April Dividends paid!
Isn't it a typo of "May Dividends Paid!"?  |
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UpdateThe main thread has been slightly cleaned up. I also added a section of payment history. Ngzhang released some news of Lancelot: https://bitcointalk.org/index.php?topic=79835.msg942822#msg942822. The expected date of first-batch releasing remains unchanged, because the present small bugs were already taken into consideration when he first estimated the date. I could take advantage of the short delivering time and low shipping fee by being in the same country as his. I'm looking forward to my smooth expansion.
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2nd Payment
Calculation time: June 6, 05:45:13 forum time
Number of difficulty change: 0
Number of block reward change: 0
Time interval:
Starting from: May 30, 05:07:33
Ending at: June 6, 05:45:13
Total time: 607060s
Difficulty: 1,591,074.96
Hashrate of this week: 1.0089MH/s
coupon/share = (1.0089*10^6)/(2^32)*(607060*50/1591074.96)=0.0044813
Number of Shares: 5916
Total Payment: 26.5113708
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Update
It's a relatively gloomy week. Our NAV increased less than 1%, and the dividends are not very much.
We plan a major adaptation of our portfolio and positions. We have to say, the portfolio adjustment is very important and necessary in the long run. The low liquidity and the bearish trend of mining bonds caused us some profit loss during the adjustment. We are relieved that it's just profit loss, not loss.
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Weekly Financial Disclosure
Time: 13:14 AM, Beijing time
Date: June 6, 2012
Funds of Last Week: 270.008BTC
Number of Total Shares in Circulation: 5000
Assets:
BitBond
Original: 401shares 243.808BTC
Bought in: 0shares 0.000BTC
Average Holding Price: 0.608BTC
Sold: 0shares 0.000BTC
Average Selling Price: N/A
Holding: 401+0-0=401shares 243.808BTC
Net Gain: 0.000BTC
Dividends Paid: 3.726BTC
JLP-BMD
Original: 1570shares 394.070BTC
Bought in: 0shares 0.000BTC
Average Holding Price: 0.251BTC
Sold: 31shares 8.990BTC
Average Selling Price: 0.290BTC
Holding: 1570+0-31=1539shares 386.289BTC
Net Gain: (0.290-0.251)*31=1.209BTC
Dividends Paid: 0.000BTC
Cognitive
Original: 100shares 51.900BTC
Bought in: 0shares 0.000BTC
Average Holding Price: 0.519BTC
Sold: 100shares 60.300BTC
Average Selling Price: 0.603BTC
Holding: 100+0-100=0shares 0.000BTC
Net Gain: 60.300-51.900=8.400BTC
Dividends Paid: 0.000BTC
YABMC
Original: 1339shares 381.615BTC
Bought in: 0shares 0.000BTC
Average Holding Price: 0.285BTC
Sold: 234shares 67.626BTC
Average Selling Price: 0.289BTC
Holding: 1339+0-234=1105shares 314.925BTC
Net Gain: (0.289-0.285)*234=0.936BTC
Dividends Paid: 5.409BTC
PIMP
Original: 0shares 0.000BTC
Bought in: 300shares 75.000BTC
Average Holding Price: 0.250BTC
Sold: 0shares 0.000BTC
Average Selling Price: 0.000BTC
Holding: 0+300-0=300shares 75.000BTC
Net Gain: 0.000BTC
Dividends Paid: 0.000BTC
Holding Funds=
270.008-0.000+0.000+3.726-0.000+8.990+0.000-0.000+60.300+0.000-0.000+67.626+5.409-75.000+0.000+0.000=341.059BTC
Total Net Gain=
0.000+3.726+1.209+0.000+8.400+0.000+0.936+5.409+0.000+0.000=19.680BTC
Calculated Dividends: 19.680*35%=6.888BTC
Usable Funds: 341.059-6.888=334.171BTC
Actual Dividends: 6.888BTC
NAV: 334.171+401*0.606+1539*0.287+1105*0.287+300*0.250=1411.005BTC
Weekly NAV Growth: (1411.005-1399.484)/1399.484=0.823%
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Friedcat: I am sorry for my misunderstanding of your bond.
From a long term point of view, I am also worrying some risks in China. As you plan to install more miners, in China, I am wondering how will some governments or departments treat the equipment and electricity.
