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Jesus Christ, don't make me turn this thread around.
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Mem, shut the fuck up and stop spamming this thread.
+1 says the 2 spamming the thread with insults and 0 contribution to discussion. Damn kids, when you grow up think back to this time you were unable to discuss a subject with someone who held differing views. Alright, angry bastard mod here. Mem, shut the fuck up and stop spamming this thread. OK Angry bastard mod, are we to assume that a thread saying "ask me anything about BFL" is in fact not open to questions but tirades of tantrums and insults like Inaba's is fine ? I have been fair and polite and simply started with airing questions others also have. Your avatar image is trollgrin.jpg. What do you expect? |
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Mem, shut the fuck up and stop spamming this thread.
+1 says the 2 spamming the thread with insults and 0 contribution to discussion. Damn kids, when you grow up think back to this time you were unable to discuss a subject with someone who held differing views. Alright, angry bastard mod here. Mem, shut the fuck up and stop spamming this thread. |
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um... 50% goes to dividends? that seems pretty damned high...
hit a couple/few months of lousy returns and increased expenses (say, for hardware replacement, repairs to the green, etc) and you're in big trouble.
I'd suggest something more like, 10% of profit cash on hand, per period. it would scale over a longer period of time, keeping more of an emergency fund available. If you have a good run with low expenses and low costs, that 10% after about 10 or so months in that condition, would be the equivalent of paying out 100% of that period's profits to dividend, while still keeping the remaining 90% of the cash on hand for emergencies, and next period's dividend cut.
Also, don't make business/financial decisions based on the dividend. The business' sustainability and health comes first, and once it is going and profitable, then, and only then, address the dividend.
I've seen too many companies fail on the net, because they prioritized their dividend, instead of their company. After all. What good is focusing on a dividend when you don't have enough cash on hand left to conduct business?
-- Smoov
Yes, 50% is high, but a lot of potential investors have been demanding 100%, and I have refused to raise it that high. I agree with a lot of what you're saying, however, and this is what I've been trying to tell people: the survival of the company is more important than profit. As it stands, short term operating costs will be taken out of BOTH dividends and payments into the growth fund. If anything happens that requires not paying dividends that month to keep the company running, then that is what will happen. I am only interested in the long term survival of the company for the most part. DMC is not a Wall Street bank nor Enron. After the initial build out, the growth fund can be left to grow for a year or more in anticipation for ASIC or unforeseen equipment failure or damage. |
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Continuing investment in new mining technology is a valid point, but it makes the constant difficulty assumption even less valid. Even the valuation of BTC if you grow to much, because you could pull off a 51% attack. Even if growth beyond your initial 1/3 of the hashrate would only be stupid unless difficulty increases, because at that point you mainly compete with yourself. Your share of the blocks will increase slower and slower the higher percentage of the total hashrate you get, and you will push difficulty higher. Many GPU miners, like me, don't need to mine for profit. It is enough to get about 2/3 of my power costs back, and it is still the cheapest heating system around. If price per block and difficulty remains constant, as you assume, GPU mining will never become unprofitable.
If the global hash rate is 10 thash, that doesn't mean that a 51% attack is 5... it means its ANOTHER 10. And even then, its not guaranteed (ask gmaxwell sometime on the exact numbers, its pretty difficult to reliably perform the attack even with that 10 thash). For this argument you conveniently don't assume difficulty to remain constant any more. You assume your added hashpower to add to the current 10 Thash/s, and not replace it as you argued earlier (otherwise the difficulty would increase, and all your profit calculations are wrong). If you believe your hashpower will add to the current total hashpower, you must also assume the difficulty to change accordingly. If you think your haspower will replace existing haspower, making difficulty and total hashpower constant, then 5 Thash/s is enough. No, thats what a 51% attack is. Its when you're 51% of the global network. It has nothing to do with difficultly. If global hash rate is 10 thash, I need to bring 10 thash online from start to finish to perform 51% attacks. It has nothing to do with profitability, it is a statement on how the attack works. If it ever gets to the point where DMC can perform one, we stop expanding otherwise it could collapse the Bitcoin network. |
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So far, I haven't heard any substantial arguments against the plan, other than ones that can be explained away with "we can't predict conversion rate, difficulty rate, etc", and I am OK with that. Where do I invest?
