Update: dividends for week 38.2012 paid, trade walls for this week set at 0.09 and 0.2164


Dear Investors,

after the payment for past week, I updated the trading walls accordingly.


With the latest updates from the ASIC developments from multiple parties it gets quite evident that the remaining operational time for existing GPU and FPGA mining rig - and consequently for existing mining bonds - will end in Q2/2013. ngzhang alone sold 18TH (300 Avalons with 60GH each) within 24h as pre-series run to ship early 2013. Network will probably have reached 100TH by then, and with the ASIC manufacturers entering mass production the Petahash magnitude is not far away.

On one hand I realize that mining with my FPGA farm will become less profitable, on the other it becomes clear that from a practical standpoint the time is right for ASICs: I only need to go down to my mining room in the basement to see how insane Bitcoin mining currently is. My farm burns 3.5kW 24/7 and as a result my basement is (although the rig operates in front of an open window) at 32+°C. I am and always have been very conscious about my 'ecological footprint' and not long ago I replaced light bulbs in my flat with energy saving lamps to save another 10W here and there. But now for mining I am wasting 350 times that savings and I begin to wonder if Satoshi's major mistake was to overlook the continuous growing need for energy waste. Sure, that's how things work today, and sure other projects and/or companies pollute the environment on a different scale (check out Google's energy footprint), but for me as someone who thinks twice whether to take the car or the bike, mining maneuvered me into a serious conscience dilemma.

The coming six months are safe - it is getting cold and I can at least pretend to use my farm as heating device that waste dumps some valid shares   Thereafter, it is time for ASICs to save some energy (and yes, I am fully aware that by Q4/2013 everyone will scale up their ASIC mining farm to the same wasting levels we have today, that's why I call it conceptually flawed blasphemy )


Have a nice and prosper week,
Zefir

Yes, I confirm that. I am heavily invested in ASICMINER (with my portion of shares locked by friedcat) and since my FPGA mining farm is not BFL based, I am offering an asset swap of 2 ZETA-MINING bonds for 3 ASICMINER shares as kind of good will ASIC upgrade path. Quite some investors made use of this offer so far and I swapped 6k+ ASICMINER shares since beginning of September.

Based on the price history there was only one short period of time where it was profitable to sell ASICMINER shares right after a swap, which might have caused the price dip from ~0.14 down to 0.1 we saw on 09-06. Not saying that this is what happened, but that the current dips most probably were not caused by my former investors dumping shares after swaps - that's not the idea of an ASIC upgrade.

Anyhow, there were nice opportunities to get into this promising venture. If I had more liquid BTC, I'd buy every share below 0.12 right away, but sadly other strong hands took the cheap ones meanwhile

Update: dividends for week 37.2012 paid, guaranteed buy-back price for week 38.2012 set to 0.093


Dear Investors,

with the payments of dividends for the past week, the break-even price per bond reached 0.2196BTC. With the current 24h US$/BTC rate of 11.8 the guaranteed buy-back price for this week is set to 0.093 - bid and ask walls are accordingly set.

I had another small exchanges for ASICMINER shares and people asking if this offer is still valid. For clarification: yes, the offer is still valid. I'll stick to it and swap any 2 ZETA-MINING bonds for 3 ASICMINER shares until end of September 2012, no matter where the prices go. This is my way to provide my investors some way of ASIC upgrade.


Have a nice and prosper week,
Zefir

Hi EskimoBob,

let's leave it at that. We obviously do not agree on some points - but we do not even have to.

The market will decide who is right. And with the latest development of even 'guaranteed' investments at 1.8%/week defaulting, I personally do not see alternatives for zero-risk investments other than in mining. Soon the dust Pirate raised will settle and unveil how substantial those fancy non-mining related investing constructs really are. Most probably the GLBSE-top10 by the end of this year will consist of mining securities - call them 'turds' or not. Let's just wait and see. Deal?