That's OK. And the concern of me being in China is also very reasonable. I will try to explain it. 1. From the legislation point of view, the Chinese government doesn't ban virtual currencies and commodities, but they only allow a single-sided circulation. For example, a game company can sell their virtual currencies for fiat, but players could not redeem them back as fiat again. This means that things like Bitcoin exchanges are in a illegal, or at best, grey area, in China. Bitcoin itself is fine, so is Bitcoin mining. 2. In the reality, legislation and laws in China are not as respected as in western countries. Orders and policies from the executive administrations matter more. Laws could be easily changed, and in most of the time, the government does not need legislation support to do evil things. But consider that the Chinese government is as slow and bloated as other fellow post-totalitarian ones in history, brand new inventions like Bitcoin is too tiny, too agile, and too beyond-of-its-imagination for it to identify. It has got too many other "bigger" and "more serious" problems to worry about. 3. In China, there are many things that are both illegal in principle and thriving in practice. Pornography, prostitution and gambling are all good examples. In fact, if you strictly follow all the laws and regulations, you could virtually do nothing at all. Almost all companies and enterprises evade taxes, or they can not survive for even a single day. Almost all stores and restaurants bribe to government officers, or they could never pass the regulation requirements, which are impossible to meet in the first place, to get their business licenses. The bottom line is that "don't make the government feel that you are dangerous for them" and "don't shout too loud to make other people believe you are beyond their regulations". 4. It is indeed possible that Bitcoin finally catches its eyes, and it finally decides that Bitcoin is a threat to it. But in my opinion it wouldn't be soon, and the possibility will not be significant larger than EU or US doing it. 5. Mining is not done publicly on the streets, and the electricity use is also limited. In China electricity costs about 0.1$/kWh, which is not much higher than in the US. If we could luckily expand to 1000GH or more, the mining space and electricity consumption might attract the attention of the local government. But that's quite far away, and could be avoided by scatter the Rigs into different places or even cities. As a Chinese, I hope I didn't fail too much in describing how things work in China, and I hope the explanations above could answer your question.  |
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Sorry, I should have been more specific, but with everything I say I must be careful not to give up my methodology. I have tested many long-short models and have found better performance from a long-only model that can switch into a completely different strategy during bear markets, albeit with higher draw-downs than a pure spread trader. So it's a tradeoff between return and draw-downs, just as it is with any approach to the market. But then again, perhaps this simply means I don't have as effective a pure long-short strategy as something you are familiar with.  Well don't take my words too seriously. It is just very exciting to see MOVETO.FUND appearing, since it's practically the first hedge fund in Bitcoin, and I can't help throwing out random ideas.  In fact our fund MU is also a long-only fund which profits mainly from buy-IPO-then-sell and market-making. Because of this, I'm very glad to see other funds thrive. Although they may bring some competition, the bullish impact of them to the GLBSE market is sweet. |
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MOORE is a formula bond, which is definitely win all other mining bonds for the issuer. I am wondering whether my following reasoning is right,
The great point is the IPO price, say 0.45 BTC or 0.5 BTC per share, which is about 1.5 times of the normal mining price.
So the issuer can get ~1.5X "hardware", or the simplest way is just to invest other normal mining bonds in GLBSE market to get the normal coupons, which is ~ 1.5X NORMAL coupons for the issued shares.
But the return is a "MOORE" formula, which is less than the NORMAL coupons in a large periods of more than one year, so the issuer can profit more than 0.5X NORMAL coupons.
The first cross point is the "MOORE" return equal to NORMAL return at the time frame more than 80 weeks according to the plots in this thread.
The second cross point is the "MOORE" return equal to ~1.5X NORMAL return, which is apparently at the time frame more than 2 years.
And the last point is from the profit during the above periods of more than 2 years. The profit during that period can also compensate the steeper "MOORE" return in a longer periods, and the profit can also get a normal profit, say the interest. So the issuer may have not any risk for this formula bond.
I didn't reason the details of the difficulty change, BITCOIN changes from 50 to 25 and all other factors. The reasoning is only from an intuitive viewpoint of a linear function that more Bitcoins can be mined if there are more mining power at any situation.
So now I will buy some shares if the price is 0.3 BTC per share as the usual mining bonds.