What about: * poses real risk of centralisation by creating a hash rate for a single person that can compete even with deepbit in the suggested configuration. <-- Same with Vlad's operation, really.* Diablo has not disclosed any previous work experience with either energy generation (a few mē are nice and might get subsidies - but if you start talking about several kWh it gets tricky and expensive) or mining farm administration. <-- I think his credentials are sufficient for this operation, or at least he would know who to contract anything major out to.* Investments will be in USD, Shares will be valued in BTC - as soon as BTC prices rise, your investment has gone bad. Profits will be in USD (electricity) and BTC (mining), both sources of income can (and probably will) be squashed by USD<-->BTC conversion rate and Bitcoin's internal difficulty mechanisms. <-- See my "we can't predict conversion rate, difficulty, etc" thing above.* To earn back your investment, this "company" has to generate at least 2 million Bitcoins either through mining (gets more and more diffficult --> Moore's Law, reward cut every 4 years) or electricity (valued in USD, paid in BTC --> currency risk). This is NOT realistic from a current point of view. <-- What is unrealistic about it? For a company that is just starting with a 5 year plan, why shouldn't it exist for 10, 15, 25 more years?* It is suggested to use FPGAs - even though these are powerful mining machines, ASICs are potentially faster and save more power. Also: hardware doesn't last forever. Written off for 5 years, it means that they cost ~200 USD a piece per year additionally to electricity costs. <-- ASICs aren't available yet, and I am sure that they would be on the table if they were.* others (as an example: Vladimir) have more experience, plan more realistically, don't get cought up in dreams about self sustainability with solar power but focus on their job and have already industry partners as well as a registered company (...and are known by their real name!). They also deal in fiat currency mainly, which after all isn't that volatile usually. You'd still get out the same amount of BTC but buying a second share from the IPO will cost roughly the same as the first share. <-- So you have more info about Vlad's operation than we do? Do please elaborate.See points in RED above. rjk pretty much covers it. However, ASIC are on the table. So are 28nm FPGA if they come out before ASIC do. Just because I can't buy them yet doesn't mean I wont. And if they come out before DMC is finished launching? I buy them as first gen hardware. Its just that, at the moment, those ztex quads are the best bang for our buck. In fact, if they were to make 8 FPGA boards that took nothing but a pci-e 6 for power, that'd be even better. Also, solid state hardware does last quite awhile. The fans might not last 10 years (although I intend on buying these without the ZTEX HSF and use higher air flow fans plus redundant fan setups so hardware doesn't fry if a fan fails (ie, typical HA enterprise computing overkill)), but I would be very surprised if most of the FPGAs died around the 5 year mark. I have no interest in shutting off hardware that can still mine; combined with green power generation, older hardware can keep mining when it'd be unprofitable for everyone else. Its not that I dream about self-sustainability, but our largest operating cost is electrical power. Anything that can be done to lower or eliminate that MUST be considered. No one knows if diff will suddenly shoot to 10 times what it is now, or BTC prices drop to 10 times less than they are now. It would be irresponsible of me not to plan for these outcomes even if they are unlikely. Also, its spelled "caught". |
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What driver is everyone using for the 7970's / 7xxx?
Whatevers newest, which is 12.4 on Windows, 12.3 on Linix. |
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to issue dividends, Bitcoins would have to be purchased at market prices to pay them out. Ergo, Bitcoin volume increases and the trend of Bitcoin prices turn to a more upward direction than normal.
So the more successful you get with this, the fewer dividends will be paid, since it becomes more expensive to buy the coins for them. You have to build twice the solar capacity if the price doubles to pay the same dividend. How is this not "eating profits"?! Because, for one, DMC does not pay a fixed dividend. It pays 50% of the profits. Green power generation exists to get rid of the largest operation cost mining has: electricity. Also I'm really not convinced that all that "green power" stuff should be in the focus of the company. Either you mine or you produce electricity and maybe even offer housing for FPGAs at low rates instead of buying them yourself. I know from Europe that green electricity is subsidized (you get a fixed rate for selling your green power to the grid for quite a few years guaranteed), no idea about the situation in the US.
