As the new year approaches, I have a number of topics to discuss with my investors, and of course
both good and bad news.
First and foremostI hope everyone is enjoying their holiday(s) and I hope everyone will enjoy entering into a New Year! The current offering at 1.0 Bitcoin per Note is set to expire tomorrow, December 31st, 2012 at 4:00pm EST. After that, all Notes can be purchased on the normal market. I will give an update on the final number of Notes sold / total Bitcoins raised once the offering ends. I also have a survey (discussed shortly) regarding what ASIC company we should purchase from (and yes, I am willing to “mix and match”).
With the final Bitcoin total, I will publish the current company financials, which includes up-to-date data on pricing, a full analysis of the months to come, as well as your standard income / balance sheet / cash flow statements. I welcome all input on the information I disclose, and if anyone finds a discrepancy in the data let me know as soon as possible. Given I’m working solo, it’s always nice to have a second set of eyes to point out something I may have missed or to provide more detail in one area or another.
Now for the most important news.As I’m sure you’ve all heard by now, there have been quite a number of delays with essentially
every company developing ASIC based mining equipment. The most substantial delays have resided with Butterfly Labs (surprise, surprise), but I know bASIC and Avalon have had their share of setbacks as well.
Seeing as I won’t be able to get the hardware (from any company) on time, it is financially
infeasible to maintain the current schedule. Unfortunately, these unforeseen circumstances have forced me to propose an Amendment to the current Secured Promissory Note Agreement.
The Amendment has been written with the sole intention of modifying and extending the current payment schedule. Interest payments will be extended, and payments on the principal owed will be pushed back by 3 months. What this means is that an extra 3 months of Interest payments have been added, but instead of starting Buybacks in March 2013, they will start in June 2013 and continue on the previous schedule, fully ending in April 2014 (instead of January 2014).
Here is the current link to the contract: https://docs.google.com/open?id=0BxnW49twNMNbSVhHamJkZ1VtZmMI urge everyone to read it.
Here is a breakdown of each Section for an easier read:
Section #:1. States that this is the first amendment to the original contract. I briefly describe the purpose and reason for the change, noting Third Party influences (delays) and current financial infeasibility.
2. Here is where I describe the changes I propose, which focuses on the second and third sections of the original contract.
...a. Interest at 1% has been extended by three [3] months, going from November 2012 to the end of May 2013. Interest is at 2% from June 2013 to the end of December 2013. Interest is increased to 4% from January 2014 through March 2014. Interest is increased one last time to 6% for the final months of April and May (though everything should be purchased back in April).
...b. Principal payments no longer begin in March 2013. Instead, they have been pushed back to June 2013, where they start at the normal 1.10BTC per Note until the end of December 2013. January 2014 starts the purchase at 1.15BTC per Note, and April 2014 marks the final purchase of 1.20BTC per Note.
...c. An error in the third section has been corrected to note that the Principal rate (previously said “Interest”, which voided that part of the section) will never go below the minimum, which is 1.005x the Par Value (1.0BTC).
3. The Amendment is valid as of January 7th, 2013, which marks seven [7] days after I give notice (as per the original contract).
4. In the event of a conflict between the original document and the Amendment, the Amendment governs.
5. The other unchanged parts of the original contract are still valid.
6. The original document and the included Amendment now constitute the Final Agreement.
7. This Amendment may be modified after agreeing with both parties.
8. In the event of illegality, unenforceability, invalidity, etc, the remainder of the contract and its Amendments are still valid.
9. Electronic communication (or other forms of communication) is valid statements of agreement, recognized in the same effect as a signature.
10. You confirm you have the power to agree and bind to the contracts outlined.
11. [Self Explanatory]
This notice is being sent out to every investor with my Fund. If you feel uncomfortable with the changes or have any input, please tell me!
For those of you who do not wish to accept these changes, please let me know. I will purchase your Notes back at the rate of 1.005 per Note (as per Section Five [5] of the Secured Promissory Note Agreement). If I have not heard from you before January 7th, 2013, I will presume you are onboard with the changes.
NOTE: Still take the survey that was sent out to all investors!For those of you who understand the changes proposed and the reasons behind them, I thank you. It has been hard enough to hear the news of more delays, let alone draft contract Amendments and modify financial statements accordingly.
With the total funding left over after any early Buybacks, Korb and Co. Investments will be purchasing mining equipment. Since we don’t have nearly enough for the purchase of a Butterfly Labs “Mini-Rig”, we have the option to purchase smaller devices from a variety of companies instead. Here’s where the survey comes in. I want to get a feel for what my Investors think.
Please take into account the information noted below when answering the survey:
Butterfly Labs – Single SC [$1,299]• 60GH/s
• 1 Watt per GH/s [CLAIMED], the most power efficient.
• Product Lifetime Warranty and “trade up” program.
• Terrible PR and constant lack of information, but they do deliver quality products.
• Shipping Date: Q1 2013
bASIC – ASIC [$1,069]• 72GH/s
• Doesn’t come with a PSU. Efficiency is predicted to be about 1.5 Watts per GH/s.
• Highest MHs per $$ and performance.
• No Warranty [Unknown].
• Shipping Date: Q1 2013
Avalon – ASIC [$1,299]• 66GH/s
• Unknown Power Consumption. Speculation as high as 400W per unit (6 Watts per GH/s).
• No Warranty or known trade-in program [Unknown].
• Standalone unit (just plug in and go).
• Shipping Date:
Early Q1 2013
My personal feelings reside with Butterfly Labs, specifically because they’ve proven themselves with their FPGA units, they have a trade in program (which is handy for future mining purchases), and are the most power efficient. I am, however, starting to seriously consider bASIC, given they’re the most cost effective solution (allowing me to max out BTC per GH/s), but they might be
the last to ship.
EDIT: This survey is the only way I'll know your personal feelings on the matters at hand, including both the Amendment and ASIC purchases. If you fail to answer the survey, I will presume you're onboard with anything that goes over the next few months.I look forward to hearing from each of you in the coming weeks regarding all of this. Any questions, comments, or constructive criticism is absolutely welcome.
Happy New Year everyone!