0.3 BTC per share for MOORE would be a devastating discount that makes me a net loss at all time. It means that I have to support 1MH/s from the very beginning, as other mining bond issuers do, and guarantee the 0.89% per week growth as an extra obligation, with only 0.3 BTC. Only if I could get BFL Mini Rigs or ASIC miners today, and have free access to electricity, I might be able to make a little profits. But in this impossibly optimistic scenario, issuing normal bonds with 0.2BTC/MH or even 0.18 BTC/MH would also be profitable. But as far as I know, 0.2BTC/MH normal mining bonds are not that common in the market. Gigavps did this before, but the market pushed the price to nearly 0.3BTC/MH almost immediately after that. |
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Update5,884 shares have been sold till now. It equals to about 5.936GH/s of hashrate this week (1.0089MH/s per share), which still does not exceed my current maximum capability of about 10GH/s. The raised money will be used for buying ngzhang's mining FPGAs called Lancelot ( https://bitcointalk.org/index.php?topic=79835.0). BFLs and other FPGAs probably will not be an option in the short term, because the waiting cycle will be too long, and they might have trouble passing the border of mainland China without paying relatively heavy tariffs. At the best scenario, we could get over 30 Lancelots at 400$ each for the first batch, which could be as fast as mid-June. Because I'm also in China, both the shipping time and the shipping price are almost negligible. If each Lancelot could mine at 500MH/s as said in the corresponding thread, It will push my mining capability from 10GH/s to more than 25GH/s within this month with the current sold bonds. At the worst scenario, the first batch could be delayed for a while, and there might be some limitation on how many each person could buy for the first batch, then I can only get less than 30 Lancelots at 500$, so I would rather waiting for the next batch, which might take as long as 1-2 weeks for retail buying and about 4 weeks for wholesale buying. In this condition, my mining capability will be pushed from 10GH/s to more than 25GH/s before the end of July, but before that, I will have to pay coupons with the existing mining power. Therefore if in the next few weeks, some sudden demands of MOORE rise, I might reduce the first round of offering from 20,000 shares to about 8,000 to 9,000 shares, and offer more after the first wave of hardware arrives.
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Lol with my teenie market cap of 1K BTC!  Seriously though, thanks for the motivation. Your 1K BTC fund might become 1M or 100M USD or even more after 5 years, if BTC really takes off, and you manage to cash out exactly before each time it rallies.  The problem with the long/short strategy is that it makes less money, and yet although it may appear to have less risk, in reality you never know when your spreads are going to come apart ( think LTCM ).
I think a well engineered long-short strategy not just reduces the risk, but also increases the expected return. "makes less money" means it will make less money in the best scenario. However, what we care about most is the expected average return rates, right? So both the "what if a meteor hits earth" condition, and the "if I long AAPL from the start" condition, contribute only a little to the average return rates. Of course it's just my personal view which I'm not very sure of. |
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And another thing to consider: It would be very interesting if you could develop a more conventional strategy as real-world hedge funds do? What in my mind is something like a combination of several or all things above: 1. longs on GLBSE. 2. shorts on GLBSE. 3. longs on BTC vs USD. 4. shorts on BTC vs USD. 5. call/put options of GLBSE assets. 6. other derivatives not re-invented in the Bitcoin world yet. Because I feel that long-only strategy is more vulnerable to risk than a carefully planned combination-based one. If you could make it fully automatic and rely on a sound investment model, MOVETO.FUND may become the Renaissance Tech of Bitcoin( http://en.wikipedia.org/wiki/Renaissance_Technologies). |
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Before the transparent funds are implemented by GLBSE, could you provide us the portfolio information somewhere else? Thanks.
I am still thinking about how to best do this. There is a tradeoff between giving out trading information to competitors vs being transparent for investor trust. In the meantime, I think the way to go is with regular auditing by a trusted third party: (1) Every month I will post the current NAV ( i.e. price per share ), # bitcoins I have on reserve for buy-backs, and fees paid (2) I will get Nefario to look at the fund's account to verify that the information is correct, and that I am following what I have promised in the contract. (3) Nefario will sign the audit with his private key. (4) I will post his signed audit here on the forum with my monthly report. I'm in talks now with him to see if he would be willing to do this for me. Naturally he would charge a fee which would come from my own pocket each month. Thanks for your reply. I'm very glad to know about this. But in my opinion, your proposition has some parts of it which are "overdoing" while some are not enough. "Overdoing" part: Nefario with his private key as an escrow. (But I secretly think that bothering him for this will give him an incentive to give transparent funds a higher priority in GLBSE's todo list. Just joking.) Not enough: Many hedge funds will give their investors information about their portfolio and positions in addition to just the NAV. You might not want to disclose too much information on the forum, or everyone else may read and emulate your strategy. But you could send information to shareholders. If you think 1 share(1BTC) is a too low threshold for people to know your financials, you could issue something like "MOVETO.FUND.MAJOR", which sells, say, 500 BTC each share, of which equals to 500 "MOVETO.FUND" shares, but the shareholders have the privilege of knowing more information than normal "MOVETO.FUND" shareholders. Hope some part of the suggestions above will be useful to you. Best regards. |
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So no following motions about Lancelots vs 7990's?  But anyway, after all BTCs are finally spent to buy hardware, whether they are newest FPGAs or newest GPUs, the MH/BTC of JLP-BMD will exceed all existing mining assets. The only concern is the high consumption of electricity of video cards. Now it seems that the electricity fee is compensated with GPUMax, but >100% PPS pools will not last forever. |
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I picked up a small amount of shares Thanks again. We have to say that, even ourselves consider MU amazing, because of its past performance of continuously beating the market for nearly two months, which are not a short time in the Bitcoin world. And we did it mostly by trading mining assets. They are relatively less risky. Someone might say that actively maintained mutual funds can't beat ETFs or the average market in the long run, but let's see. |
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Nice. Starting small will make you flexible and agile. Nearly 40% selling at the same day of IPO is also a good sign.
