what is the model for sustainability now that all the IPO has been spent? Yes, I know about the reinvesting the 25% and the two weeks of mining - but that can be unsustainable and accelerate failure if done improperly. These are things that if you released financial statements months ago, your investors could have helped you avoid a potential death spiral.

I know you don't think about these things and get annoyed when investors ask for accountability, so I'm not expecting an answer.

Many went to direct shares, like LRM did. A few are exploring trustless trading systems using the block chain to verify transaction (ala OgNasty/NastyFans) and keep an automated list of shares (fee-free trading). Most were essentially group buys, so their securities are designed to fall to zero value and not much needed for exchange.

Some are actually doing zero-fee direct share exchanges over the forums (ADDICTION). I cannot recommend tyrion70 and blastbobb enough, if anyone is interested in group buys in the future - their operation is amazing, I'm very happy with them.

How generous

+1

Clever, that would work. It's a grey area, but not one that anyone at the IRS would be aware of or want to touch.

Overall, we have different comfort levels of data required for investment. This is one of the least transparent (if not most opaque) BTC investments available. It is what it is, we invested before LR had any track record of success, so it is on us. I just am hope he receives an education through his own experience and learns where he can improve (and then implements improvements). Those questions, in my opinion, need to be explicitly answered - not just hand-waving "trust me."


My biggest problem is not simply getting hashrate quicker than difficulty increases. That short sighted goal is financial and business suicide and will drive share price to 0 (literally, 0) with dividends that do not exceed investment. You need to make sure you get hashrate at BTC/GH/s that exceeds the expected valuation (in BTC) of the hardware when accounting for difficulty increase. Those are two very different things. LR has never made any statements or comments indicating he knows the difference, nor indicated he has plans for implementing it. Even if you do implement it, one of two things can happen: 1) share price shrinks to 0 if you reinvestment rate doesn't exceed difficulty, but dividends will exceed investment or 2) share price rises if reinvestment rate exceeds difficulty, but dividends will be smaller than case 1. I think LR wants to be in case "2" What is his plan to stay in case '2'? Are we there?

But you're right, it is our fault for putting too much trust in him at the start without these answers.

So what that we have 15-20 TH/s more, how much did it cost (in BTC/Gh/s)? What other hardware can we get with remaining funds?

Why does this ensure that we will likely get a 100% return? What is the investment plan that ensures this? What are the price points and difficulty projections? Will revenue exceed expenses? What is lab rat's fee and how will that affect long term profitability? He needs to get paid, is he being paid enough to keep the program running? Does he have investment/options/buy-in that is affected as well? Of the $1m we gave him, what did he do with his person $200k? What was the plan for the other $800k of hardware we bought for him? Can LR hire someone (or outsource) management of the business so he can concentrate on hardware?

These are questions investors (and lenders) ask. I don't share your enthusiasm because nothing has been presented to make us excited. I can be excited if those questions are answered.

But it doesn't matter, we're pretty much all strapped in for the ride due to the difficulty in exchanging shares and LRM doesn't have to (and won't) answer any basic questions on the fundamentals of their business.



EDIT: Another, possibly huge problem coming up in April, depending on how he set things up... He raised $1m from investors, but in exchange for no equity. On his annual IRS reporting, that just counts as income - not as raised capital since there is zero equity outlay. LR, as sole owner of his LLC, is personally responsible for taxes on that income at his personal tax rate. He will be forced to take a distribution just to cover that taxes. In the US, that's somewhere between ~15-35%, even if it is retained earnings. If he structured it as a loan, that could work - but we didn't sign a promissory note.

What's the plan for this? Have you talked to a tax accountant? Is there plans to buy lots of hardware fast to reduce tax liability?

there is no built in functionality for that. You could set fee to 100% and then write your own script to parse http://yourserver.com:9332/web/log to find out what everyone's hashing power was per day and payout each daily based on that.

That is a good idea, but maybe outside of the scope of p2pool. A key property of p2pool is the trustless payout scheme. If you start centralizing payouts, then people start depending on a third party for payment.

A better way would be to lower the hashrate cap so large hashers don't flood the sharechain and push out small hashers. I think forrestv has done it, it's now:
https://github.com/forrestv/p2pool/commit/69d7300919e0f9b23ec81c1d01c0bf12cdb1ebc5
basically you get a max of 48 large-value shares per day so smaller miners can scrap up a few smaller value shares. At best it should lower difficulty for a share by 3 - might not be enough for usb sticks though.

funny, I came back to report that failover-only was working on zvs's pools, when he took them down this time they didn't lock up the miners.

I think you should ONLY do things based on recommendations backed by reasonable math. Why would making reinvestment 100% improve the value of the offering, just because it feels good?

The math isn't that hard, and there are just two variables (time to delivery and difficulty rate)

HR=device hashrate you want to buy
NET=network hashrate at time you start hashing (need to estimate)
tau=1/e lifetime of your device (mining half life of the device), in days which also is the exponential difficulty growth rate
CURRENT=current network hashrate
T=time, in days, until delivery

If you guess what the network rate will be when it arrives and have an estimate of difficulty growth rate
HR/NET*3600*tau < the cost (in BTC) of the device you want to buy, DO NOT BUY IT
or if you have an idea of when it will arrive and an estimate of difficulty growth rate:
HR/CURRENT*e^{-T/tau}*3600*tau < the cost (in BTC) of the device you want to buy, DO NOT BUY IT


The approximation is that growth will increase exponentially over the time frame of usable mining. Don't say "it can't sustain this forever" because over the next year it should fit somewhat of an exponential as gen2 devices come out, and it's just a model - use a bigger tau in that case... These are models, you need to figure out what your tau and T's are, and back them up and justify it. Use this for security valuation, hedge against difficulty and price variance risk with futures. Pick a reasonable high, low, medium for those 2 variables, make a 3x3 chart and figure out what you'd need to break even. Invest based primarily on that.

