Proposal: Swed Crypto Mining IPO :: BTC/LTC/... Mining with a twist

[Insu Dra]

Swed Crypto Mining – Swedish Multi Coin Mining Operations

:: Mining with a twist
------------------------------------
Swed Crypto Mining is currently developing relations and equipment to supplement heating of community building in the far north. The goal is to build a mutual beneficial relation ship between crypto-currencies and local communities, where both parties benefit in multiple ways. For investors the primary goals of Swed Crypto Mining are stability, security and growth.

The future we see is one with more alternate currencies and merged mining options resulting in more stable returns and a reduced operational cost. This is the future we want to build on!

:: Short Term Goals
------------------------------------
In coming months our goal is to raise the funds true public and private funding to create at least one installation for a winter season. Besides generating some return for investors we will use this installation to gather hard numbers on how effective we can extract and distribute heat.

:: Mid Term Goals
------------------------------------
Install small scale Solar, Wind and/or Water Power to reduce operational cost of the mining equipment and increase net profits as a result. This will be our summer project, the goal will be to add at least one of the mentioned options to a existing installation. On top of that we want to expand the concept to fpga and asic hardware, a different design for casing will be needed. One gpu at 200 watt vs a fpga at 60 watt average also means there is a big difference in heat output and the required installation cost to supplement heating in a building.

:: Long term Goals
------------------------------------
Expand mining operations to more community buildings and develop more efficient way's to extract and distribute heat. Extend heat extraction to generate warm water both on large (think data center) and smaller scale. At some point in time we hope to build and sell smaller units for private residence.

:: Growth, Funding & Code Conduct
------------------------------------
A) Swed Crypto Mining growth and funding is based around 3 different investment contracts split over different investment accounts.

• Public Shares are for long term investors and as a means to fund installations in to new buildings.
• Private Bonds are for short term investments to expand or diversify installations.
• Building owners provide the space and use the heat.

• 1) Public Shares, this investment type allows people to buy and sell shares of the public investors account.
  
  • 1.1 These shares will be listed on a public exchange.
  • 1.2 These shares repressed all assets related to this account, both hard and soft. The primary asset will be the hardware used for mining operations these are considered hard assets, the account may hold shares and bonds of partners these are considered soft assets.
  • 1.3 The account will hold at least 80% of it's value in hard assets and maximum of 20% in soft assets**. In case of a sudden rise in value of soft assets Swed Crypto Mining will take action to maintain and restore this balance.
  • 1.4 The account is evaluated in btc and the value of assets in the account will be calculated by using monthly trading average between btc and euro.
  
  
• 2) Private Bonds, this investment type allows people to buy bonds, the bonds represent shares of a separate asset account. Extra terms of these accounts can be set on a case by case.
  
  • 2.1 These bonds will not be listed on a public exchange.
  • 2.2 People owning Public Shares will get a chance to buy bonds before they are offered to general public.
  • 2.4 Bonds repressed all assets related to the account linked to them, this account type will not be allowed to hold soft assets**.
  • 2.3 When people owning bonds want to sell them they are obligated to first offer them to Swed Crypto Mining at 95% of the original value before they can offer them to a third party.
  • 2.5 The accounts related to bonds are evaluated in btc and the value of assets in the account will be calculated by using monthly trading average between btc and euro.
  
  
• 3) Building Owners, contracts with these investors includes a rental agreement for space and install agreement for required equipment. It also stipulates payment procedures to cover operational cost of equipment. Building owners have the right to own shares of a separated account that holds assets in there buildings. Terms of these accounts are negotiated per account.
  
  

B) Swed Crypto Mining will keep separated records for accounts and at no time can assets be moved from a primary account to a secondary account without similar value retuning from the secondary account to the primary account.

C) Swed Crypto Mining does not guarantee any fixed or minimal payout on dividends of shares or bonds, payouts are based on net profits of the account related to the shares or bonds.

D) Swed Crypto Mining has the right to change terms stipulated in any contract, it is obligated to inform the general public, share and bond holders 7 day's before the changes become active.

