I’ve been receiving a fair amount of feedback thus far, which is always helpful. I wanted to take a moment to address a few questions and suggestions that have been repeated a few times.


While this would be a short-term and aggressive solution, it does present two primary concerns:
1)   If the calculations show that, even under optimistic circumstances, hardware purchased at price “X” isn’t able to recoup that cost “X”, is it really worth it to make the purchase in the first place?
2)   A change like this would require a vote, and one that would more than likely fail because it doesn’t present itself as a viable long-term solution to a perpetual problem.



Unfortunately, gambling on when the BTC/USD exchange rate will go up isn't a practical long-term, or short-term, business model.

In order for us to grow in any substantial capacity (speaking solely to datacenter space and hardware purchases), the exchange rate would need to be above $750 per BTC. That price would give us the ability to increase our hashrate by 50%, datacenter space by 100%, and cover energy costs associated with adding another 20A circuit.

While it’s always a pleasure to see the exchange rate rise, we know it can also fall. It’s better to be realistic about the situation rather than hopeful, which is a hard lesson I’ve learned in years past.



I have some daunting ambitions, certainly, but we don’t have the capital resources (by a long shot) to grow even one hundredth of their size. Hosting space, energy costs, and time are also major preventative factors.



Mining something is better than mining nothing. I won’t even touch on the pain and aggravation we would experience if we had to sit through another preorder queue. Foregoing that would mean purchasing hardware that is available now, which, in terms of efficiency, is on par with what we’re already using.



Shares are left untouched in this process, and can still be traded when the KCIM market resumes. The last dividend will be paid out on a ‘per share’ basis and will be distributed after all equipment has been sold and funds are accounted for. At that point, trading will again be halted, and a summary of all assets and final dividend will be posted.

Once the dividend is paid and outstanding issues are resolved, the fund would be permanently closed.



Assuming full liquidation, the final dividend will be comprised of all remaining mining revenue, leftover funding from the previous model, our reinvestment fund, proceeds from the sale of all equipment, and any remaining Namecoins mined on BTCGuild. It’s hard to say what this value will be, but I estimate it to be anywhere from BTC20-30 (0.00023 – 0.00035 per share, 10x more than a normal dividend).

Theoretically, selling the entire operation as is should net a bit more than that as there is value in A) already having a listing on Havelock and B) having an established investor base. A motivated individual or organization looking to build a mining farm would have the framework in place by buying us out instead of starting from scratch.

Ignoring how profitable another coin may be, mining Bitcoin was our only focus with the equipment. Introducing additional mining and exchange risk by trying to profit from other coins would have been irresponsible and reckless, regardless of how lucrative.


No. Any revenue from mining was used to cover expenses and set aside for reinvestment / dividends. Trading with mining proceeds *is* akin to gambling in this market, and also incredible unprofessional and irresponsible.


Should dissolution be agreed upon, the next step would be to determine how to dissolve the company. I'd likely determine if there are any immediate interested parties for the entire asset (which includes the equipment, Havelock listing, and investor base), as it's easier to sell everything to one person / organization than to sell everything bit-by-bit. If no one is interested in taking up the reins, the next step would be to find any interested buyers for the hardware and slowly sell off each one.

During that time, mining will continue as normal, but bi-weekly dividends likely would not. The final dividend would be distributed once all hardware is sold and any internal processes are concluded. This dividend would be a culmination of all mining revenue during the liquidation period, proceeds from the sale of hardware, our reinvestment fund, and any remaining fund reserves I had set aside.

An act like that would be on par with gambling, and extremely irresponsible on Cryptx's part. When it comes to mining, it's a far more intelligent decision to act on current information rather than future projections (or guesses), especially when outside funding (e.g. investors) is involved.

Hi All,

Thank you for your responses and comments thus far, and to those of you who sent me a PM or email I'll be getting back to you shortly (still playing a bit of catch-up).

A survey link will be released tonight and again tomorrow (via Havelock) so I can get a feel for where everyone stands, similar to the way I handled the restructuring back in December. A reminder to submit your vote will go out again on the 27th and 29th, with a final tally being taken on the 30th prior to trading reopening.

Just so everyone is aware, this is not a forced liquidation, instead it's merely a suggestion based on where I think the network is going. With that in mind, proceeding down this road leaves us with options besides simply selling off all mining equipment. Another option, as wisely pointed out by a knowledgeable investor, would be to sell the fund in its entirety (including all equipment) as a going concern to an individual or organization that has the available resources to push forward.

