BMF - 2014 news and updates thread

[usagi]

Hello friends;

I've promised many of BMF's investors that a news update would be coming in January and I've been dragging my heels a bit over it, but here are the basics.

Essentially, when BTC-TC shut down, I was one of the first people to start selling. Indeed some of you may remember that infamous post of mine responding to burnside which predicted the shutdown of BTC-TC just a few hours before it was announced. Unfortunately despite our prescience we did not escape unscathed. I can estimate losses of 25% due to selling into the bid. Those who doubt this strategy please be aware that the securities we did not sell (like FIMB) are now unrecoverable. For example, I haven't heard a response from Cognitive over the FIMB bonds we held (I believe we held 500, worth approx. 8 BTC at the time). That isn't to say I've put much work into recovering them. We do have contact with BitVPS over our BitVPS shares (4000+) and we have decided to hold the BitVPS shares for now.

Anyways, after the BTC-TC shutdown I decided to move forward on the silver conversion (essentialy the merge with TU.SILVER) despite Deprived voting no. There are a few reasons why I did this. First, what Deprived voted no on was a series of warrants attached to the deal. Secondly, because as CEO I believed moving into silver was the best thing that could be done with the money at the time, and third because I issued an additional 5,000 shares at 0.03 to myself, tied to the real estate project I mentioned just before BTC-TC shut down (more on that in a moment) giving me 70% control of the company. With insider ownership that strong, all I can say is that my personal interests were definitely aligned with every other holder of BMF and TU.SILVER, and with no possible way to hold a vote I just went ahead and bought as much silver as I could. We got out around $120/BTC on average as I recall.

We moved most of what we had after than into BitFunder, and therein lies a sad, sad tale. It's ironic, that after fighting for over a year to get into BTC-TC it should shutdown just a few short months later, and that BitFunder would shutdown right after BTC-TC. I had primarily invested in Ukyo's bond and Graet's bond (i.e. the weexchange bond) and shares like JAH and PAMB. When the shutdown news for BitFunder came I sold what I could and invested into places like Just-dice and so forth. But having to go through another 20% loss to get out before the herd really made me feel like shit. I believe I was justified in dumping our holdings, in hindsight had I not done it I probably would have lost everything. And on that note I really feel for the people who still have (hundreds) of BTC stuck with Ukyo.

I have now begun a process of moving our silver assets back into mining, and I am extremely pleased to say that as a result of me coughing blood until 5am every night trading and investing we have increased our megahash per share by over 50%, from ~5 mh/share to 7.5 mh/share fully diluted. The bad news of an increased difficulty has been strongly tempered with high bitcoin prices.

Let me try and summarize where our value is coming from these days so investors can get a fuller picture of our worth.

1. Income stream #1: 7.5 mHash/share = .0075 gH/share * 0.044 (price on ghash.io) = 0.00033 per share in mining assets

In addition, there is a sizable amount of silver remaining from the buyout of TU.SILVER -- ~140 oz. mainly in canadian silver maples. There is also a small quantity (less than 1oz.) of gold. At an optimistic $30 for silver, that adds approx. 0.00038 BTC/share in value at current rates (I am using canadian dollars, not US dollars atm). [edit: investors in bmf and tu.silver have now redeemed over 200 oz. of physical silver. If you still own shares of tu.silver, you now own shares of BMF. your purchasing power remains the same, you can still redeem 1 share for 1/10th an oz. of silver if you wish]

2. Approx 0.00038 BTC/share from remaining silver holdings.

Finally, there's the real estate deal I mentioned earlier. The return on that investment is a baked into the cake minimum 100% which will be realized over the next 3 to 5 years. How do I know that? Because we're being matched $2 per $1 and it was a distressed property. I'm going to be honoring the full value of that deal for shareholders by including that value in the "NAV" calculation we use to place the bid at 95% of "NAV" if/when we relist. A quick back of the envelope calculation shows that the $16,000 cash I put into that deal, if it does return 100%, would be worth 0.00237 BTC per share at current rates.

3. Approx. 0.00237 per share from our real estate holdings.

4. We have about 5 bitcoins left sitting in a wallet which I will probably use to buy the new butterfly labs hardware or maybe put it up on ghash.io. I was saving it for applying to list on havelock or 796, not sure. That works out to 0.00033 per share.


There will be residual income from the real estate in the form of rent which will begin paying out before the end of the year. I haven't included it in the calculations here because I have no idea what those costs will be.

Total is:
0.00033
0.00038
0.00237
0.00033
--------
0.00341 BTC/share

All things considered, I'd say we did a pretty good job of preserving purchasing power in the rise from $100 to $1000 BTC. During that time we went from about 0.032/share to 0.0034/share.

In retrospect...

I've learned a heck of a lot over the past 2 years running BMF and various other businesses. The most important lesson I have learned is that bitcoin is not legal tender. You cannot invest bitcoin and expect a return in bitcoin. It is a break in logic. If I invest $1000 in mining hardware, that mining hardware is going to be worth ~$1,000 next month no matter what the price of a bitcoin is. Once you invest your bitcoins, you no longer own bitcoins, you own what you invested in and if that happens to be worth 1, 100 or 0.1 bitcoins, has nothing to do with what you paid for it. This hard lesson was to understand the difference between price and value. Price is what you pay. Value is what you get.

I also strongly suspect that the rise in $/bitcoin is due to the rise in difficulty. Mining must always be profitable. This is a somewhat perverse idea, but it seems to make sense to me on some level. I am not sure if it is true.