E) Swed Crypto Mining can not be held accountable for losses due to fluctuation in the exchange value of crypto and or other currencies.

:: Public Investors Contract (GLBSE Contract)
------------------------------------
A) Shares on glbse represent a share of the public investor account managed by Swed Crypto Mining , by no means do these shares represent a share of ownership of Swed Crypto Mining as a corporation.

B) Swed Crypto Mining has the right to issue more share to fund the cost of new assets.

C) Swed Crypto Mining will publish regular dividend payout report, the maximum time between these reports is 30 day's.

D) The total dividends payout has a minimum limit of 20% of the total net profit from assets in the public investor account, Swed Btc Mining is free to lower or raise the payout percentage above this minimum limit. The 80% left over net profit is to be used by Swed Btc Mining to expand the public investor account with assets that protect against aging equipment and/or rising difficulty of mining operations.

E) The public investor account will hold at least 80% of it's value in hard assets* and maximum of 20% in soft assets. In case of a sudden rise in value of soft assets** Swed Crypto Mining will take action to maintain and restore this balance.

F) Swed Crypto Mining can not hold the owners of shares accountable for negative balance in the public investors account due to operational cost. Swed Crypto Mining is allowed to liquidate soft assets** when needed. Swed Crypto Mining it is not allowed to liquidate hard assets* to cover losses due to operational cost.

G) Public investors have the right of information on all assets in the public investor account. With the exception of physical location of related assets and/or technical information Swed Crypto Mining deems sensitive.

H) Swed Crypto Mining will ask for feedback from share holders when needed, by no means is this feedback binding. Swed Crypto Mining Management has the only vote that counts on any decision it deems necessary to maintain the public investor account.

I) Swed Btc Mining has the right to sell existing assets if it invests the value of these assets back in to the public investors account. These operations are only allowed if they increase the efficiency of mining operations inside said account.

J) Swed Crypto Mining has right to claim a extra fee to cover wages, this fee will be deducted from net gain of the public investor account before dividend payout. Swed Crypto Mining will keep this fee at 0% for first year of operations and at no point in time will this fee be larger then 5%.

K) If Swed Crypto Mining needs to default on it's obligations to public investors all assets in the public investor account will be sold and the gains from these sales will be divided evenly between all public share holders.

L) Swed Crypto Mining will aim to be as transparent as possible and always operate with best interest of all it's investors in mind.

* Hard Assets: Physical hardware bought with assets in the account.
** Soft Assets: Shares, Bonds and other paper assets bought with assets in the account.
------------------

We would love your feed back and thoughts on both rules and concept ?
If you are willing to invest, please let us know what kind of return you expect.

Atm nothing said here by you or us is binding, final contracts and rules will be posted before we open doors to public investors.

Note: None of the people involved have English as there native language, I'm the one stuck translating for now and translating these types of texts is pretty funny. If you see anything that looks wrong feel free to send me a pm or just hang me in public, I'm always happy to learn.

[Insu Dra]

Q&A Part One:
Who are we ? Me (31 years of age), my dad (allot older), our local hardware dealer and some people related to community buildings mentioned in this project. We strongly believe in the future of crypto-currencies, as the tools to use them become more user/merchant friendly bitcoin and it's relatives will hit critical mass. History tells us a multitude of alt coins will follow ...  This is me, born in Belgium, living in Sweden: https://dl.dropbox.com/u/23217081/Silver.Btc.JPG

How about asic future ? At current stage asic is just a promise, there is no real time frame on when or how. On top of that there is the resell value of graphics cards, there added flexibility to work on other block chains and even to preform other functions. As such we believe it is still wise and safe to invest in gpu based mining at start and diversify to fpga and/or asic to fuel the growth of hashing power when the time comes. (at least for coming weeks)

Why litecoins ? There have been period’s in the past that ltc mining was more profitable then btc mining, litecoins also act as a hedge against fpga and asic competition, like most gpu miners if difficulty of btc becomes to high due to asic we will switch to ltc. A small part of our equipment will be mining ltc from start, diversity is key to survival.