Stumbled upon a company called HashPlex quoted in an Ars Technica article. Seems they could be a nice addition to this thread!

URL: https://hashplex.com/
Price: USD$99/mth per 1kW, $89/mth per 30kW, Quote for 500kW+
Location: Various - Washington, US
Thread: N/A
Feedback: TBC

I appreciate that, thank you.


Reply sent!

Important Update

Noted below is a culmination of several weeks of thought. I've been trying to figure out what the best course of action is in such a turbulent, and slowly centralizing, mining environment. What I've put together represents my thoughts on where we stand and my concerns going forward, but more importantly I'd like to hear from the community.

Formatted PDF Version (including working links): https://drive.google.com/file/d/0BxnW49twNMNbZlVRN3Y1WGZXYTQ/edit?usp=sharing


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Abstract
Korb and Co. Investments, DBA Korb Enterprises, is looking to liquidate all mining gear and cease operations as a Bitcoin mining organization.

Overview
To many of you who have kept apprised of the changing Bitcoin environment, I’m sure this comes as no surprise.

The past two months have been difficult as we’ve been operating at a net loss. While I was aware this was going to happen, I didn’t plan for such a drastic decrease in the BTC/USD exchange rate. This drop greatly effected both our ability to reasonably cover expenses and our ability to purchase new hardware, all using Bitcoin of course. With no new hardware coming online, coupled with an increase in BTC expenses (when converted from USD) and an increase in network difficulty, it’s becoming infeasible to continue for very much longer.

All net losses have to be reconciled somewhere in order to pay dividends, and in this case it has been pulling from the leftover funding I set aside for dividends under the old KCIM model in 2012. As planned, this source of funding is coming to a close, and it was never intended to be anything other than a crutch during slower months.

In order to maintain the previous dividend model (paying 0.000025 Bitcoins per share after expenses, per two week period, 26 periods total) KCIM needs to operate roughly 0.006% of the network at any given time. During the early months (December 2013 – February 2014) this was fairly easy (very minor net losses and gains over the period), but unfortunately also very short lived as hardware delays mounted and our overall purchasing power decreased.

As it stands right now we are still operational, but given our current circumstances I voice these three concerns:

Mining Difficulty, Public/Private Interests
The most daunting challenge in Bitcoin Mining is predicting where the network is headed. The number of variables that can go into such an equation are often numerous and volatile; factors such as the BTC/USD rate, current difficulty, energy costs per kWh, past difficulty increases (averages per 2016 blocks), number of ASIC device manufacturers, and cost per device should all be considered.

When considering the number of public manufacturers currently (including “supposedly”) working on development and shipping, there are several prominent companies in the industry. Serious companies to consider are: KnCMiner, ASICMiner, BitMain, Spondoolies Tech, BitFury, Bitmine, and CoinTerra. Other contenders (including dodgy companies at this point) are: BlackArrow, Buttefly Labs, Avalon, Hashfast, Dragon, and several others.

Combined, we start to see a picture of what they’ll be shipping, spawning threads like these in their wake: https://bitcointalk.org/index.php?topic=283820.0 and https://bitcointalk.org/index.php?topic=387533.0

Most of the well-known developers have numerous Petahashes worth of hardware on order, including news from ASICMiner that put their current on-order wafers at 100PH/s, with possible expansion into the Exahash range (1,000PH/s) over time.

Aside from publicly disclosed details, we’re also encountering a substantial amount of private and semi-private interest in Mining. GHash.io / CEX.io is the most prominent known example of this, but Cloudhashing.com, MegaBigPower.com, KnC Miner’s datacenter, CoinTerra’s datacenter, BitMain Tech’s operations, and ASICMiner also come to mind.

So long as there is money to be made, organizations with the knowledge and resources will look to take advantage of that fact, ultimately reaping the benefits sooner than anyone purchasing retail devices, putting smaller mining organizations at a disadvantage. This isn’t uncommon, however, and it is a trend that will continue so long as the Bitcoin economy continues to grow.

As it stands right now, all of our equipment is still marginally profitable, which is why liquidating now is beneficial; the devices still have market value.

Lack of Resources
While we do have some dedicated space in our datacenter (limited, but flexible), we do not have the capital required to continually purchase hardware to store there. Ultimately, we are unable to purchase any meaningful amount of hardware to achieve and maintain a 0.006% share of the Bitcoin network, especially as it continues to grow exponentially.

These issues have led to a gap in our incoming orders, and soon a decline in our share of the network. The larger the gap, the harder it will become to catch up to our minimum requirement.