Cheers,
Zefir

Hi dishwara,

well, you'll need to read the ASICMINER (they are shares, btw.) contract to decide if it is the way you want to go. They are not paying dividends right now, they will do if they succeed to realize their plans and provide ASIC miners in the early phase (i.e. before BFL, bASICs, etc. boost difficulty to new levels). If they succeed, you'll multiply your investment within months - if they fail you'll most probably loose your investment.

It all depends on what risk you are willing to take - and this is something you need to decide by yourself, do not expect (or accept) external advices.


HTH,
Zefir

Hi dishwara,

could you specifically ask what you do not understand? If it is about mining and bonds in general, you'll need to study the forums by yourself.

If it is related to ZETA-MINING, please ask what you need better explained. You might prefer to do it via PM initially and post it after we clarified the issues interactively.

The bond is still a perpetual mining bond with each share paying you weekly the equivalent mining income of 1MH/s 100%PPS. I recently posted offers to my investors to disprove some common accusations towards fixed MH/s mining bonds recently flowing through the forum:

1) claim: mining bonds are bad, mining companies are good, since you hold a portion of the mining rig
If you prefer mining by yourself, I'm fine: you transfer 800 bonds back to me, and I send you a CM1 board hashing at 800MH/s.

2) claim: ASICs will make existing mining bonds worthless
If you believe in ASICs, transfer me X ZETA-MINING bonds, and I'll send you 1.5X ASICMINER shares back. Offer valid until end of September 2012.

3) claim: mining bond issuers pass the risk to the holders completely and keep the rewards for themselves
At any time I will buy back ZETA-MINING bonds for the break-even price denominated in fiat (see post above). For this week 37.2012 this is at 0.102, a bid wall for 1k bonds is placed. If that wall is ever cleared, do not sell below that price at any time. Instead PM me and I'll buy the bonds for this price within 72h.


That is basically what I am adding as voluntary offer on top of the contract. If you want to use any of those, just PM me.


Does this help to clarify?


Cheers,
Zefir

This implies that others were just taking coins without delivering -- and that's really an unfair and false claim. I do not know of any single issuer of mining bonds that took money and ran - all of them are still paying coupons regularly. In contrast to them, look at all those shiny constructs that tried to squeeze out more than is essentially doable (which in fact is the current inflation rate of 50.4k fresh coins per week / 9.89M coins total = 0.5% weekly) - bust, illiquid or in the process of ceasing down.
Seriously, you do not see how insulting your posts are to people involved? Please, do read them again and look at it from a bond-issuer or holder perspective. I lost tons of fiat money and countless time to set everything up and keep it running to keep my promises. And then you come along and call what I am working so hard for (as others do) 'turd'? This is where I am putting every single minute of my time into, and reading your posts everywhere calling this a 'pile of shit' is, well, more than disrespectful.


You did not address the essence of my claim, which is: do you believe that mining in general is economically profitable? If it is, mining bonds can't be your 'guaranteed loss turds', if it is not, then: Goodbye Bitcoin.


Cheers,
Zefir

Hi EskimoBob,

I cared not to mention you personally as the inventor of the 'turd' naming for mining-bonds and one of the few very enthusiastic detractor of those, but now since you step ahead and repeated your claims here (like you already did in almost any mining related GLBSE thread), let me please answer shortly.

Yes, I follow your argumentation and also admitted somewhere in this thread that the initial idea to make back the investment within 6-8 months is not achievable any more - it will maybe take 2-3 years. The result is a direct outcome of the broader availability of FPGA based mining rig and the anticipated arrival of ASICs that increased the difficulty in that short time, and put a pressure at existing mining securities, respectively. Now that's the inherent risk for investing in mining in general and in buying mining equipment in particular.

What I do not like in your argumentation are two factors: a) you are calling everyone who is invested in mining more or less idiots for not being able to predict the development that led to the current situation, and b) you are implying that mining is non economical in general. While the former is just impolite towards the folks around that are engaged and believe in Bitcoin (maybe even more than you do), the later is plain wrong and contradicted by the pure existence of Bitcoin.