How does it work legally ? We rent the space from building owners, true the rental contract we also pay for electrical consumption of installed equipment. The building owner is responsible to provide and maintain infrastructure and connections to distribute the hot air. (Ofc we help with planning of the later) This construction minimizes taxes and we stay as owners of mining equipment,  on top of that it keeps the door open to a create healthy and competitive market.

Why Sweden ? Besides the cold dark winters when Sweden needs heat, they also have sunny summers with 20+ hours of sun light a day, add to that many rivers and a long windy shorelines and you can see the potential for free electricity in summer time. On top of that Sweden is open to alternative idea's and embraces the future: http://www.youtube.com/watch?v=0B_9IKfrLJk, http://www.landshare.net/users/editor/blog/kristianstad-the-swedish-city-heated-entirely-by-waste/, ...

[DeaDTerra]

I am happy to see some Swedish investors being active on the forums
I think I would be interested in investing some into this operation, it seems well thought through.
//DeaDTerra
Managed and owner of Gamma Investment Fund

[Insu Dra]

Glad to be here, I'm gone have to read a bit more about that insurance in your sig
Probably best after good night of sleep.

Shameless cross posting plugg, a picture with my id card can be found in following thread:
https://bitcointalk.org/index.php?topic=101163.0

A summery of the conception of Swed Crypto Mining.
----------------------
Part One

Intro:
We all know our mining gear is a great source of heat

We also know that the north of Sweden is a cold place with affordable electricity and things are mostly based around small village communities. This brought us to the idea of installing mining gear in community oriented building to supplement there current heating systems.

The main benefit for the building owners would be lower heating bills, secondary benefit would be lower electrical prices. We as the organization managing the installations can negotiate electrical price with retailers on behave of a group of building owners. To some degree this grouping of consumers is already happening in Sweden but it is not yet widely spread.

For this winter we would like to start our first test case in a old school building in Morjärv. The building is bought by the community when the school closed and is now used as a local restaurant for residents and as center for other activity. More Info: http://www.morjarv.eu


Break Down:
The initial goal is to add 6 mining rigs each containing 4 * 7970's to the main building that is used as a restaurant. Looking at the size of this building and there currently used heating system this should cover +-50% of the BTU needed to heat the building mid winter or 80% for the actively used/targeted area. These are rough estimates based on power consumption of cards, there is little to no info on how match BTU we will be able to extract and distribute efficiently.

Investment:
Special Casing: 6* 250 = 1500 Euro
Computer Parts: 6* 3.200 = 19.200 Euro
Structural Adjustments: 1* 2500 = 2500 Euro
Total 23.200 Euro


Conclusion:
The installation of this is not cheap compared to other heating options, especially if you take the lifetime of the installation in to consideration. This is where the idea started to break down, financially it is not a interesting investment in the eye's of a small community, for them the risks are to high and there is to little trust in the 'weird' thing called bitcoins.

However with current btc/ltc prices it is becoming profitable again to invest in mining gear and we could see if there is a interest in the bitcoin community to invest in a mining project like this.


Funding:
Some safe numbers, price of electricity at 0,1750 Euro, at btc price of 7,5 Euro (or ltc converted to btc) and a hash rate of 600 Mhs per gfx card. This means we would only require about 60% of the hash rate to cover the growth, power and maintenance cost. Price of electricity for big consumer groups is cheaper, Btc is currently worth more and the planed cards have slightly higher hash, this leaves us with some operating space to adjust numbers and with 40% of the hash rate to be sold.

6 * 4 * 600 * 40% = 5760 Mhs

GLBSE mining shares variates a lot, but at a average of 0,5 BTC we could be selling 1Mhs per share and raise 2500 BTC to cover the bulk of the initial installation.

However fixed hashing power per share is dead sentence, the rising difficulty in all block chains will reduce the value of a share over time. To make this work we need to make sure that we have a viable growth of hashing power to add to every share and a decent return on investment.
----------------------

[Insu Dra]

Ok, I should have know a talk about the concept wasn't gone take off in this part of the forum, however in the past week things kinda hit high speed, agreements where made, papers filed and birth of small new company is imminent.

