Bitcoin Forum

annoucnement

facepalm time?

You guys are clearly in love.

You have no idea. He_She even accuses me of cheating now. LOL

In more serious note. To be honest, I actually hope that one day usagi hits the bulls eye and his investors win. I am sure, this day is really close. Question is, how to define "close" in this context.

http://tsukino.ca/bmf/holdings-nav/ if this the list of your holdings and hardware, how did you arrive at your "The NAV of BMF is approximately 0.50"

It looks more like between 0.26 and 0.283 BTC.
PS! I love your hardware list. Especially that BitForce 'SC' Single 40 GH/s, you got listed as existing asset.

Its worse than that. Here is an up to date NAV:



So a total of 1150.6147 for 5147 shares gives 0.22 BTC / share.

edit: outstanding shares are apparently 4392 now as usagi is buying his own crap, so that puts it at 0.262 BTC per share.
Advertising that as "approximately 0.50 " is plain lying.

I would advice any shareholder to take full advantage of usagi's buyback for as long as it lasts.



I assume those FPGAs and ASICs are on order, and therefore fully paid for. Its of course reasonable to put them on your balance. Its not reasonable to put them at 20% over list price on the balance.

Isn't BMF supposed to be a mining fund? Why does it hold ANY of the no relation to mining whatsoever OBSI.HRPT?

For the same reason his/her Nyan.a (only supposed to invest in low-risk securities) does.  Having lost a large chunk of NAV of all his/her companies he/she went for double or nothing on OBSI.HRPT (it's not like what you agree to in your contract actually matters, right?).  Double isn't looking like the most likely outcome, needless to say.

I wonder if he/she gets a mangement fee for all the 'profits' being distributed through dividend (a large chunk of which gos to other usagi companies that can then dividend them back - due to the way they all hold one another's shares)?

Just run NAV down - and keep dividending back and forth taking management fees: great business model (except for investors of course).

Usagi, I will give you some friendly advice: only buy things that the fund is supposed to be invested in. BMF should only be investing in mining. Low risk does not include ponzi schemes. Also, untangle your funds, do not use one fund to invest in another fund, it just makes everything worthless.

Actually there's no real issue with one fund investing in another - the problems arise where the investment forms a loop.

CPA holding BMF shares and Nyan/Nyan.x is fine: it's when one of them also holds CPA that it become a mess.  What it does is form a feed-back loop where changes to the price of one stock alter another which alters another which then alters the first (and so on ad infitum) - amplifying any rises or falls in any one stock price (and making it impossible to properly value any of the stocks in the loop).

Bingo, we have a winner.

CPA holdings are not disclosed AFAIK, but  if you read here:
http://www.tsukino.ca/cpa/nyan/nyancat-statements/2012-37-nyan-statement/
You will see CPA holds at least 1100 Nyan shares, so basically all of it. Nyan holds over 1000 Nyan.a/b/c shares
Nyan.b holds 6600 cpa shares.

There is also a much smaller loop with Nyan A which holds 1200 BMF shares, thats almost a third of BMF, and BMF owns a small number of Nyan shares.

There might be many more such loops that we dont know about; eg, I dont know what move.to or futurefund have in portfolio, but its quite possible it holds some usagi assets, while Nyan.B holds Moveto and futurefund shares. If any of them starts crumbling, they all start crumbling and with the fallout of obsiponzi, its hard to see how that will not happen.

The original investors who bought it at 1.0 are already wishing that.

You IPO'd at 1 BTC, paid a total of just below 0.1 BTC in dividends and you now have a NAV thats around 0.3 BTC. IOW, you lost 60% of your investors coins. How you can twist that in to doing a good job is something only Diablo can understand.

/me gets out the popcorn to wait for the creative accounting spin on this.

Oh.....right. wait. I think I remember.
at IPO 1BTC = X USD = NAV,
then later (now) 1BTC= (X USD * 2.5 ) or so = NAV = .3 BTC =NAV.....

I used oversimplified math here, but you get the jist of the idea.

yes congratulations, you've realized less profit on the USD than if you'd simply held BTC in cold storage....but you supported usagi while you did it...that's something.

Disingenuous, at best - intentionally misleading investors to move more shares at worst. Overstates the returns, understates the risks.

You are completely incorrect.


This post shows how misinformed Usagi is. Let me lay this out for everyone.