this doesn't take into account electricity, rent - you need to figure that in too.

background:
I value a device at
\int_0^\infty HR/NET*25*144*e^{-t/\tau} dt
and say that NET can be CURRENT*e^{-t/\tau}


EXAMPLE:

Monarchs, CURRENT = 5000 TH/s, HR=600GH/s, cost ~6.5BTC
valuation is profitable if they deliver in 2 months and difficulty tau is 50 days (82% per month)

One of the best things about this group buy is that lack of mandatory reinvestment. If people want to reinvest their dividends, and tyrion/blastbobb are up to it, there can be another group buy and allocate additional shares per the original share agreement (no dilution of shares, 1 share equals the same hashing power as before).

If you're interested in reinvestment of dividends, check out the ADDICTION DISCOVERY fund (I believe it still exists, but I could be wrong)

check out
https://bitcointalk.org/index.php?topic=328135.0

26,941 shares offered for sale

1,375 shares offered to buy

please edit it, update it as you like (follow instructions in first post)

I'm kind of confused, you seem to agree with me... but at the same time seem confrontational...
My problem is the pricing of ASIC products makes positive ROI impossible, at least for now, so patience is worthwhile to find an opportunity that has a good chance of working out (maybe monarchs are, if we get in the bullet run it might be possible)

The fact is that, for nearly every ASIC product, you would have been better off buying BTC instead of the miner. There is negative ROI (measured in BTC out minus BTC in) everywhere except maybe the very first avalons and first month BFL products. Nasty's BFL products are probably a net loss*. KNC is a 50% loss from day 1. The solution to that isn't necessarily "let's save money to go buy more miners."

EDIT: I support Nasty and what he's trying to do, even with the loss. But since you had an emotion response to my first post, I'll give you a mathematical proof to my point:

*Nasty raised  ~4k BTC (based on IPO and current shares outstanding, correct me if wrong). Of that original fund raising, we have received ~500 BTC in revenue. We may receive 20-50 BTC more over the life of the hardware. That original fundraising did not buy any of the monarchs or cointerra products, since they were financed via loans - so ~600BTC is probably the best we'll see as a return on the original IPO purchased products. Overall, this is positive ROI (by a lot) in $, but negative ROI in BTC.

since p2pool doesn't mine the bitcoin blockchain (but instead the p2pool sharechain), load balancing won't work. "failover-only" is encouraged because any worked leaked from another pool while p2pool is catching up will be rejected

p2pool orphans/DOA do not mean wasted work like they do in other pools. Compare the "efficiency" percentage, that is how much you are making compared to a 0% fee pps pool that pays out all fees. So, realistically, as long as your node is >95% you're beating pps.


Re: upping to 50%.
Mining will move to a sustenance market where there won't be much profit to gain. Long term NastyFans would need to diversify to grow, as OgNasty is doing with running a pool, selling physical goods. Mathematically, selling new seats and keeping reinvestment rates at 25% is the same as keeping the same number of seats and upping reinvestment rate. Permanently changing reinvestment rates to chasing shrinking mining profits may be a bad idea. Selling loans or seats to take advantage of an perishable opportunity is probably better (assuming the investment returns more than the loan or dilution).

it is a cgminer problem, I think I found some info here:
https://bitcointalk.org/index.php?topic=188533.0

funny thing is that OgNasty's node failsover fine for me! I have much smaller hashrate, maybe that has something to do with it too.

@zvs: When I'm mining on your node, and it goes down, my cgminer client totally locks up and stops working. Other nodes, however, don't have that problem and cgminer properly switches to failover nodes. Has anyone else seen this on your node? I don't remember the error it gave; I stopped mining on it after it happened a few times (3 times last week).

nonnakip, check your pm re:p2pool settings

where are we on the laffer curve? (i.e., what is the theoretical justification of 50% versus 25%?) I'd be for it if LR can mathematically argue it. But he doesn't have to argue it, he can either follow through with what he promised investors (25%) or just say screw it and do whatever he wants anyways. There is no accounting, he can re-appropriate whatever he wants where ever and just keep on not telling us.

This is a phenomenally run offering. BTC losses are my fault and have nothing to do with tyrion and blastbobb, but this should be the model for all future group buys.

One thing people forget, tyrion and blastbobb bought into this as well. Many other group buys were organized by people with no skin in the game.

It is the wild west, we have to regulate ourselves. LR has shown to be bad at business. There are other offerings which are run better. LR got his money, but will find it difficult to raise more in the future.

I don't think he's a scammer, I think he's someone that is annoyed that the people who bought the hardware for his mining hobby are demanding accountability. He doesn't have to tell us anything, we already donated our BTC to his company in exchange for nothing.

It's obvious he has little knowledge of economics or financial markets, he doesn't even know the damage he's doing.

We've enabled this mess, it is our fault for not demanding more accountability from the start. We bought him equipment, pay for his electricity, and pay him a fee. He does the work and collects money. What was his financial buy in? What was his risk? Does him destroying confidence in the security financially affect him at all? What is his fee? Why did we give money without knowing these answers?


EDIT: You know we paid him $200,000 (before the recent run-up, his fee now is > $500k if he held on to BTC) to set up this up ON TOP of the hardware he bought. What the **** happened to that money? "Trust him" is a horrible response - don't work on trust, believe the data. Seriously, this is approaching criminal level. We bought in to a managed group buy. Where did the money go?

Yes, number of shares @ price per share (makes competitive offerings easier to distinguish):