Lowering operation costs is the focus of the company. Green power is a way of doing this. Green energy is subsidized in various ways in the US, I detailed this in the 4/27 update to the plan. There is no reason why DMC can't do both mining and green energy, since green energy lowers the operating costs of the company. |
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Oh, and some "companies" on GLBSE already put 40-50% of earnings aside to be used for expansion, it's not like they all pay out everything.
Yes, but from what I've seen, most don't. Most of these companies have no fiscal responsibility. Its like watching the Dot Com bubble all over again. I don't want anything to do with that. Anyways: sturle seems to have gotten my point: I don't care about profits in USD, as long as this company is not profitable in BTC it is NOT profitable at all! Think of a company in Zimbabwe Dollars instead of US Dollars: Even if you started it with 1 million dollars and it now makes Billions per day, the conversion rate eats it all. As you said yourself: You are hoping for press coverage of a 5 million USD Bitcoin startup, not a 1 million BTC Bitcoin startup.
Anyone who invests in this with Bitcoins is (in my opinion) at least not thinking it through. The press you'd get for this (if any) would be probably also in this direction, I doubt many would buy shares if you cannot explain this (other than "Price for BTC in USD will double!!!111"). It might be fine just to get publicity though.
Conversion rate doesn't eat the profit, and I'm not sure why you think it would. Lets say, in the far future, the single wind turbine and a few solar panels have turned into a large scale wind farm and solar thermal + graphite storage plant... to issue dividends, Bitcoins would have to be purchased at market prices to pay them out. Ergo, Bitcoin volume increases and the trend of Bitcoin prices turn to a more upward direction than normal. I am hoping for press coverage, but it is only a perk. It is not required by the plan. It is, however, something I foresee happening as a result of a successful DMC IPO. |
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Is this a plan for organizing a 51% attack for profit? If so, sign me up.
Or is there no business model here? If so, why invest in this?
No, there is no 51% attack here. There is a business model, its been linked to from the op post. |
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Its not that you did the math wrong, its that your valuation of coins has remained constant.
And we are straight into another problem with your calculations. You keep mixing USD and BTC at rates picked out of thin air. Everything kan be made looking profitable with enough invented numbers. To compare buying 1 share at 1 BTC to just keeping the BTC, you need to do all those calculations in BTC. The price development of BTC will decide if both are profitable. If you can deliver more BTC back than I pay for the share, your model will be more profitable than just keeping the money. Doing the calculations in BTC is impossible because BTC prices change too quickly. Yes, I'm well aware that collecting 1m BTC may end up with a $3 or $7 million dollar IPO instead because of this, the plan is flexible enough to deal with that. However, until I can buy property and FPGAs in Bitcoins and pay taxes in Bitcoins and go to the corner store and pay with Bitcoins, what you're saying is wishful thinking... I look forward to the day that I can, but Bitcoin isn't there yet. USD is a factor and we can't ignore that; otherwise we end up with another 10k BTC delivery pizza. Continuing investment in new mining technology is a valid point, but it makes the constant difficulty assumption even less valid. Even the valuation of BTC if you grow to much, because you could pull off a 51% attack. Even if growth beyond your initial 1/3 of the hashrate would only be stupid unless difficulty increases, because at that point you mainly compete with yourself. Your share of the blocks will increase slower and slower the higher percentage of the total hashrate you get, and you will push difficulty higher. Many GPU miners, like me, don't need to mine for profit. It is enough to get about 2/3 of my power costs back, and it is still the cheapest heating system around. If price per block and difficulty remains constant, as you assume, GPU mining will never become unprofitable.