I claim that investing in mining-bonds is an equivalent of investing in mining rig. When I did my IPO, the price for 1MH/s was about 1.5 times the cost for the mining boards alone. Now take that your boards are not running at 100%PPS (in retrospect, mine are at around 85%) and additional infrastructural investment required, let's assume for a moment the factor is a fair one. If you claim mining-bonds are a guaranteed loss, you equivalently state that buying mining equipment also is. Now, if that was the case, who do you think would buy mining rig to keep Bitcoin alive? Those generous people that have enough spare money to throw it away for just being nice and support the idea? Or those that believe difficulty / price ratio will develop in a way that mining remains profitable in the long run?

I believe in the second. If you personally don't, then you maybe even do not believe in the long term success of Bitcoin as a whole. Do you?


Cheers,
Zefir

Update: successful ASICMINER swaps & recall of bonds


Dear Investors,

I had an enormous feedback on the exchange offers for ZETA-MINING bods, with interests concentrated to swap for ASICMINER shares.

Several investors exercised the offer and I ended up with lots of ZETA-MINING bonds that I currently can not sell for a reasonable price. Now that Pirate went bust and caused most of the high-yield investment opportunities at GLBSE to cease operation, investors might soon realize that 1-1.5% weekly ROI is not too bad - and mining bonds are far from being 'turds'. At current difficulty 1% weekly would match a 1MH/bond price of 0.26BTC, which is around twice as high as mining-bonds are currently rated.

When the market is willing to correct the valuation of mining-bonds, I am open to sell more of mine to finance expansion. For now, I decided to do the opposite and recalled 5000 bonds. With the 1000 I left unsold in the asset account to provide some liquidity, there are 4000 bonds left outstanding. This matches exactly 10% of the physical hashing power I currently have to back them.


As stated in the exchange offer, I am accepting swaps for ASICMINER shares at a 1/1.5 ratio until end of September. Also I need to point to potential takers again that, while it seems a profitable move right now, remember that you are swapping a low-risk low-income investment for a high-risk high-income venture. You might multiply your coins within some weeks, but other ASIC manufacturers popping up might void ASICMINER's plans and profitability forecasts (that's nothing new, friedcat is openly pointing to those risks). Though it should be pretty obvious, I state it here for completeness: the offered swap is a one-way process, i.e. I will not swap back at no time.


Have a nice and successful week,
Zefir

Hi VeeMiner,

the additional information board members received so far does not exceed what is available here in the forums - at least nothing that would give you an informational advantage over non-board members. To give you a better idea, here is what has been provided so far:

1) a detailed explanation on the relation between ASICMINER and Bitfountain shares and how dividends will be distributed. This is basically a confirmation on what was already written in the IPO posts.
2) an introduction of the people behind Bitfountain, including full names, contact information, and short CV. This is basically to confirm that those people a) are real, b) are capable to deliver what is planned, and c) can be contacted for further questions.

All in all it does not provide valuable information other than a strong indication that those folks are serious and the plan sounds reasonable. I'm pretty sure friedcat will make most of those documents available to the general public at a later date (but for obvious reasons he won't post contact information to the individual developers on a searchable forum).


HTH

Hi Elraffa,

thanks for your support. Most other mining bonds already provide some sort of 'ASIC ubgrade path' based on BFL's product upgrade offer. My intention is not to offer such a path (hence the limited offer for ASICMINER exchange), but to allow those who see FPGA mining threatened by ASICs an exit opportunity. It still might turn out to be an exchange of the one bird in the hand for the two in the bush, but at least you have a choice.

Feel free to PM me if you decide to.