Snip from above quote:

Original cost of 1 share of BMF = 1 bitcoin.
1 bitcoin on June 1stwas worth ~$5.16
1 bitcoin on Sept 19 was worth~$12

Investor A has $5.16 on June 1st, buys a bitcoin, and decides to hold it. Today, he has ~$12 worth of bitcoin.

Investor B has $5.16 on June 1st, buys a bitcoin, and buys 1 share of BMF. Today, that 1 share (assuming a NAV of .50 btc) and total dividends (~.10 btc) would be worth ~$7.2.

This is how you claim that BMF has delivered 41%. Now here is where I explain why that claim is not true:

Investor B's gain had absolutely nothing to do with their investment in BMF, and everything to do with their investment in bitcoin. If Investor B would have bought bitcoin and not invested in BMF, they would have experienced nearly an additional 100% gain. Since Investor B's purchase of BMF is the only difference between them and Investor A, we can conclude that BMF was the cause of the lesser return. IF BMF had a positive ROI, then Investor B's return would have been higher than Investor A's.

ROI for a security is measured in the currency it is based in, so all of the blabber about USD in your post is completely irrelevant.

It goes something like this:
1 share of BMF @ IPO cost 1 bitcoin. It can now be sold for ~.50 btc and has paid ~.10 btc in dividends. That would be a ROI of -40%.

You either have nearly 0 understanding of finance or you are trying to deceive investors and the community; or both. This is not me looking to insult you; this is me stating the truth.

You just explained the main flaw in bitcoin. The fact we wont be able to build an economy because businesses wont be able to get investment in a depreciating currency while they still need to pay their suppliers and the tax man in fiat.

Its the reason loans and securities denominated in bitcoin have all mostly failed as a concept and why the bitcoin economy will eventually stall completely. Its the same reason a depression happened when  the economy was backed by gold. Businesses cant raise money to put on extra staff or buy more equipment to expand.

The solution is to peg the expansion of supply to the price, however doing so would kill the speculative value for holders. This would kill bitcoin faster than anything else.

*SssMmmAaaSssH*
And its outta here.....

Wrong.

Since usagi wont update and correct his faulty spreadsheet, I thought I would.
Using GLSBE API, these are up to date date numbers, feel free to point out any errors:

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

Care to enlighten us casual readers as to which numbers Puppet fraudulently changed?

As usagi damn well knows, I used the latest numbers available on his site when I posted that, I made a screenshot if anyone doubts that.
He has been doing some trading, here is an updated spreadsheet.

https://i.imgur.com/scks8.png

Not much difference, if anything it looks a bit worse.

Meanwhile usagi has been doctoring his shareprices so much it becomes a bit of a joke really. My numbers come straight from glbse API, anyone can verify them, how usagi now gets 60% higher NAV with the same shares and sharecount is... interesting.
He is just putting numbers what he thinks it ought to be worth? Or putting random prices until the NAV gets close enough to the 0.5 he thinks BMF is worth?

BTW, not to sure what to make of DMC. He claimed he sold them for 0.1, but he still lists them. Diablo himself calculated his NAV to be 0.065 (he owns just 3 or 4 different shares, thats it, so not much confusion there). If you want to pretend its worth twice that, and put that in your books, be my guest, but unless he actually sold them for 0.1,  fair valuation for DMC would be 0.065 tops, and api is what it is.

edit: its now trading for 0.55.. someone is having fun pushing it up and down. Dont be fooled, 0.065 is what its worth tops.

Nice try. For a 6 year old. Perhaps you can put up a single BMF share for sale on bitmit for 50BTC and claim that is the market price?
Thats not market price, thats ask price and its for a single which is readily available, unlike yours.

Edit your link actually also shows singles for sale 30BTC. Did you notice?

Yes, and if you really think that means anything you are even dumber than I thought. Also, if you think this kind of juvenile arguing convinces anyone reading this that you are competent and sincere  and that it is reasonable to value your recently ordered hardware 28% above list price and shares at 2x GLBSE 3 month high, you are insulting their intelligence.

IOW, stop wasting my, your and their time, you are as transparent as a quartz glass.

I am not accusing you of being a scammer. I am using basic math to illustrate a grave inaccuracy made by you.

All of my posts relate directly to the topics at hand and are completely founded on information provided by you (Usagi.)

Which would all be well and good IF your investors bought their shares with USD.

They didn't - so mostl of your post is totally irrelevant.  What about non-US investors?  Did they make a different profit/loss due to their currency not being pegged to the USD?