If the global hash rate is 10 thash, that doesn't mean that a 51% attack is 5... it means its ANOTHER 10. And even then, its not guaranteed (ask gmaxwell sometime on the exact numbers, its pretty difficult to reliably perform the attack even with that 10 thash). That said, yes, I will purposely back off if we get close to 50% because, frankly, its insane and its bad for investors. However, increasing diff to price out most GPU users IS good for investors. Nvidia and Radeon 4xxx have already crossed the points of no return, it is only time for even the most efficient GPU setups to fall behind, even without DMC. Being aggressive for a large scale mining operation isn't a bad thing. As for GPU mining becoming unprofitable, all you're doing is calculating cost of heating into your total operating cost math. Which, don't get me wrong, thats pretty smart... for the 2-5 months your part of the world calls Winter. The other months you're turning the A/C and/or shutting mining off. That is not something a large scale mining operation should do. Diff and BTC price are not constant. Given the entire history of Bitcoin, on average, diff is going up quickly and BTC price is not significantly increasing. For DMC, or any mining operation, worst case scenarios must be planned for. Even paying for electricity at industrial rates (2 cents kwh) is a liability. In addition, the DMC shares themselves might go up greatly in value if I can swing power generation profits far enough in our favor to make it an important part of the company and not just a way to stave off ever rising power costs (but thats a very long term outlook). Dividends don't solely have to be generated by mining alone if we're already investing heavily in green power.
Green power isn't always profitable. Especially in the US where coal is heavily subsidized. Its not unprofitable either. For us, we would have two income streams. Green power would be reducing our total operating costs, whatever is left is then sold to the grid: we can't keep it, the overhead of operating a battery array would just be too expensive. The other income stream would be the mining operation itself. Coal is heavily subsidized because it is expensive to operate. We're in orbit around a gravity fed highly efficient fusion reactor that outputs more power in a second than Humanity has used in its time on Earth. Solar and Wind are the only power generation techniques that are cheap to deploy, cheap to run, and will never run dry. It would be insane not to take advantage of this any way we can. |
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Start small. Get a better idea of maintenance and other costs. For wind turbines you need to research the power capacity factor. Wind power is proportional to the speed cubed, so it is far harder for the typical property owner to use it efficiently than solar is. The NREL did a survey of most of the United States regarding where the best locations for turbines are. In Maine they are probably off-shore or on mountain ridges. Unfortunately I couldn't find it when I looked, but this is a mapping site that I made that uses the data set (that does not include off-shore): http://www.energyjustice.net/t=ora340 Yes, I'm aware of how wind power works. However, it is not only off shore, it also includes near shore areas. There is no way you're getting a 10MW on shore turbine, but as I've said, its not like we NEED 10MW. As long as we're tall enough, we're avoiding most of the efficiency problem. |
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After a discussion on #bitcoin-assets I would like to make something clear.
Mining bonds and shares that have a fixed output value DO NOT WORK.
I have seen bonds that pay 1mhash forever. When the hardware fails, the owner has to, essentially, go out and sell more bonds and use that to replace the failed hardware, which ends up leading to a situation that you have zero mining company growth because essentially 100% of the profits are being paid out to bond holders and the only way to grow at all is triggered by hardware failure and new bonds are greatly diluted by old bonds. This is a pyramid scheme.
I've also seen companies that pay 100% company profits out as dividends. I'm going to say the same exact thing, hardware fails, zero company growth, sells new shares for more hardware, but this time, old shares don't dilute new shares, its the opposite, it screws old investors in favor of new ones and thats STILL a pyramid scheme.
These models are unsustainable, and I wish people would quit requesting that I change the contract to fit these models. This is why the contract makes shares have a non-binding voting mechanism, because this is probably the first thing that would be attempted to be voted on.
In addition, due to the perpetual growth model of my plan, dividend output can go up. Yes, thats right, it can go UP. Those figures in the plan? That is calculated for the original generation of hardware only. 0.21 BTC (post December) per share dividend annually means 0.21 BTC also goes to the growth fund. After two or three years, the size of the mining hardware installation can be doubled. And two or three years after that? Doubled again. If after five or six years I've managed to greatly out pace the growth of the network, then we could very easily be looking at 0.42 BTC (post December) per share (which also means people might be buying shares from the first generation of investors for twice what they were originally purchased for).