Cheers, Zefir

Bounty transferred: 200 BTC sent to 1KqMBXSmZDFzCsZqp84mNB3QM3t2bV3BaB
Transaction: 2a6823eb8a6c578e5c66f6f9af94fae952acf1329e28b609c9ae09d2a006a707


Thank you all for the support. And of course thanks to Glasswalker, makomk, TheSeven, and all others for their enormous effort.

Yep, that's all true.

My statement is based on the observations I have with some of my boards running makomk's latest 200MHz bitstream. To be safe on the timeout value on SW side, I always run cgminer with --icarus-timing long, which effectively prevents FPGAs from running out of work and idling. What I observe are boards (that always have been 'problematic') flash their orange LED quite often (in the range of every 2 to 5 seconds), which I interpret as watchdog restart. The calculated hashrate for those boards is obviously inaccurate, i.e. the relation between U and MH/s does not match the 71.6 ratio in the long run (12h+).

Update: exchange offer for physical hashing power or ASIC securities


Dear Investors,

With the latest difficulty increase of more than 11%, the earnings per week came down to 0.98% of IPO price. Including the compound earnings of ~22% since the IPO, the time frame to recover the investment got fairly long. If ASICs show up by the end of this year or early 2013, we might even end up with not being able to earn back at all.

This would be the first time that I fail to recover my investment in mining rig, and it makes me really sad that it happened with investors' money. Contractually wise I am not obligated to guarantee a ROI at all - I basically passed a portion of my risk from acquiring mining rig to you, hoping for a quick recovery and a long term profitability. We took a joined risk, and it did not turned out as expected. Please note that my personal involvement in this venture is more than 75%, i.e. I collected less than 10k$ through the IPO, but paid 40k$+ for the mining rig that operates ZETA-MINING. So, while I could refer to the contract, let the bond price deplete continuously, and remain perfectly compliant to the contract, I feel a moral commitment to not let those down that are supporting me.

Last week I already stated that I will pay at least the break-even price denominated in fiat (which for this week is 0.108BTC) for outstanding shares. I plan to keep this offer as long as possible, at the same time I admit that currently I have not enough liquidity to buy back all outstanding shares at once. I considered a variety of different options I could offer to investors and ended up with the following two that address the core criticism towards mining bonds in general and the main mid-term risk existing mining ventures have in common:

1) Bond holders are offered a trade option for physical hashing power. Each share qualifies for the break-even ratio of 1MH/s. Example: after dividend payments for week 34.2012, the break-even price of the bonds issued is 0.23BTC, which is 78% of the IPO price. Therefore, each outstanding share can be traded for 780kH/s of physical hashing power. A CM1 Quad-FPGA currently delivers 840MH/s, which during this week allows you to trade 1077 shares for one CM1 board. Bond holder is paying shipping and taxes. This offer will be always valid, the exchange ratio will be updated each week in the related spreadsheet.

2) At any time before October 2012, each ZETA-MINING share can be exchanged for 1.5 ASICMINER shares. If you believe that ASICs will kill GPU and FPGA-mining and have some confidence in friedcat's venture, this is your chance to participate. If the plan succeeds, each ASICMINER share will represent 30MH/s, allowing you to upgrade 1MH/s physical FPGA-based hashing power to 45MH/s assumed ASIC-based hashing power. I am in no way promoting ASICMINER or claiming the venture will be successful at all. The bond holder willing to swap needs to do so based on his own risk analyses and is fully responsible for the outcome.

If you are interested in one of these options, please contact me via PM. As said above, contractually I am not obligated to offer such an exchange program. I do it solely as a goodwill to thank you for the support I received so far. This implies that I reserve the right to cancel the offer on extreme and / or unforeseen developments.



Thanks for your continuous support and have a nice week,
Zefir

Update: dividends for week 34.2012 paid

Dear Investors,

I just paid the dividends for week 34.2012, and when I compared to last week's payments I noticed I made a mistake. Instead of paying 22.6566 BTC last week, I obviously sent only 22BTC. I must have entered either wrong decimal sign (comma instead of dot), or it was a GLBSE problem.

