final payment but the dividends by then would be near irrelevant compared to what they receive now.
 
It may be the case that the only way your investors would ever make a profit is if difficulty stops rising soon (or alternatively if it stops rising middle of next year and they don't mind waiting a few decades and hope your hardware lasts that long).  But as there's little likelihood of it stopping rising soon, arguments based on the assumption that it will are pretty meaningless.  Yes it IS true that when difficulty stops rising (and I DO agree with you that it likely will - at least for a while) DMS.Mining ceases to behave like a PMB -  giving a lump-sum golden hand-shake rather than a daily pittance.  But that pittance that they don't get would realistically be at a tiny part of today's dividend - with the vast majority of all dividends they'd receive in, say, 3 or 5 years of operation having already been received.

Best advice to potential investors in BFMINEs is to hold on.  It looks unlikely to sell out soon, so there's no rush to buy - and no discount for buying now rather than later.  When the hardware looks likely to ship, see how much difficulty has changed, work out how many years that would take to return capital even with no further changes, compare to other available options and decide then.  As there's no way to sell back at or near buying price right now there's no incentive to gamble and buy without a clear delivery date when you can wait and see how difficulty changes and the prices of competitors (including any new ones that show up) rise/fall.

I don't want to confuse people beyond making it clear that what they are buying isn't mining, and that the funds from which they receive dividends are the same funds used to buy shares (in any of the assets). As such, there is no way to bring more funds into the asset pools so if those funds run out, payments will stop. They will run out, and fairly quickly, if mining difficulty does not increase.

If mining difficulty does not increase, they can expect to get the exact same dividends from BFMines. The lump sum payment won't cover the rise in price, as any asset that consistently and over time will yield perhaps 100% will drastically rise in value and definitely much more than double overnight.

Actually the asset pool DOES increase slowly due to investment though, to date, that's been at a slower rate than the payment of MINING dividends (haven't done the exact math but think on average profit covers over about 1/3 of dividends).

That is only true as long as you have a positive ROI on your .Selling investments, which may or may not be true (if Dooglus or TradeFortress drove into a concrete wall tomorrow, those funds would likely be worthless and cause a loss).

Like I said, I'd be happy to write a more comprehensive article on DMS, but I want to clarify the article on BFMines so you don't feel I'm doing you or your investors injustice.

Would you be OK with the clarification, the link to your post here, and the two paragraphs quote in the article?

.b

Yeah sounds reasonable.

when is Metabank supposed to deliver again? I lose track

I forgot to post when I did it, I apologize.  But I updated the contract per the motion a couple of days ago.  ;)

Cheers.

Minimum Revenue Guarantee
BFMines is backed by real mining hardware and is thus subject to miner's luck. To preserve the stability of dividends, however, BFMines guarantees a minimum dividend equal to that of the current hash rate with a PMB style dividend. This cancels miners' bad luck while retains miners' good luck.

This minimum dividend will be scheduled at each difficulty change and paid on a daily basis. In addition, any positive dividends from miner's luck will be paid out at each difficulty change for the previous difficulty period. Any negative dividends from miner's luck will not affect current or future dividends and will be covered by the surplus mining capacity funds.

The excess mining power will be held in reserve to account for operational cost, hardware failure, or other problems. Revenue from the excess mining power will not be paid out to contract holders.

Each contract pays exactly 100% of 1mh/s of BTC mining power. All expenses related to the operation will be carried by the operator.

Each contract is entitled to all output of the mining operation divided by the number of outstanding contracts. This output includes transaction fees and miner's good luck, but not miner's bad luck, according to the minimum revenue guarantee.

All expenses related to the operation will be paid for from the surplus mining capacity. The surplus mining capacity will be no less than 20% more than the capacity required for dividend payments. Excess funds from this surplus capacity will go to the benefit of the contract holders in the form of securing the long-term operation and stability of the mining operation, but will not be paid out as dividends.

In case funds from the surplus mining capacity is not sufficient to cover expenses, the operator will cover additional cost until such a time as the surplus mining capacity is again sufficient or the mining operation closes as per the terms of this contract.

Contract


Overview
 
BFMines is a mining contract backed by physical hardware. The contract pays a dividend equivalent to 1 megahashes per second (mh/s) of mining power.
 
