Largest IPO on GLBSE to date!

[optimalbitcoinminingcorp]

Hi I'm optimalbitcoinminingcorp - you might recognize me as dubious on IRC around the bitcoin channels.

I'm starting a new bitcoin mining business, and the largest IPO on GLBSE.com so far.  You will soon be able to purchase 0.8 btc bonds that mature at 1 btc on or before December 1, 2011.

You can buy the bonds by creating a new web account for the web client for GLBSE.com here: http://dev.glbse.com:4567/client/index.html

Then generate a key pair and register, deposit some bitcoins and you are ready to go.

Currently I am running 15 gpus at around 4 Ghash/s, so I've invested about $5.5k of personal funds and I am looking for bonds as loans to expand my cluster to around 40 Ghash/s.   I would like to raise $45k for expansion funds within the next month.  10% of net profits from my business will be going towards different charities and donations, to the bitcoin community and other highly regarded charitable organizations.  Feel free to suggest charities that you believe would be worthy causes.  I believe Bitcoin is a great idea and has great potential in the future so long as people continue to contribute to the bitcoin community in positive ways.  I have been doing a lot of thinking and planning for this business and I am finally ready to expand.  Expect more details regarding this opportunity to follow.

If you have any questions you can post them on this thread or email me at optimalbitcoinmining@gmail.com.

Thank you for taking the time to read this!

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[done]

best of luck with this venture

[optimalbitcoinminingcorp]

Thank you, you too!

[Nefario]

I confirm that optimalbitcoinminingcorp is actually dubious. I've been dealing with him over this for the last few days.

Nefario.

[done]

Thank you, you too!

Thank you sir

[Nefario]

Whats the asset id?

[jaime]

Why the 10% for charity donations? is it marketing, legal?

Every time I see that kind of "get karma" proposals I wonder who benefits.
Why not leave it in your investor's wallets and let them get the karma? 

I wish you the best in your new venture.

[optimalbitcoinminingcorp]

I have issued 2800 bonds for sale at 0.8 BTC

The asset ID is cbc7c9f999f94665e599d0ab0e144e1953e40d399a0f9191b91b843db4bb92da
and the ticker symbol is OPTIMALBITCOIN

[Nefario]

The charts for  this share are available at :
http://charts.glbse.com/markets/OPTIMALBITCOIN.html

The asset contract here:
http://dev.glbse.com/cgi-bin/asset?id=cbc7c9f999f94665e599d0ab0e144e1953e40d399a0f9191b91b843db4bb92da.xml

[Hunterbunter]

If possible, could you answer these two questions?

What sort of network hash growth per 2016 blocks (a block cycle, if that's a better description, I'm not sure how to refer to it) are you expecting between now and dec 1st? That is, how much do you expect, on average, the total hash power of the network to increase every block cycle?

What sort of price growth per block cycle are you expecting per BTC between now and dec 1st? Do you think it'll go up 25% per cycle (on average)? more? less?

From what I've been calculating, if it keeps up the +50% Network Hash Power increase per block cycle its been doing the last 3 months, unless the price increases in step around 50% per cycle, it'll be very difficult to walk away with a profit, if not a severe loss. At that rate of expansion (it'll probably be less, but who knows), in only 90 days your 40GHash/sec will be creating around 5-6 BTC per day, and after the extreme volatility the bitcoin is taking, are you confident it'll be worth the $600/BTC or so it'll need to be for us to get our return?

I think if you could post your analysis (even pm if you'd prefer I guess), myself and other potential investors would feel more comfortable with the deal. 25% interest isn't bad for 6 months, but only if its significantly lower risk.

I'm not trying to dampen what you're trying to do btw, if you achieve profit then I applaud your entrepreneurial spirit. I just may not share the same confidence in the market that you do, or I'm missing something.

[optimalbitcoinminingcorp]

To make the numbers as simple as possible and simulate the timeline of events as they occur:

Let's start by only concerning ourselves with recouping the cost of the first 20 computers since it takes time to build the computers (3-4 computers can be built per day working moderate hours, estimating I build a computer in about 2-3 hours) and there is a hurdle of increasing the electrical capacity of $4000 after the first 20 computers and this will complicate things slightly.  First, we receive enough funds from the bond offering to purchase the parts for the first 20 computers by the end of next week: $900*20 = $18000 would be enough.  We purchase the parts and receive them in 4 days (June 30th).  The computers are built and up and running in one week.  That puts us at July 7th to start mining, which is 20 days from today.  The current estimate of the next difficulty increase is 35% and has been gradually decreasing since the last difficulty increase, so let's say the next increase is 30%, as are subsequent difficulty increases.  This is estimate turns out slightly more conservative than yours.  Difficulty increases tend to occur every 14 days, so lets say the difficulty at this point has increased by 30% so 877227*1.3 = 1140395.  At this difficulty and 22 Ghash/s, we get 19.4 btc/day. 