Whatever, I corrected the mistake and paid the remainder of 0.66BTC today. Please accept my apologies  for the inconvenience.


Cheers, Zefir

Utility in cgminer is defined as (total accepted shares / total uptime in minutes), i.e. it is what the pool is paying you for. It considers HW errors, invalids and rejects and is therefore the best available measure for your effective hashing power in the long term.

In contrast to that, the MH/s value reported for Icarus / CM1 may be off if your board has problems. That is due to the lack of explicit reporting when the FPGA searched the whole nonce range without finding a share. If after the given or calculated timeout you do not hear from your CM1, you assume that it processed the range and add 2^32 (or more precisely: the number of hashes you assume should have been processed during this period) to the share counter. In fact, the FPGA might have entered a hang condition and just stopped before being restarted by the watchdog. Then your MH/s value looks better than it actually is.

If your board has no problems, in the long run MH/s = U * 71.58. If you find your board's values are too far off from this relation, watch your board and you should find it being restarted by the watchdog regularly (see the orange LEDs lit).

Thanks for your feedback. We are at almost 80% now.

Will contact the remaining folks and we should have a full acceptance tomorrow.

Ok, updated the votes so far in the spreadsheet.

For those of you not using Google Docs, this is the current state:

Contributor    BTC       Payment accepted
-----------------------------------------
Arvicco        30        UNKNOWN
Cranky4u        2        YES
dietwice        1        UNKNOWN
Doff            2        UNKNOWN
Fefox           5        UNKNOWN
Hpman           1        UNKNOWN
Isokivi         3        YES
julz            1        UNKNOWN
Lethos          5        UNKNOWN
misternoodle    1        YES
roomservice    10        YES
salty           1        UNKNOWN
ShadesOfMarble  2        YES
Slipbye        10        YES
Slipbye        20        YES
Slipbye        10        YES
Slipbye        10        YES
spiccioli      10        UNKNOWN
spiccioli      10        UNKNOWN
steamboat       9        UNKNOWN
tf101           2        UNKNOWN
zefir          50        YES
-----------------------------------------
           Total BTC: 195
Accepted for Payment: 118 BTC / 61%


Like guessed, we already have 60+% support to release the funds. Please consider dropping me an ACK/NACK either here in the tread, via PM, or in #cm1 to approve your support. As soon as spiccioli and Arvicco (who contributed a large amount but was silent thereafter) confirm, we are at 85+% and ready to transfer.

Thanks HorseRider to bring this up.

Generally I'd agree, better ensure the venture can be realized at all than to speculate on better exchange rates and potentially higher reserve funds.

The only issue I have is: do we already know that the IPO will pass successfully? If not and we need to exchange to fiat and then back to refund the coins, this will inevitably cause losses. I personally stopped calculating in fiat, and it would hurt to get only 80% of my invested BTC back.

Hi Entropy,

great to hear you kept your promise and also compensated kano for the CM1 related tweaks in the Icarus driver.

Generally, I was following the development process most of the time at #cm1 and understand that reaching the current state is the outcome of a great teamwork between Glasswalker and makomk, with lots of help from more supporters. Going through the chat logs I'd say that TheSeven contributed significantly, not only with real-time updates to MPBM to support CM1 bitstream development, but also with bitstream development itself and code reviews.

Even if I do not use MPBM, I feel that his contribution deserves some compensation, but this is only my personal view. For the bounty that is soon to be paid out, I therefore suggest to not split the pledged coins to individuals by ourselves, but to send them to Glasswalker and let him distribute them in a fairly manner. He proved his professionalism and can best rate whom to thank for getting where we are now.


@Isokivi: I understand that most of us testers agree that the terms are sufficiently met to pay out the bounty. From my personal contacts with contributors I'd guess that 60% are ok with it. Are you going to initiate a vote and define acceptance criteria to get that officially passed?