This is not for lacking of trying, however. With our purchasing power based solely in Bitcoins, and hardware based primarily in USD (a few companies notwithstanding), we have to contend with an ever changing BTC/USD exchange rate. As it stands in this moment, no hardware purchased using Bitcoins at today’s prices (~$450-470 via Coinbase, May 18th) will ever recoup the original cost to purchase said hardware (in Bitcoins). Continuation requires a vast increase in price that my not come soon enough.

Between January 1st, 2010 and May 12th, 2014, the network difficulty has increased an average of 20.34% per 2016 blocks. Using a BitMain AntMiner S2 (1TH/s) as an example (as stock is on hand and ready to ship), at the time of writing they’re priced at $2,424 (5.51 Bitcoins, May 13th 2014). At this continued rate (and including energy costs @$0.15/kWh), the device would be mining at a loss when network difficulty reaches approximately 60 billion, bringing in a total net income of 2.69 Bitcoins by that point: goo.gl/QYI0N9

It’s easy to assume such an exponential trend cannot continue indefinitely. As such, calculations at even half that increase (per 2016 blocks) still yields disappointing results; the miner has only earned 4.91 Bitcoins during the time it took to reach a difficulty of 60 billion: goo.gl/moIGKE
United States Regulatory Concerns
When this venture officially started at the end of October 2012, Bitcoin-denominated Securities presented a legal ‘gray’ area, to the point where I even wrote a brief, though dated, analysis on the subject after consulting with a local Securities lawyer.

Since then, the Securities and currency regulators in the United States have become more aware of what Bitcoin is and what it can be used for. 2013 marked the year when FinCEN and the Securities Exchange Commission stepped in to voice their position on the virtual currency, as well as the Federal Court ruling in August of that year that Bitcoin was money. In 2014 so far, we’ve seen an update from FinCEN regarding Money Transmitter laws and an IRS ruling on how gains and losses in Bitcoin should be taxed.

What that leaves us with, however, is an outdated list of rules we should be abiding by. Unfortunately, I no longer have the time, knowledge, or financial capability to properly bring this organization up to current standards, leaving us unable to adhere to the rulings presented over the past 12 months.

While this is something that solely lies with me, it is still a concern (both in the present and future), and certainly something I must acknowledge. With that, I want to make it perfectly clear that I have NOT received any notification or contact from the United States Securities and Exchange Commission, Financial Crimes Enforcement Network, Internal Revenue Service, or any State or Federal Court Circuits regarding a cease and desist for current operations. While this may not presently be the case, it is better to be proactive and open about the situation.

At this point in 2014, any individual or organization based in the United States who is looking to build a crowdfunded mining farm will have trouble proceeding legitimately, I have no doubt about that. Be wary of these investments.

Afterword
I’ve always been a ‘one man’ operation, and I’ve always been as forthcoming as I could about what I know and don’t know. Along the way, community members have pointed out my mistakes and offered criticisms, but at the same time they’ve also offered solutions, strategies, and praises. For that, I couldn’t be more grateful for what I’ve learned over the years, and I’m proud to be a part of such an intelligent community.

Along with this, I’m also quite impressed with how far Bitcoin has come over these past few years, from media attention and network growth, to general value and applications. I certainly imagined some growth when this project begin, but nothing as epic, turbulent, and stunning as what we, as a Bitcoin mining organization, have gone through.

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I'd love to hear what others think on this matter. Any comments, questions, concerns, or general opinions are more than welcome, and I plan on being around for much of today and tomorrow to address each one as I can. I'm also on FreeNode IRC, #HavelockInvestments

Hello Everyone!

Trading will be temporarily halted tomorrow (May 23rd) at 12:00PM EDT prior to some new updates I'll be releasing. We'll be going over where we are so far this year, what's to come (potentially), and go over some voting.

The freeze will last seven days, and trading will resume on May 30th, 12:00PM EDT. There won't be any effect on mining or dividends during this time.

Is this the one?

eBay store: http://stores.ebay.com/1stsourceapplianceparts/

APCO Appliance Part Supply (aka 1st Source Servall Appliance Parts, part of a turn-key operation).
5520 Jewella Ave, Shreveport, LA 71109

A friend of mine is actually stationed over at Barksdale AFB, and I'm sure he wouldn't mind paying a visit to see if this is legit.

Interesting! There are 5 letters in 'North' and in 'Korea'. The NK is 2 letters.

5-2 = 3

Half Life 3 confirmed.

I'm trying to recall, but isn't there a way to connect up to it over USB (the port on the back must be used for something)? Maybe that's something else I'm thinking of...