Before the transparent funds are implemented by GLBSE, could you provide us the portfolio information somewhere else? Thanks.
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hmm, who cares about 30% price drop if you can get 2%-6.8% interest per week? :-) BTW price of Gigamining shares went back up as it has quite high ROI, and additionally, the ask side almost didn't move at all but nevertheless, I wish you good luck and happy investors with your fund We own 140 shares of Gigamining, but the point is we also own positions of comparable size in many miners -- some of which pay out higher than gigamining. In the end you get the same dividend, but it's more stable. It's a pass through -- if we get 5 bitcoins in dividends from gigamining, we pay out 5 bitcoins in dividends to our shareholders. The benefit for YOU is as stated; strength through diversity. That being said, yes, there is a demand for high yield financial bonds. May I suggest Gamma Bitcoin Fund, for a very profitable BMF-like fund which also invests in pirate bonds and other high-yield instruments? Your risk will be reduced if you let a fund manager handle diversity and trading for you. There are other funds similar to Gamma Bitcoin Fund too. I hear MU is good. It's run by friedcat who is a pretty cool guy. So check out GBF and MU, if you want a higher yield fund. Thanks for your advertisement in your own thread. If I were you I wouldn't do this. By the way, MU was only slightly Pirate related and recently turned to be totally away from Pirate. |
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(2) The maximum concentration in any given security is 20%.
Is there any limit to exposure to a single market sector? For instance, if your algorithm chooses to invest in 10 different pirate bonds you will have less than 20% in any given security but still 100% exposure to Pirates's default. This is a great point. Right now no, there is no sector filter - but I will definitely consider adding this soon since it's a great idea. However, regarding Pirate: I have already filtered out all assets that are associated with his operations. If you want pirate exposure, you'll have to invest elsewhere. Nothing against him personally, it's just that I don't know or understand what he is doing. We plan to be Pirate-free from this week. So MU could be white-listed. |
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5/30/2012 - CONTRACT UPDATED PRIOR TO IPO such that dividends are automatically reinvested into the fund, which is how most hedge funds operate. This ensures the highest possible performance for investors, as well as making MOVETO.FUND a "set it and forget it" type of investment, where clients are not continually having to reinvest their own dividends. ( It also has the side effect of making the paperwork easier for everyone, because investors that continually request new shares in order to reinvest their dividends would be very difficult for me to accommodate. )
Here is the final contract:
(0) Each IPO share represents a 1 BTC investment in the fund.
(1) The fund trades and invests solely in securities on the GLBSE.
(2) The maximum concentration in any given security is 20%.
(3) 80% of earnings are reinvested for fund growth, and 20% are paid out as fees to the fund operator. Fees are paid once a month on the first of the month.
(4) The fund operator will buy-back shares on the first of every month upon request to ensure liquidity for exiting MOVETO.FUND. Each share is valued at (1 / # shares ) * fund_portfolio_value minus 1% to cover redemption expenses.
(5) New shares may be issued at any time at (1 / # shares ) *
fund_portfolio_value price to ensure liquidity for entering MOVETO.FUND
I have notified Nefario of these changes so hopefully the IPO page will change shortly. Naturally after the first share is sold the contract cannot be modified, so I want to make sure I get it right. It's also possible Nefario will require that the IPO be postponed somewhat due this modification.
Either way, I will keep you posted. Take care.
-cyto
It's closer and closer to the fee structure of the "real-world" hedge funds now. Good to know that at least you don't charge an extra 2% of the deposits like other hedge funds do. There's a potential risk for you however. If there's a panic buy-back demand with a high volume, you will lose a lot of money when you liquidate your position, considering the low liquidity of GLBSE. |
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Update
To reduce the "scary wall" and facilitate the discovering of a proper price. We changed the IPO offering from 5,000 shares to 1,000 shares.
The bulk purchase is still open at 0.45 BTC/share.
As the hash rate grows each week and so does our obligation of payment, both the IPO price and the private offering price are about to rise soon.
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