There is no other company on GLBSE that has a model that can sustain continued growth, every single company will be dead in the water within two or three years.
I think you've ignored the buyback clauses in the existing mining bonds. There's also the whole time value of money business that explains why it can be profitable to sell perpetuities. Calling these things pyramid schemes and saying they're doomed to fail is not going to make you any friends. And I hate to say it, but if you want to raise money, you need to try to avoid pissing people off. Oh, don't get me wrong, telling the truth has NEVER made friends in the history of the world. But people have repeatedly attacked my plan without any logical reasons, pointing at the rest of the GLBSE companies and say that they're better structured, and I think I have a right to defend my plan and rationally explain why those companies can never succeed over the long term. If I'm going be asking for a million BTC, I better be damned sure I have the best possible plan available, and it has to be geared for long term survival. |
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After a discussion on #bitcoin-assets I would like to make something clear.
Mining bonds and shares that have a fixed output value DO NOT WORK.
I have seen bonds that pay 1mhash forever. When the hardware fails, the owner has to, essentially, go out and sell more bonds and use that to replace the failed hardware, which ends up leading to a situation that you have zero mining company growth because essentially 100% of the profits are being paid out to bond holders and the only way to grow at all is triggered by hardware failure and new bonds are greatly diluted by old bonds. This is a pyramid scheme.
I've also seen companies that pay 100% company profits out as dividends. I'm going to say the same exact thing, hardware fails, zero company growth, sells new shares for more hardware, but this time, old shares don't dilute new shares, its the opposite, it screws old investors in favor of new ones and thats STILL a pyramid scheme.
These models are unsustainable, and I wish people would quit requesting that I change the contract to fit these models. This is why the contract makes shares have a non-binding voting mechanism, because this is probably the first thing that would be attempted to be voted on.
In addition, due to the perpetual growth model of my plan, dividend output can go up. Yes, thats right, it can go UP. Those figures in the plan? That is calculated for the original generation of hardware only. 0.21 BTC (post December) per share dividend annually means 0.21 BTC also goes to the growth fund. After two or three years, the size of the mining hardware installation can be doubled. And two or three years after that? Doubled again. If after five or six years I've managed to greatly out pace the growth of the network, then we could very easily be looking at 0.42 BTC (post December) per share (which also means people might be buying shares from the first generation of investors for twice what they were originally purchased for).
There is no other company on GLBSE that has a model that can sustain continued growth, every single company will be dead in the water within two or three years.
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One, the news of a $5m Bitcoin startup gracing the front page of every tech and financial news site would be worth its weight in gold; two, for those months that power generation profits exceed total operating cost I have to buy BTC to send them back out as dividends and at least some of that money is going to stay as BTC and not be converted back out; three, the aforementioned news of a $5m Bitcoin startup is going to bring a certain level of legitimacy to Bitcoin and is also going to attract more companies to bring their business here and start supporting it.
I honestly do think that someone investing into DMC is going to end up with a higher profit margin than if someone just bought and held 1m BTC alone. If I didn't think that, I wouldn't have bothered placing the plan in front of the community for their input to begin with.
Unfortunately there's a big difference between a $5M startup and a startup that's asking for $5M. Yes, I will not deny this. I am hoping that the entire Bitcoin community will support me in my venture. We're all going to have to band together to get this one done, I think. |
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After the block reward decrease in early December, you will produce 413910 coins a year assuming 1/3 of all GPU miners quit and no other new production than yours come online. This is 0.4139 BTC per share, assuming 1M shares and full set of 4200 FPGAs. Half of it will cover operating costs, leaving 0.2 coins for dividend. At best, if you get this up really quick before block reward decreases, investors will have back what they paid for their shares after five years. Then block reward halves again and profit, if any, will come really slowly.
And all this changes for the worse if less than 1/3 of current miners quit or other new production comes online.
I can't see how this could possibly be profitable. The only factor which make your calculations work out to the positive is your assumption of doubling exchange rate. To take advantage of that it would be safer to just buy coins.
I didn't vote. It is up to you to decide what you want to do. I'm just not going to invest in it unless I did the math wrong.