The profit/loss on a security is measured in the currency it's denominated in.  BTC in your case.  Not in whatever other currency you can find (after the fact) that happens to be able to make it look profitable.

Except that the other 'investment' in my example is one both Investor A and investor B made.If BMF had a positive ROI, Investor B in my example would have a higher return than investor A.

ROI = return for a specific investment, based on the currency the investment is denominated in. What was invested? Bitcoin ws invested. Therefor, ROI is based off of return in bitcoin (not fiat.)

The 41% you are talking about is total Return on Investment if someone had done usd to btc and bought BMF; not Return on Investment from strictly BMF.

In this case, total ROI ≠ ROI.

Let me create another example to illustrate this:

Original cost of 1 share of BMF = 1 bitcoin.
1 bitcoin on June 1st was worth 5.16z (z, for this example, is a fiat currency that has strengthened vs btc over the time period covered)
1 bitcoin on Sept 19 was worth ~2.16z

Investor C has 5.16z on June 1st, buys a bitcoin, and decides to hold it. Today, he has ~2.16z worth of bitcoin.

Investor D has 5.16z on June 1st, buys a bitcoin, and buys 1 share of BMF. Today, that 1 share (assuming a NAV of .50 btc) and total dividends (~.10 btc) would be worth ~1.296z of bitcoin.

In this example, investor C had a total Return on Investment of -58.2%. Investor D had an even worse total Return on Investment; -74.9%. Investor D's return was worse strictly because of BMF.

Now lets look at the initial example and the new example together:
Investor A had a total ROI of approximately 132.5%. 132% ROI from capital appreciation vs USD.
Investor B had a total ROI of approximately  39.5%. 132% ROI from capital appreciation vs USD compounded onto a -40% ROI from BMF.
Investor C had a total ROI of approximately  -58.2%. -58.2% ROI from capital depreciation vs fiat z.
Investor D had a total ROI of approximately -74.9%. -58.2% ROI from capital depreciation vs fiat z compounded onto a -40% ROI from BMF.

Now we have 4 different total ROIs, two of which involve investing in BMF. Investor B is the scenario you are using to state "BMF has a ROI of 41-44%." This is false. A correct statement is "For an individual who bought btc with usd and then bought BMF at IPO price and sold today, their total ROI for BMF would be  39.5%."

How did I come up with the figure -40% ROI in the example? All that matters for calculating Return on investment is this:

ROI(r) = Price sold at(c) + earnings received, in this case dividends(d) - initial purchase price(i)]. All of the values must be denominated in the currency the investment is denominated in.

r= (c + d - i)

Usagi argues a nav of .50 btc, lets say we can sell a share for that (our c value.) Lets say BMF has paid .10 btc in dividends (our d value.) The IPO price was 1.0 btc (our i value.)

Time to do some grade school math to find our Return on Investment (our r value.)

r= (.5 + .1 - 1)

r= -.4

ROI = -40%


I will say it again: ROI performance is measured in the currency the investment is denominated in. Including a specific exchange rate does not give ROI on the security, but a total ROI for that entire specific scenario (In your case, the "The BMF Holder made 44%" is the specific scenario. The example of other people who just bought BTC with fiat and held is meant to help clearly illustrate this concept:

Two people bought btc for usd. btc increased in value vs usd. One of the individuals used their btc to buy BMF and ended up having a lower return that the person who just held btc. Therefor, the cause of the lower return was from the only variable between the two investors: the purchase of BMF. Since the return of the holder of BMF was lower, that variable had to be a negative value. That is 100% pure logic.

wow.... so basically... what you are saying is your ROI varies depending on the currency? Lol. Your shares were sold for 1 BTC (btc) B-T-C. It lost over 40% of its value. Your ROI has NOTHING to do with other currencies. Even if you wanna say it was profitable because of the btc/USD deflation, it was still one of the LEAST profitable.

All I can say is: it will be interesting to see how this performs as the BTC price decreases. usagi, you should be proud of how well you did despite the increase in the price of BTC.

I am not sure if you understand what has happened. I encourage you to read the entire thread. A purchase of BMF @ IPO and sale today would net a ROI of around -40%.

I am pretty sure that was 110% sarcasm

Probably. Though without any way to definitively detect that by reading plain text, I just took the post to be serious.

On securities - BMF didn't start buying hardware until after the losses had occurred (well, no doubt there's still more losses happening - but the first big batch were before the change in plan to being a miner).