Please read the following article to understand what mining contracts are:
 
http://coin.furuknap.net/understanding-mining-bonds/
 
In summary, however, please note the following:
1. This is a mining contract, not a share in a company. You receive no voting rights and no other income than the stated dividend.
2. The mining contract is perpetual, which means it will continue to generate dividend until terminated following one of the below conditions. There is no defined termination date of the contract.
3. The mining contract pays the equivalent of income from 1 mh/s. Any excess payments not explicitly stated in this contract is solely at the discretion of the operator and should not be expected.
 
A total of 100,000 contracts will be issued backed by no less than 120 GH/s of mining power. The excess mining power will be held in reserve to account for operational cost, hardware failure, or other problems. Revenue from the excess mining power will not be paid out to contract holders.

Each contract is entitled to all output of the mining operation divided by the number of outstanding contracts. This output includes transaction fees and miner's good luck, but not miner's bad luck, according to the minimum revenue guarantee.

All expenses related to the operation will be paid for from the surplus mining capacity. The surplus mining capacity will be no less than 20% more than the capacity required for dividend payments. Excess funds from this surplus capacity will go to the benefit of the contract holders in the form of securing the long-term operation and stability of the mining operation, but will not be paid out as dividends.

In case funds from the surplus mining capacity is not sufficient to cover expenses, the operator will cover additional cost until such a time as the surplus mining capacity is again sufficient or the mining operation closes as per the terms of this contract.
 
Minimum Revenue Guarantee
BFMines is backed by real mining hardware and is thus subject to miner's luck. To preserve the stability of dividends, however, BFMines guarantees a minimum dividend equal to that of the current hash rate with a PMB style dividend. This cancels miners' bad luck while retains miners' good luck.

This minimum dividend will be scheduled at each difficulty change and paid on a daily basis. In addition, any positive dividends from miner's luck will be paid out at each difficulty change for the previous difficulty period. Any negative dividends from miner's luck will not affect current or future dividends and will be covered by the surplus mining capacity funds.
 
Changes to Contract
 
This contract may be updated at any time by the operator if it is to the reasonably undeniable benefit or of no consequence to contract holders. Changes that do not work in favor of existing contracts may be implemented only if the changes are accompanied by an offer to buy back contracts at the terms specified in this contract.
 
Operation and Buyback
 
The mine will operate perpetually and pay daily dividends, to be scheduled at or around the time of difficulty changes.
 
The term perpetual is unlikely for practical reasons, and as such, there exists provisions to close the contracts for one of the following reasons:
 1.The operator becomes incapable of operating the contracts over an extended period
 2.The overhead of operating the contracts becomes greater than its profits
 3.Permanent and irreparable damage to hardware
 4.The operator must close the contract for other reasons
 
If the contract must close for any of the above reasons, the operator or a duly appointed representative, in case the operator is permanently unavailable, can buy back contracts at no less than 110% of the average trading price at BTCT over the previous 7 (seven) days.
 
Please note that this buy-back is a right of the operator, not a duty. Any buy-back is solely at the discretion of the operator.
 
In any case of permanent and irreparable damage to hardware, the operator will pursue any means available to replace hardware as quickly as possible at no cost to contract holders. However, if replacement hardware cannot be obtained at reasonable costs, the operator may choose to suspend operation and dividends and start liquidation of the contract as explained above.
 
Pre-Release Terms:
 
Please note that these terms apply only until the mining hardware has been delivered. Upon delivery, these terms will be removed from the contract.

The contracts are backed by miners that have yet to be released. The scheduled release is September 2013.
 
All funds received as part of the IPO process at BTC Trading Corporation (BTCT) will be held in escrow until said mining hardware is delivered and made operational (the release date). In case the mining hardware fails completely, all funds will be repaid fully at the listing price of 0.004BTC/bond.
 
No dividends will be paid until delivery. On the release date, the IPO funds will be released from escrow.
 
Upon delivery, any excess capacity from the mining hardware will be used to pay contract holders additional dividends for six months. The additional dividends is intended to compensate contract holders for not receiving dividends until the mining hardware has been delivered.
 