Its not that you did the math wrong, its that your valuation of coins has remained constant. Investing looks much more attractive in inflating fiat currencies, but Bitcoin isn't a fiat currency. What people are investing in here is a very large scale mining farm whos sole purpose is to drive the cost of mining down in a way that benefits everyone going forwards. Lets say it takes them 5 years to get the investment back counting in BTC (not including any profit made from large scale green power generation exceeding overall power usage), BTC valuation might have doubled or tripled by then, partly driven by DMC. Not only that, they are guaranteeing themselves future profits which they may be unable to get themselves by mining by themselves due to residential power costs and the high cost of FPGA. In addition, the DMC shares themselves might go up greatly in value if I can swing power generation profits far enough in our favor to make it an important part of the company and not just a way to stave off ever rising power costs (but thats a very long term outlook). Dividends don't solely have to be generated by mining alone if we're already investing heavily in green power. If the value of the coins go up, then the investors should have just held on to the coins instead of invest in the company. Also, why would BTC valuation be driven in part by DMC? One, the news of a $5m Bitcoin startup gracing the front page of every tech and financial news site would be worth its weight in gold; two, for those months that power generation profits exceed total operating cost I have to buy BTC to send them back out as dividends and at least some of that money is going to stay as BTC and not be converted back out; three, the aforementioned news of a $5m Bitcoin startup is going to bring a certain level of legitimacy to Bitcoin and is also going to attract more companies to bring their business here and start supporting it. I honestly do think that someone investing into DMC is going to end up with a higher profit margin than if someone just bought and held 1m BTC alone. If I didn't think that, I wouldn't have bothered placing the plan in front of the community for their input to begin with. |
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After the block reward decrease in early December, you will produce 413910 coins a year assuming 1/3 of all GPU miners quit and no other new production than yours come online. This is 0.4139 BTC per share, assuming 1M shares and full set of 4200 FPGAs. Half of it will cover operating costs, leaving 0.2 coins for dividend. At best, if you get this up really quick before block reward decreases, investors will have back what they paid for their shares after five years. Then block reward halves again and profit, if any, will come really slowly.
And all this changes for the worse if less than 1/3 of current miners quit or other new production comes online.
I can't see how this could possibly be profitable. The only factor which make your calculations work out to the positive is your assumption of doubling exchange rate. To take advantage of that it would be safer to just buy coins.
I didn't vote. It is up to you to decide what you want to do. I'm just not going to invest in it unless I did the math wrong.
Its not that you did the math wrong, its that your valuation of coins has remained constant. Investing looks much more attractive in inflating fiat currencies, but Bitcoin isn't a fiat currency. What people are investing in here is a very large scale mining farm whos sole purpose is to drive the cost of mining down in a way that benefits everyone going forwards. Lets say it takes them 5 years to get the investment back counting in BTC (not including any profit made from large scale green power generation exceeding overall power usage), BTC valuation might have doubled or tripled by then, partly driven by DMC. Not only that, they are guaranteeing themselves future profits which they may be unable to get themselves by mining by themselves due to residential power costs and the high cost of FPGA. In addition, the DMC shares themselves might go up greatly in value if I can swing power generation profits far enough in our favor to make it an important part of the company and not just a way to stave off ever rising power costs (but thats a very long term outlook). Dividends don't solely have to be generated by mining alone if we're already investing heavily in green power. |
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Been looking at em  Still hoping for BFL to speed up shipping,if not I may grab a few Quads instead. Do they come with a powersupply?? It seems from info on thier website that they may not  They don't I don't think. Then again, thats 38 watts. I don't think I'd like 38 watts going through a barrel plug. Don't the BFL miners push 82 watts through a barrel plug? Must be beefier ones then. |
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Been looking at em Still hoping for BFL to speed up shipping,if not I may grab a few Quads instead. Do they come with a powersupply?? It seems from info on thier website that they may not They don't I don't think. Then again, thats 38 watts. I don't think I'd like 38 watts going through a barrel plug. |
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Angry neighborhood bastard mod here. So, anyone see those new quad FPGA boards ZTEX has? |
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