Some of Usagi's argument is that the hardware is (and same in your case) bought with fiat and stores a relative fiat value, funds raised and paid out however are in BTC, so when the exchange rate changes it can be rough when it's well above a 100% increase in exchange rate. Some of the point of doing the actual mining however is the long-term profit, not just the quick gains.

That's an issue which (at root) is one of the big problems BTC faces in gaining wider acceptance - specifically:

1) Most physical assets owned by businesses (e.g. mining rigs) are valued in fiat - and will continue to be valued so whilst the materials and labour needed to make is valued in fiat.
2) Because of 1), the value of those assets (expressed in BTC) is going to vary as the BTC/fiat rate alters.

What this means is that to make profit in a market where BTC is gaining vs fiat (with investment and gains denominated in BTC) your business has to make a profit which exceeds the rate at which BTC climbs.  That's very hard to do.

But for a long-term mining operation that shoudn't be as disastrous as it seems.  In most businesses not only are the assets denominated in fiat - but the product is too: so not only are your assets losing value, so is the value (in BTC) of what you produce.  That's not the case in a mining operation - as what it produces is priced in BTC.

IMO mining operations should be planning from the start to write-off their equipment over a fixed period of time.  That period may vary from item to item - but the expected lifetime of various computer equipment isn't exactly a secret.  Ideally that period should be the warranty/guarantee period for the kit.  If, using sensible projections for difficulty increase/rewards halving, there's no way to make back the original investment before the gear gos out of warranty then there's an immediate red-flag for investors: there's a not insignifcant risk that they'll never make back their initial investment.  Add to that the need to generate some profit, cover the operator's fees and make additional funds to expand and/or be in position to replace equipment as it fails/is superceded.

And that last sentence is the key to why mining isn't necessarily doomed.  If BTC rises vs fiat then sure - your original equipment is losing value at a faster rate (in BTC).  But if X% of mined income is used for expansion then that X% buys MORE replacement equipment as a direct result of the exchange rate varying.

There's another point where many operators screw their investors (probably unintentionally).  That's by including (non-free) power as being covered by their portion of the take (usually with a clause that if it won't cover the costs they can take more or shut down the operation).  When BTC gains value vs fiat then the value of equipment falls - but so does the cost of operating the equipment (as power becomes cheaper expressed in BTC).  Operators with that sort of arrangement get to pocket those savings - whilst passing on all the losses (in the value of equipment) to their investors.

I'm gradually working on a model to allow me to properly assess the long-term viability of mining companies in various scenarios.  One thing I can say without needing a model is that it's scary how readily investors are buying operations where the hardware will only come with a 6 month warranty.  What precisely is the plan if the kit fails after 7 months?

Assets which tend upward, and usually rapidly, in value are probably best deployed as collateral for loans denominated in assets that do not go up in value as fast or even go down in value.

It is not just fiat that is going down relative to bitcoin, you can leave fiat out of it and just treat "electronics" or "mining gear" as an asset class directly and see that it goes down itself, in fact usually even faster than fiat does.

Because it goes down relative to fiat, it can make sense to to use fiat as collateral to borrow gear, but doesn't make much sense to use fiat to buy gear unless you have some productive use you can put that gear to.

Similarly because fiat goes down relative to coin, it can make sense to use coin as collateral to borrow fiat, but doesn't make much sense to use coin to buy fiat unless you have some productive use you can put that fiat to.

There is a double-whammy if you in effect use coin to buy gear.

-MarkM-

Very nice post. I wonder if these same issues explain the mystery of why the values of gold mining companies have not risen nearly as much as the gold they mine.

Wow what an announcement. If you gave any money to usagi, now you can get half of it back (when the bids are there). High yield indeed.

The counter to this is that a vast majority of companies have no business being listed in BTC, seeing how in fact they have little to do with it. If your diner serves American hamburgers to American citizens you wouldn't list it in Yen on the Tokyo SE would you? Just so, if your business is purely fiat a BTC listing makes zero sense.

BTC is for BTC companies not for fiat companies.


This is a good point, and one of the chief reasons MPOE has no mining rigs and no plans to acquire any. But I'd be very interested to see that model.


Indeed so.

Back to the topic of BMF and creative accounting. Usagi's spreadsheet is becoming more and more interesting with this new "real value" column. Looking over some of the holdings.