Ah, I see what you're saying. I apologize, I misunderstood before.

Since that's the case, price per GH/s starts at ~$2.84 (@$448 per BTC) and varies from there based on share price & BTC/USD fluctuations. Compared to other hosting plans, $2.84 isn't so bad...but compared to actually purchasing and running the hardware it's terrible

You are guaranteed >15GH/s, for now anyway, but an increase in the outstanding shares does have a diluting effect:
1,500,000 GH/s spread over 66,375 shares is ~22.6GH/s per share.
1,500,000 GH/s spread over 76,206 shares (selling out the current IPO) is ~19.68GH/s per share.

Which would you rather have?

They should, theoretically. Right now, PETA is at about $5.64 per GH/s (~7.55 GH/s per share @ BTC0.095). Assuming full deployment of 1.5PH/s, current share value (BTC0.095) puts it at ~$1.88 per GH/s (at 66,371 outstanding shares)...but the more shares there are, the higher the 'price per GH/s' will be.

Until full deployment happens, though, CoinTerra's new hosting plans range from $4.99 down to $2.75. And I'm not sure what KnC's plans are for hosting...

This was a bit painful to read, but it does highlight some glaring issues with how some people view mining. $3 per GH/s was a fair deal 4 months ago when BTC/USD was $700-800 a coin and network difficulty was under 2.5B.

As Jimmothy started to touch on, current hardware has fallen well below that mark. A BitMain AntMiner S2 (1TH/s) is being sold for BTC5.065, the equivalent of ~$2.27 per GH/s at today's exchange rate. It's predecessor, the AntMiner S1, is being sold for BTC0.439, the equivalent of ~$1.09 per GH/s at today's exchange rate, though not as energy efficient. As newer hardware is introduced and competition increases, it's expected that the price per GH/s will continue to fall.

Currently it does, sure, but that won't last too far into the future. My point in this case is that it's a much more sensible investment (for most people) to purchase Bitcoins outright instead of either mining themselves or going through hosted plans.

Let's say the hosted hardware CoinTerra is offering somehow manages to get 1w per 1 GH/s. For a 12 month host, that 1w / 1GH/s will cost approximately $2.19 (@ $0.25 per kWh to cover industrial energy, space, cooling, and security).

200GH/s is priced at $999, and costs CoinTerra $438 to host. Profit is ~$2.80 per GH/s.
1,000,000 GH/s is priced at $2.75M, and costs CoinTerra $2.19M to host. Profit is $0.56 per GH/s.

If you go with the max plan, 1PH/s for 24 months:
1,000,000 GH/s is priced at $3.5M, and costs CoinTerra $4.38M to host. Obviously they can't have a loss, so my guess is either A) they've already factored in a baseline profit from developing the hardware itself (e.g. it costs less than $1.75 per GH/s to develop the hardware), B) I've overestimated the cost per kWh, C) something I've missed, or D) a mix of A, B, and/or C.

In any case, they've got some high margins on plans most people would actually purchase. Things only get reasonable when you start spending a few $100k-$1M.

Ah, yes, I've received that as well. Hosted mining between $4.99 and $2.75 per GH/s, which I suppose isn't so bad.

Oh wait... http://goo.gl/p7emyh

Ordered a pint glass with the Batman symbol and a Bitcoin beer mug last week via PayPal. Packaged arrived today and was a little beat up (obvious disconcerting given the contents), but both items were packed fairly well and didn't sustain damage.

Regarding the products themselves, I'm kind of 'meh' on the prints. Both turned out much smaller than I was expecting, but that may just have been the angle of the shots for the website.
I tried to compare them as closely as I could to the actual sizes.
Batman Pint Glass: https://i.imgur.com/ts2wHxT.jpg
Bitcoin Beer Mug: https://i.imgur.com/iQB93wz.jpg

I still like them though, and they're a nice addition to some of my glassware.

EDIT: Also 'meh', the print goes nearly transparent when the glass is chilled / filled. Not so bad in this pic though, but a flash helps: https://i.imgur.com/Dp92yUV.jpg

Received our second unit at the beginning of the month, and got it situated in the datacenter on the 2nd (I apologize for the lack of update here!). We're currently hashing at ~3.9TH/s total so far.

Just so I'm reading that correctly, $180 per 1,000wh? Is that over 115/120v or 220v?

I ask because if it's the former, that's expensive. As it stands right now I pay $125 per 20A (2.3 KwH) circuit I use in my datacenter for 'street' (unfiltered) power, and while not 100% full service the onsite techs help me move and setup gear as necessary.