Next we calculate the amount of bitcoins mined until it is no longer more profitable than the cost of electricity (at $20/btc).  20 computers consume $92.16 of electricity per day (20*24*1.2*0.16=92.16).  Convert this to bitcoins to find the minimum number of bitcoins produced per day for mining to be profitable and get 4.608 btc. 

We remain profitable for 11 weeks since weeks 12-13 we produce 4.019 btc/day.
add bitcoins produced each difficulty period
btc produced week 1+(weeks 2-3)+(4-5)+(6-7)+(8-9)+(10-11)
135.8+208.92+160.71+123.62+95.09+73.15=797.29 btc
(19.4*7+19.4/1.3*14+19.4/1.3^2*14+19.4/1.3^3*14+19.4/1.3^4*14+19.4/1.3^5*14)

Then we still have those 20 computers, which we can sell for 75% salvage value. 
$18,000*0.75=$13,500

We made 797.29*20+13500=$29445.80
We pay back the investors $22,500 since the bonds return 25% (0.2 of 0.8 is 25%) and we have a profit of $6945.80, which is enough to pay for rent for year 1, which is $4200 at $350/month.
If we built 40 computers instead of 20 our profit would essentially double considering the facts that while it would take some time to build the computers, the computers could be mining as they are set up, which we can say essentially cancel out in order to avoid too much additional calculation.  (if you want I can calculate this later) 
So our profit becomes $13891.60, which is enough to cover the $4000 cost of increasing the electricity, with $9891.60 profit remaining, which will be used for the cost of server racks, switches, ventilation equipment and the rest will be profit for the project.

Of course, the difficulty is increasing during this whole time, so while we can't make any guarantees, we would expect the value of the bitcoin to be higher than $20 when we decide to sell the bitcoins.  Plus, we have from the time we end mining until Dec 1st to decide when the best time to sell the bitcoins would be to maximize return.

This is only plan A.  Plan B is still being worked out and therefore it is not ready to be released to the public, but I can say that it does not depend at all on the bitcoin.

[Hunterbunter]

Thanks for posting that, and I agree 30% increase in network hash power per cycle is a reasonable figure over the next few months, but there is what I believe to be a serious problem with your calculations that you may not have considered.

If you sell 1200 bonds for 0.8 BTC each (trade for current market value of $18k cash) and start with 20pcs as scheduled, you'd need to produce 1500 BTC to cover the bonds on maturity, which seems to be impossible, even with the figures you drew up  (my calculations have you producing around 650btc minus electricity over 3-6 months), plus you mentioned it, but did you actually remove the cost of electricity from your calculations? Or did you absorb it into your BTC production estimate? If you actually managed to produce 800BTC as you predict, sell the hardware @ $13.5k and rebuy 675 BTC t $20 a pop (it may be much higher than that), you may just be able to pay everyone off with no profit at all for yourself. If my calculations are correct however, you'll be down anywhere between $2k - $30k, as you're essentially making a bet that BTC will be worth less in 6 months than they are today; either by demand tanking, or network hash power dropping to half or something.

If BTCs go up in value at all by december, you'll never be able to pay back the BTC promised by your bonds, and may unfortunately sully your reputation for future endeavours. If, however, BTCs are worth nothing then, you'll have managed to make a nice short sell on the market.

For what you propose to really work (assuming you believe that BTC is going to go up in value), you'd be better off borrowing against USD, not BTC; borrowing and repaying $20k cash is very different to borrowing and repaying BTC. With cash you only have to make 25k, which is easy as the price per BTC rises (unless it falls!), but with BTC, you'll never be able to catch up with it, as you've sold yourself short by selling the BTC now and buying it back later, when its much harder to get. If you truly believe the BTC will be worth much less in the future than today, and can convince others that's what'll happen too, then your project should do well, and you're essentially short selling BTC which is a workable market mechanism.

The only way for BTC investors to profit from BTC is to invest in businesses that stimulate the movement of BTC via goods/services, which I don't believe what you're proposing is doing. For profiting in $$, borrow $$ and mine BTC and make $$ seems to be the go.

[skyhigh]

Sad to inform you that your idea for plan A has so many flaws you are practically doomed. Lets hear plan B.

[Shinobi]

Not to mention that your introduction of "securities" will likely draw the ire of the SEC, perhaps not for dome time but eventually.