Usagi has 210 shares in ABM and has been buying more recently. ABM IPO'd at 0.25 and has a 5 day avg of 0.255 BTC/share.
210x0.255 = 53 BTC.
Usagi lists the "real value" of his shares as 73.5 BTC

So I had a look if that was defensible

Ive asked the operator to confirm this, so perhaps Im wrong, but as far as I can tell, ABM has as only asset one BFL single, thats mining with horrendous electricity costs and no ASIC upgrade path. 25% of the mining revenue is kept to cover costs. ABM has issued 1000 shares.

So, usagi thinks the "real value" of this one $599 single is 1000*73.5/210

350 BTC

or ~$4000

or

0.42 BTC per MH

Usagi, can you explain to your shareholders why you think 350 BTC is the "real value" for ABM, and not, say, 75% of ~40 BTC going rate for a used BFL single?

Correct!
You can read the ABM thread here: https://bitcointalk.org/index.php?topic=78638.0

Greetz

Thank you. I read it, but thought I might have missed something, like a solid gold cooler on your BFL :).

Because CPA insures them  :P

P/E multiple = current market price divided by past 12 mo earnings. You don't apply your own made up multiple to current earnings and state that as what something is valued- that is completely ridiculous. Also, even if you understood P/E on the most basic level; it has very little relevance to proper accounting.

Apparently you have not read my thread
https://bitcointalk.org/index.php?topic=78638.msg919121#msg919121

In the event of liquidation all share holders will get a final dividend.
This will include:
- last time mining revenue payment
- a share in the mining hardware sales income

Greetz

A P/E ratio has little relevance to a balance sheet. The fact that you are not using the term correctly makes it less relevant. Some of my previous posts advocate using book value as a basis for specific calculations, as it is a 'current' value and not dependent on a 12 month period. A P/E ratio is current market price divided by past 12 month earnings. Since ABM and BMF both have not existed for 12 months, a P/E will be inaccurate. You can not simply extrapolate by multiplying the past 3 months by 4 or 4 months by 3 to reach a 12 month period, or however you seem to think it works.

Your new system basically allows you to just make up random values that aren't based on real information.

I have not 'changed my tune.' All of my posts are very in-line with one another. Anyone can go to my post history and read the posts I made regarding your business operations. They would see I use bath math and principles of finance to illustrate specific points and show when you are incorrect.

Oh thats easy.
Two days ago you held 200 ABM shares and they traded for 0.125. Today you have 210 shares and they traded for 0.45. Do I really need to explain?

For those not seeing it, these are very very low volume shares with an enormous spread. Usagi seems to focus primarily on making his books look better than they really are, so he buys a few shares way above of any reasonable NAV estimate, so GLSBE share price shoots up, and if no one sells, which happens a lot with those low volume assets, particularly without any bid walls,  he can put those inflated values in his books.

He did the same with CPA,  BMF,  DMC etc. Spend a few BTC and you can put a multiple of it as "asset value" in your books. And even then he seems to think its a good idea to increase that value further.
.

At the risk of being called "troll" or "sockpuppet" I was going to ask a question about BMF.

Since discussion is discouraged here it should move to https://bitcointalk.org/index.php?topic=113708.0.

If you knew bitcoin was going up, why would you invest bitcoins in something that is tied to fiat instead of just investing in bitcoin? Trust me, if the bitcoin price had dropped to $2, you'd be celebrating BMF right now. Because of bitcoin's volitility, it is only useful to value companies in USD, and thus should be treated as a regular USD investment and not part of your BTC investment.

I am not sure that you are understanding completely. You say that investors "would be celebrating BMF right now." That seems true, but isn't it also just as true for other assets?

My most recent posts are not talking about determining the value of BMF; they are talking about how to properly calculate ROI and differentiating between total return.

If bitcoin dropped to $2, investors who paid usd for btc and bought BMF would still be worse off than if they had just bought bitcoin with USD and held. Both of those routes would lead to a loss, but as BMF has a ROI of -40%, those individuals would have a greater loss.

Please read this post and see that 'Investor D' is an example of an individual you think would be celebrating if btc fell:

https://bitcointalk.org/index.php?topic=112734.msg1226979#msg1226979

WOW! Congratulations, Usagi.

Not one single nay vote after all accusations against your management...

Priceless!

 ;D

Meh :

1.  A large chunk of those votes were you I'd bet.
2.  "All of my shareholders are happy." is not supported by the facts.  All the vote shows is that the ones who VOTED were happy.
3.  Anyone with half a brain who wasn't happy would have sold out by now - and no longer have a vote.
4.  Why do you think you were able to buy back shares at below IPO price?  It can't be because the shareholders were ecstatic about your management of the company. 