Over the weekend the decision was made that we would at least try to get funding for a public investors account no mater how small it would be, as result I decided to edit this topic and go from concept to a open proposal to you the investor.

In the first post we have outlined what we believe (and in part where told) are best guidelines and rules to push this concept from idea to reality, Q&A was moved to second post and if I find time I'l post more about how we got to this stage. So now it's your time to speak, I will put a IPO on to glbse next week. If you are interested in the concept but don't like some of the rules or you think something is missing, tell me what and why, I will consider adding and/or changing some. Please keep in mind we are in this for the long run and not for fast high profits, we want to push this far beyond a simple mining operation and take you along for the ride.

[Bitcoin Oz]

This is an interesting proposal.

If you start with GPU mining for the initial installation which provide all the heat you need you could then add BFL singles later on for growth. A mining operation needs to expand constantly to overcome difficulty rising if it is to remain viable.

Once ASIC comes you still have the GPU for litecoin mining and to heat your buildings.

[Insu Dra]

Once ASIC comes you still have the GPU for litecoin mining and to heat your buildings.
...
Once ASIC comes you still have the GPU for litecoin mining and to heat your buildings. 

Exactly, it theory it's even possible to heat it with fpga or asic buts sins heat generated by electronic device is directly linked to it's power consumption, the amount of fpga's or asic's to generate sufficient heat would result in a unrealistic startup cost per building. At this point in time it is still profitable to mine with gpu's and we hope ltc will keep it that way for some time. Starting off with gpu's and keeping part of net profits for growth should allow us to expand in to asic (or other tech/coins) to deal with rising difficulty and keep cost/profits of a system in check.

At some point I even wrote down a plan to do a start with cheap fpga modules in a smaller building, it was viable and allot more profitable in theory but with asic around the corner these modules just seemed like a very bad investment.

Atm we are not charging anything for heat generated and we pay 100% of the electrical bill. This is why we are focusing on community buildings and we do inform them this might not hold up in future but that we will do our best to keep the cost as low as possible. If crypto currency hit critical mass or some other commercially viable need for a distributed network like this emerges there is nothing holding us back from contacting commercial entities and charging a small percentage for the heat.

[Insu Dra]

:: Changes Made to "Public Investors Contract (GLBSE Contract)"
Due to some discussions on irc and now forums we decided to make 2 changes to the public contract. Changes are to emphasis on growth and to keep value of hard assets stable.

Change to Point D: minimal payout is changed from 50 to 20%, this means we will have a sliding 80% growth fund to keep value of existing hard assets in the account up and to make sure operations remain profitable. We did not want to set a fixed amount, from our point of view that would have been unfair to investors because there are to many variables involved. The main one being value of btc towards other currencies, second big one is hash rate vs difficulty.

Added point I: We added a clause that allows us to sell hardware, this will be used to replace hardware before it loses all it's value and or to replace inefficient hardware with newer more efficient hardware. This was in the planning but we just wanted to make 100% clear to possible investors.


:: Other Tibits

Website building is slow, I forgot how match I hate and suck at front end design ...

Decision has been made to order at least some asic equipment from the initially funds, what the devision ratio for asic/pc is not final yet.

Test rig is runny smoothly, the system now boots over the network using pxe, so we have no need for hard drives or usb sticks any more. This also means less work to manage the servers, all we have to do is update the server setup, remote reboot the machines and be done with it.

Numbers, you guy's probably want numbers, all in good time 

[Insu Dra]

Or first account is funded and to day I ordered 6 computers with 4 * 7970, they should be up and running soon, on top of that we have added a order with bfl for 2 single that will be added on to this account. So this winter we will be providing some heat to combat the cold Swedish climate.

The Public Investment Account has been delayed till we can come up with a exchange to list on, one that offers us all the options we need to ensure continuation of operations under all circumstances. GLBSE looks nice, probably will get there some day but is lacking some critical options for now ... (back-up and proof of ownership)

And as a side note, it's probably best not to mention btc when registering a business in Sweden. Atm we are having some funny discussions with skattverket (tax agency) as to how we should be listed and taxed 

thats it for now, good luck to yha'll