Hi Nolo,

I've read through this thereat as well as the other one where you publish the defamation and the ponzi articles.

Great work.

Although I don't have any spare BTC to send you (sorry, everything I mine, I save so I can buy myself a mini-rig or two!), may I offer you my opinion about the structure of your loan proposal.

I would not bother with a TL:DR trailer, as I am sure you enjoy reading stuff (like I do, lol)

My credentials: 14 year as a senior partner in a top 10, 32 year-old Private Equity firm - successfully raised two funds (total +/- $305M), one at the top of the IT bubble, one at the aftermath. Exited both funds successfully within the investment horizon. With the profits bought myself an airplane. Now struggling to keep-up with its running costs, bummer!

Here comes my analysis and opinion.

To structure this as a loan is wise.

Alternative would have been to offer an investment opportunity, your argument against that is self-explanatory.

But the loan structure will present its own challenges.

First question, are you securing the loan (not sure if the mining-rig is / can be held in escrow?). If you are, then you potential customers will fall into two categories - one that is looking to receive interest form the capital he/she has at hand and second, someone who has secured a credit line with his/hers bank at an interest rate lower to what you are offering and contemplating to do a back-to-back deal and profit from the interest arbitrage.

If you are not securing the loan, then I doubt that people will queue to offer you the loan - its just too unpalatable, the risk is too unbearable.

Looking at the parameters in your offer, I see another issue.

You are guaranteeing 1 x money back at unspecified Internal Rate of Return (IRR) + 10% interest in perpetuity after the 1 Time Money Back (TMB) period

You will agree, such offer is very different to what one would get from his/hers Bank. And if one cannot figure out what his/her deal would be, one would usually walk away from this opportunity, irrespective of how lucrative it may look.

So, here is my view, perhaps you may re-look your business-plan and come with more similar rather than different to the traditional lenders proposals

If I was you, I would re-structure the offer as follows:

1. Start by asking for an unspecified initial payment holiday period, subject to the ASIC-rig supplier supplying you with the equipment + 1 week setup time (this defines the initial risk - similar to what you have already stated). Bank agree on initial payment holidays all the time. You prospective lender will understand this as well.

2. Provide guarantees for the rig while at your possession - I am not sure how you would do that, but it will be a great thing if you manage to do. Banks rarely offer unsecured loans, and only if they can blend it with some other risk

3. Offer let's say 100% IRR with an option to increase the IRR as the market conditions allow - this in effect means that you are going to pay back the lender 100% of the loaned amount within the first 12 mounts (including the holiday period), or sooner if market conditions allow it. There is a certain risk for you in this initial period, but it does give you the flexibility to react if things do not go well for you - let's say in moth 9 you managed to re-pay 50% of the loan, then you will have 3 months to sell the equipment, even at loss, and re-pay the other 50% (providing the holding-of-security agreement allows it).  

4. After the 1 x money back grantee, then you must specify a return (interest if you like) per period of time. The actual percentage is irrelevant, as long as it is specified per commonly acceptable period - month, year. So when you stated 10%, it must be per month or per year - the prospective lenders will understand.

5. Then you have to stop somewhere - otherwise this is not a loan. I am sure you know the law, but a loan has a maturity date. State it. The the prospects can calculate their return on the money they "loaned" - either in terms of IRR or TMB, or both.

I'll shutup now.

We will have to see if there is any asics.  At this point everything at this point has just been empty promises.

Reasons why I don't like offering first

1) I offer too little. *no response, I recheck over and over waiting, still no response.
User never responds ever again, Ignore mode. I lose 30 mins of my time, from rechecking the status over and over, and user could of let me known, and save me my time. (Which I don't get, why not bargain with me, and offer a higher rate? Why is everyone so scared of doing this?)

2) I offer too much. *You jump at it immediately, I am like fuuuu And out a bit.
3) I offer just right. *happens rarely.

This happens in real life a lot, Craigslist, etc, well at least to me.

Now since I made my point across  

You start with the first offer

Hey Nolo,


Are you a lawyer? If so we happen to be in the market for your services. Please take a look at our other post for more information:

https://bitcointalk.org/index.php?topic=130286.0


Thanks,

ZIGGAP

What does the american law say about that?
If the law says you must be able to cancel and get a refund if it takes longer than twice the time they say when you order, they have to give a refund, even if it says something else in their policy because the law is more important.
I'm not sure what law they must follow for orders in other countries, for example for me. The dutch law because I order it from within the Netherlands, or the american law because they are an american company.

It's the same kind of risk as with mining bonds, and of course there's risk of not making investment back. If there were no risk to make a decent return, everyone would be doing it. Both this offering and mining bonds are effectively leasebacks, except OP mentions liquidation (which investor gets 10% back on... for the item he effectively purchased... whoopee!).

There's no guarantee (and by a good few estimations, no likelihood) of ASICs making a decent return if you're not one of the first in line for whatever company ends up delivering first. There's very significant risk of loss, and given orders are being placed on-demand this late in the game, it's almost guaranteed. The difference between this and a mining bond is mostly just in phrasing, but fundamentally, it's the exact same risk. The ASIC will depreciate in value and returns in time -- so will a mining bond. This deal gets OP "free" mining hardware -- so does a mining bond. "Perpetuity" can end without a positive RoI -- so can happen with a mining bond. Just because an ASIC unit is tangible and a "MH/s" is not, does not make this contract significantly different (except for the paltry liquidation value an investor gets at... Idunno, some undefined time).

And electricity? Really. What's that, $.01/gigahash-day? The idea that this offering is "much safer" borders on fraudulent, and "the way the return on this investment works is 1) Full repayment of your loan; 2) 10% of the earnings weekly; and 3) 10% of the liquidation amount." is absolutely misrepresenting the involved risk. Additionally, this offering fulfills every requirement of the Howey test, so there's not really much (if any) regulatory advantage over mining bonds, either, except there not being any type of securities exchange involved (which is not relevant to the Howey test, anyway, so....).

The other problem, which I already hinted at, is lack of definition under when a liquidation happens - and it's a big red flag to have "liquidation" and "perpetuity" in the same description of an offering. They can't co-exist. There is no definition in the terms of which conditions would justify liquidation, or even if both (or >2, in cases of "splitsies") the purchaser and manager need to agree. The only guarantee provided by OP is the implicit "I wouldn't take advantage of ambiguity in contracts like so many others."

(err - sorry to be blunt. The abrasiveness on the forum's rubbing off.)

Declawing a cat is just mean you shouldn't be a dick to it if you don't want to get scratched.

My son took off his diaper the other day and decided to pee on the cat.. for some reason the dumb cat sat there and got pee'd on

Why wouldn't he want to do this? It allows him to buy ASICs at almost no risk. If the company he chooses doesn't deliver? No loss. Difficulty goes batshit crazy and the ASIC takes years to pay off? No worries, not his money. ASICs actually turn out to be pretty profitable and they pay themselves off in a half year? He gets a steady income stream without using his own money and only has to pay 10% of income.