You bought out all the unhappy ones (at a loss to them) - what's left is those who don't pay attention, the terminally stupid and probably a few unfortunate souls who haven't been around for a while.

Typical usagi spin/gloss.  The vote wasn't even announced in the main BMF thread - just in one of your numerous "Important: I'm an attention whore - please listen to my bull-shit and don't argue with me" threads.

Oh - and how DID you get more yes votes than have EVER been in circulation?  You didn't by some chance transfer unsold ones to yourself to vote with (then send them back) did you?  I asked nefario about that particular nasty little trick a while back (by PM) but got no answer - so assume it IS possible for a company owner to generate as many yes votes on a motion as they like.

Usagi and your new shill, I have a question:
As of today, BMF only has 4983 shares outstanding and staring from 2012.09.19, BMF never had more than 5347 shares outstanding. So, how did you manage to get  8148 "Yea's"?

I did not!

http://en.wikipedia.org/wiki/Shill


I do not have any relationship with Usagi or his business. We only share the same membership status in this forum. It appears that the outstanding shares are not a safe indicator to determine how many votes a motion can receive. This situation only shows that you and other users have been making clueless accusations against Usagi management, since you cannot even agree with the stock market vote system.

Let's verify some available data:



https://glbse.com/asset/old_motions/BMF

From the motions already carried by Usagi it is an indication that the system is able to receive nay votes.

But, why so many votes? I am not sure, but I will try to guess. Every security issued must give a right of vote. If this is the case, then it is completely reasonable as to why there are so many votes, including Usagi votes:

https://glbse.com/asset/view/BMF

http://imageshack.us/a/img268/5944/glbse.png (http://imageshack.us/photo/my-images/268/glbse.png/)

Uploaded with ImageShack.us (http://imageshack.us)

It does manipulate, as many times as you push that button is as many times as it votes. How do I now this I just recently had a vote I clicked the button 3 times, You all know how slow it is lol. At the end it had more votes then I have shares total LMFAO.

This is pretty concerning however, "GLBSE reporting the data wrong". How is that possible? Maybe the result to every motion to date is in fact bogus?

Or did Usagi just get caught with their pants down fixing the poll? Why would you even do that for such a worthless poll?

Still wondering why CPA hasn't paid out on its NAV insurance contract...

In context that probably is the likelier explanation.

Do you have a link to the text of this contract? Usagi starts so many threads I am not sure where to find it.

https://bitcointalk.org/index.php?topic=113708.msg1229467#msg1229467

Link to the policy and other relevant info in that post.

That policy does not make sense. Ignoring Usagi's trouble calculating what a NAV should be, at the time the contract was "signed" the NAV was below 1.0, so there should have been an imediate payment to bump the NAV up to 1.0.

Usagi, am I reading this contract correctly? When is BMF going to ask CPA for the insurance payment?

Or is it actually insurance to keep NAV above 1.0 USD, since you seem to like those so much?

Nah it's not in USD.

"2. CPA will not be liable for loss greater than 500 bitcoins."

Clearly says that the loss against which BMF is insured is denominated in BTC.  Plus usagi has always stated nav in BTC anyway.

As far as nav being below 1.0 - it's pretty obvious that usagi did the insurance policy right when it had got nav back to or close to 1.0 (the last reported nav was .866 2 weeks before the insurance was agreed).  Usagi specifically stated that signing the polict meant that "This contract means we will likely begin paying dividends again by next week."

You see the nature of the contract is such that it COULD be agreed when nav was actually slightly below 1.0 - in those circumstances they'd make an immediate claim on it, but CPA would still get 550 back from BMF long-term.  If the initial payment needed were low (and BMF didn't collpase horribly like it did) then CPA  would still make a tidy profit from it - and the deal could be viewed as making good sense for both parties.

I repeat: if you interpret the contract that way (and believed both BMF and CPA had rosy futures), then signing it make good sense for shareholders both parties.  BMF got some immediate cash to restore NAV to 1.0, CPA got an income stream etc.

The problem came when both BMF and CPA then lost a ton of capital, CPA couldn't afford to cough up 500 BTC (in 5 chunks of 100 of course) and usagi decided to stiff the BMF shareholders to prop CPA up.

Signing the contract wasn't the problem (though it SHOULD have been properly explained and motioned as usagi represented the other party to it too).  Not honouring it is a HUGE problem.