Where we go from here with BMF is into a bright future. We are making 1%+ per week accreting gHash/share on ghash.io, and the silver and real estate saved our necks in terms of purchasing power. It's pretty much the same accross the board really. COGNITIVE fell from 0.55 btc/share on BTC-TC to 0.055/share today on Havelock, so I guess we did our job tracking the market. But going forward the least change I am making in how I run BMF is to never invest entirely on one platform. For example we will not be investing/living on havelock the way we used to "live" on BTC-TC. We're spread out over a number of different projects and investment vehicles. Had I done that long ago I don't think we would have lost so much money when BTC-TC and BitFunder shut down.

In terms of management guidance, and lessons learned from the past, I feel confident in predicting forward momentum for BMF in 2014. The goal is to relist somewhere by March/April, keep the assets mainly off-exchange this time, and I feel confident with a share price around 0.004 by that time (in terms of current $800/BTC exchange rates).

Questions or comments welcome. This is a self-moderated thread.

[usagi]

FAQ/COMMENTS

1. You should really consider switching your operation to a decentralized pool as to not contribute to the weakening of the network by encouraging use of a dominant pool. (-OgNasty)

A: ghash.io is "dominant" at 7 petahash (iirc) meaning it's one of the largest pools (BTCGuild is 6.3 iirc). However compared to all other mining, it is nowhere near a threat to the security of the network. That being said I'd happily switch over to a competing service given the right incentives. A partnership deal could go a long way towards helping both companies (hint!) I will also say that one pool we are taking a serious look at is p2pool node nastyfans.org:9332. They are collecting data to hand out lotto tickets to miners that will be used to receive proceeds from mined alt coins, since p2pool doesn't have a built in way to distribute them. This kind of innovation is what made them stand out from the crowd.

[usagi]

March 2014 update.

1. Income stream #1: 7.5 mHash/share [...]

I am happy to report our mining income stream has been increased to 15.5 mHash/share, an increase of more than 100%.

2. Approx 0.00038 BTC/share from remaining silver holdings.

Our silver stock has been depleted due to redemptions from TU.SILVER holders. If you're a TU.SILVER holder, contact me immediately. I will no longer honor physical silver redemption orders after April as we continue to convert back into mining hardware.

3. Approx. 0.00237 per share from our real estate holdings.

This was a ballpark estimate. There are two material changes which will affect this number. One, we are tearing down the existing structure, not adding to it. This will cause a short term loss as we need more money (approx. $7500) to tear it down and clear the property. Construction costs will also go up by about 20%. On the plus side, we're free to completely redesign the interior now, which will make the final product worth a bit more (how much more? more than we're spending tearing it down). If I had to take a stab at what this is worth per share now, I will state a conservative 0.00275.

4. We have about 5 bitcoins left sitting in a wallet... 0.0033 per share.

Not sure what to do with this yet, I guess I should apply to cryptostocks. Havelock would be nice but I have decided to avoid incorporation for now, we're no longer profitable enough (from a gross profit standpoint) to warrant the cost.

I reiterate previous guidance of obtaining forward momentum for BMF in 2014. Right now the plan is to convert everything we do into hardware. The real estate holdings are nice but at some point that needs to either be paid out or converted into income paying hardware.

Questions or comments welcome. This is a self-moderated thread.

[usagi]

Quick announcement;

If you're not yet a CEX.IO customer, please sign up using our referral link (in my signature). All referral income will be contributed to BMF which will in turn increase your value as a shareholder.

If you are already a CEX.IO customer, please consider creating a new account using our referral link. This way, you will increase your profits mining and trading at CEX.IO.

If we had everyone signed up and mining via CEX.IO, it would go a long way towards getting BMF back in the game. Thanks to everyone,

[usagi]

April 6th interim update.

I am happy to report our mining income stream has been increased to 15.5 mHash/share, an increase of more than 100%.

I am happy to report our mining income stream has been increased to 19.6 mHash/share, an increase of 26.5% in the last two weeks.

Update April 25th:

We will cross the end of April with a confirmed hashrate of 26 mHash/share, an increase of 67.8% on the month.

[usagi]

I am happy to report our mining income stream has been increased to 15.5 mHash/share, an increase of more than 100%.

I am happy to report our mining income stream has been increased to 28.96 mHash /share, an increase of 86.8% over the past month.

Management guidance suggests 40% growth in May 2014. We are aiming at federal incorporation in June, with the addition of a legal team by the end of the year.

If you wish to invest or redeem shares of BMF in the interim please contact me, we are in the process of applying for listing on two top exchanges now.

Anyone interested in investor info, please PM me.

[binderclip]

What's BMF? Do you have a website?

[usagi]

What's BMF? Do you have a website?

BMF is the first mining fund in the community and we are the oldest mining fund. We still have major shareholders on the books from the GLBSE era.

We had a website, but there's almost no point to it. When we incorporate (I'm guessing around june) I'll set one up again. The only thing on the website will be a list of past prices I guess. The business model is very simple and there's not much to report.

You'll see that a lot when you encounter a real business vs. a scam, there's always this complex business model that is difficult to describe or to pin down, and the CEOs are not accessible or are prone to doublespeak. With BMF it is very simple, we own mining hardware, we reinvest into to mining, and pay a reasonable dividend. Right now our hardware is around 30 mhash/share, which is not much, but I'm investing a lot of my own money in this which should bring it up a bit.