Expansion of Operation
 
This contract will always be backed by real mining hardware or equivalent mining assets. In case of expansion of the contracts, those contracts will be offered at a rate not lower than the lowest trading price at BTCT over the previous 30 days. Any expansion will be backed by mining hardware or mining assets.
 
Caveats
 
Please be aware of the following before investing:
 
A mining contract decreases in value as Bitcoin mining difficulty climbs. The biggest return on investment will happen early in the contract’s existence and gradually decline as the Bitcoin mining climbs.
 
Mining contracts are not shares, they are effectively contracts where the mining operator mines bitcoin on your behalf, to be rewarded in dividends based on mining power. The price paid for a mining contract will under normal circumstances not be repaid so your sole income will be from the dividend paid daily.
 
Due to the buy-back clause of this contract, please be careful of paying too much for this mining contract, especially when there are sudden price spikes. The operator may choose to buy back contracts at 110% of trading price so if you pay more than this, you may theoretically lose anything you pay above that.
 
Pre-release only (will be removed once mining hardware is operational): This contract does not pay dividends until the release date. To compensate for this, the first six months of operation will give approximately 20% higher dividends depending on the final performance of the miner. In case the hardware fails completely, the contracts will be repaid for 0.004BTC per bond.

Pre-release only (will be removed once mining hardware is operational): This contract does not pay dividends until the release date. To compensate for this, the first six months of operation will give approximately 20% higher dividends depending on the final performance of the miner. In case the hardware fails completely, the contracts will be repaid for 0.004BTC per bond.

All expenses related to the operation will be paid for from the surplus mining capacity. The surplus mining capacity will be no less than 20% more than the capacity required for dividend payments. Excess funds from this surplus capacity will go to the benefit of the contract holders in the form of securing the long-term operation and stability of the mining operation, but will not be paid out as dividends.

4.The operator must close the contract for other reasons

Please note that this buy-back is a right of the operator, not a duty. Any buy-back is solely at the discretion of the operator.

Mainly just after one clarification

Is it this;


Or this;


Or is it a mix of both, option one for 6 months then option two?

If it is the first option and let say you sell a total of 40,000 units in your IPO, will the bonus dividends equate to an extra 2mh/s per share for 6 months?

Also I do like your fourth option for closing the fund
 

and then adding this in


Pretty much means you can Cancel BFmines on the first day of operation for any reason you see fit, and not pay back any funds to anyone.

The 'right of the operator' clause is there to prevent misuse. It does not void the clauses of the buy-back, but states that nobody can demand a buy-back with those terms at their leisure. In other words, you can't come and say "I don't think mining is profitable anymore, please buy back my shares for 10% more than I paid for them earlier today".

Perfectly understandable  :)


Once you are up and running and say the price is lower, you could once again close and come out ontop paying 110% of the average trading price over the last seven days. given that already the average of the last 7 days trading is 0.00396 (granted right now you would be out of pocket)
Its still all about trust, and in your terms you could withdraw at any point that you see fit.

You have answered my question above, ie 120gh on offer but only 40,000 shares sold gives a usage of 40gh, therfor you have 80gh/s free which in turn may equate to an extra 2mh per share if the answer was "yes", but since you are not offering this my question is irrevelant.

I own some of these assets and having done the math am not that convinced they are a good buy. At 0.004btc for 1 mhash/second you would need to purchase 333 shares for 1.332btc to get 333mhash per second, however that would also buy you 2 x Block Erupter (USB ASICMINER)  which would give you 666 mega hash per second.

Given mining will not start until September I do think see these ever being profitable to hold.

Have I calculated something incorrectly or could I start a bond/asset like this with block Erupter and essentially double my money?

I own some of these assets and having done the math am not that convinced they are a good buy. At 0.004btc for 1 mhash/second you would need to purchase 333 shares for 1.332btc to get 333mhash per second, however that would also buy you 2 x Block Erupter (USB ASICMINER)  which would give you 666 mega hash per second.

Given mining will not start until September I do think see these ever being profitable to hold.

Have I calculated something incorrectly or could I start a bond/asset like this with block Erupter and essentially double my money?

so will this security have more than 120 gigahashes before the metabank chips arrive or not.

Will it have more than 120 gigahashes after the metabank chips arrive or not.

does this security have enough funding to it any of it all since less than 1/2 of the offering has been sold so far on btct.co?

thanks

Hi,

I'm not sure I get all your questions; there seems to be three of them.

The Metabank miner is scheduled to arrive in September; it has been paid for and whether the IPO of the contracts sell out is irrelevant to the mining operation (any unsold contracts just remain with me).

The metabank miner is guaranteed 120GH/s, but we still do not know the final numbers. We do know, however, that the Bitfury chips will overclock well and under ideal conditions have even surpassed 50% of stated rate. This shouldn't be taken as a guess at what the final numbers will be, though. Anything above 120GH/s is a bonus on top of the normal bonus, but we shouldn't expect it. If it does go over 120GH/s, great, we all get more dividends, if it doesn't, we still get what we have been promised.

.b

okay.

I have only been following the contract updates very loosely.


So the only thing this PMB will ever have is the machine rated for 120 GH/s which will arrive in September

This PMB will never have additional hardware using funds raised?

Can someone tell me, why BFMINES shares are so expensive? Using current ASK price on BTC-TC, it's 3.588 BTC for 1 GH/s.

IMPORTANT NOTICE TO ALL BTC TRADING CORP WEBSITE PARTICIPANTS

As a result of recent changes in the virtual currency regulatory environment, the btct.co and litecoinglobal.com virtual stock market websites will be closing down.  The following is our current schedule:

Approximately a week ago, both sites were closed to any new users and new asset creation was disabled.
 
Effective immediately, in conjunction with this release, trading will be halted, all order books cleared, and trading re-enabled.
 
October 7, 2013, all forms of secondary market trading will be halted on both sites.
 
Approximately October 31, 2013, both sites will be taken offline.  It is strongly suggested that participants take the following steps to protect all of their virtual assets:
 
All participants should take steps to transfer all of your BTC and LTC (and any other data you wish to keep, such as CSV trade histories) held on the sites to your personal computer or another trusted site.
 
All participants should make sure that their public BTC or LTC address is properly set in the Account page on the Settings tab whereby it can be shared with all issuers.
 
All “issuers” should have the contact information concerning their “investors”, and we ask that all “issuers” communicate with their “investors” as soon as possible as to how they will ensure that all are treated appropriately.

We regret this development. However, we want to do everything we can to minimize problems arising from this transition.  It is our goal to keep this shutdown orderly and calm.

Thank you for your participation, creativity, loyalty and sense of community over the past year.  Additional communications will follow as we work out the details.

Ethan Burnside
BTC Trading Corp.

As announced, BTCT, the current trading site for BFMines, has decided to shut its doors shortly.

Please read carefully, you need to do one specific action.

BFMines' primary purpose is not to be a trading vehicle but a mining contract. As such, the closure of a certain trading platform does not impact the primary operation of the contracts.

BFMines will continue to operate, expecting delivery of the first miner very shortly. Once the miners arrive, you will receive dividends as planned.

To accomodate continued operation, you need to update your profile and set your public withdrawal address. To do so, log in to BTCT and go to your profile.

Trading on BTCT will stop on October 7 on BTCT. 24 hours in advance, on October 6 2013, I will halt trading on BFMines on BTCT. I will also investigate whether public trading on a different exchange will make sense, or whether private listing is a better option.

One temporary change will happen as a result of this. BTCT offered a feature to schedule dividend payments into the future. When this feature disappears with the site, I will change the payout to pay in advance each difficulty period based on a 10 day difficulty period. Any remaining time in the difficulty period will be paid out next period. Any surplus dividends paid will be deducted from the next period.

This will only mean you get dividends sooner, so it is to the benefit of contract holders only. This is a temporary measure until I can find a solutoin to paying daily dividends. The advance payments will come from the operator's funds so will not affect the surplus capacity funds.

Until the future trading of BFMines is clarified, no further IPO contracts will be available for purchase.

Thank you for your patience and understanding in this transition. Do not hesitate to ask questions in the forum if you have them.

.b

So there was no dividend paid until now. What's planned?

Just wondering if there are plans to move to Havelock?