[BTCT][BFMINES] - Mining Contracts Now Available - Bonus Divs First Months

[furuknap]

Prices right now:

Code:

BFMines:      0,004 per Mh/s
TAT.VM:       0,0035 per Mh/s
DMS.MINING:   0,0032 per Mh/s
AM USB Miner: 0,003 per Mh/s (with new price 0.99 btc)

But anyway it's doubtful if BFMines will get approved, it's waiting for another YES vote since days...

I'm sorry, what was that? BFMines is still the cheapest contract on the market. DMS.* carries additional volatility risk, which is likely going to be of concern to those that are the targets of these types of assets (investors who would want an option to get out, not traders who would speculate on short-term price shifts).

And really, I'm sure you're not comparing running your own hardware with having someone run the hardware for you. Or are you OK with farming your own wheat rather than buying flour in the store?

My point with previously comparing the hardware cost to mining contracts is to show that they are real alternatives (and, to some extent, that ASICMiner in particular is charging ridiculous prices for hardware) not to indicate that there is no extra cost or risk involved with running hardware.

The final vote, however, is of less concern now as there are wheels in motion to come up with an alternative. I will announce news on Friday June 28 regardless of whether the vote comes in.

.b

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[Mabsark]

Prices right now:

Code:

BFMines:      0,004 per Mh/s
TAT.VM:       0,0035 per Mh/s
DMS.MINING:   0,0032 per Mh/s
AM USB Miner: 0,003 per Mh/s (with new price 0.99 btc)

But anyway it's doubtful if BFMines will get approved, it's waiting for another YES vote since days...

I'm sorry, what was that? BFMines is still the cheapest contract on the market. DMS.* carries additional volatility risk, which is likely going to be of concern to those that are the targets of these types of assets (investors who would want an option to get out, not traders who would speculate on short-term price shifts).

And really, I'm sure you're not comparing running your own hardware with having someone run the hardware for you. Or are you OK with farming your own wheat rather than buying flour in the store?

My point with previously comparing the hardware cost to mining contracts is to show that they are real alternatives (and, to some extent, that ASICMiner in particular is charging ridiculous prices for hardware) not to indicate that there is no extra cost or risk involved with running hardware.

The final vote, however, is of less concern now as there are wheels in motion to come up with an alternative. I will announce news on Friday June 28 regardless of whether the vote comes in.

.b

Would you be OK trying to solve blocks using pen and paper as that would be the more apt comparison to farming wheat. The comparison to mining bitcoins would be asking a Star Trek food replicator for wheat.

Anyway, it's good to hear you've come up with an alternative.

[furuknap]

The comparison to mining bitcoins would be asking a Star Trek food replicator for wheat.

Only if you assume that replicators are free of maintenance, risk, and energy cost :-) I'm sure there are some interesting episodes in Voyagers to speak to that alternative.

.b

[Mabsark]

The comparison to mining bitcoins would be asking a Star Trek food replicator for wheat.

Only if you assume that replicators are free of maintenance, risk, and energy cost :-) I'm sure there are some interesting episodes in Voyagers to speak to that alternative.

.b

Why? Are you assuming that mining devices are free of maintenance, risk and energy cost? Because that's what you're saying with that statement.

[furuknap]

Update Delay

I was supposed to have completed a plan by this evening and post information today, but sadly I've run out of time. I'll continue to work this weekend and post the update as soon as possible.

In the meantime, if you know of any LTC-Global voters that have not passed their votes yet, feel free to give them a gentle nudge and ask them to review the contract and asset.

Thank you,

.b

[furuknap]

Potential Private Listing and Suggestion for New Buy-Back Clause

Because LTC Global voters can't seem to get their act together, I'm contemplating listing BFMines as a private asset and later issue a PT asset for BTCT.

However, before I finalize the plan and post an official update, I would like to request your opinion on a new idea for a buy-back clause.

In case of a forced buy-back as per the original contract, rather than base the buy-back price on a trading price on BTCT, the buy-back price will be based on a formula which is listing price minus 125% of paid dividends. In other words, if the asset is listed at BTC0.004 and has paid out BTC0.002 by the end of a year, a forced buy-back if required would happen at 0.004-(0.002*125%)=0.0015.

However, if the asset produces more than BTC0.0032 during it's lifetime, the buy-back would be negative and closing of the contracts would not be possible. To avoid this, the minimum forced buy-back price is fixed at BTC0.00001 or 0.25% of listing price.

Obviously this creates an incentive to close the contracts early. If a contract is closed after producing BTC0.002, the full return the contract holders would get is 0.0035 or a loss of 0.0005 per contract (and an equal profit for the asset issuer). As such, a new clause will be introduced in the buy-back provisions of the contract.

In case of a buy-back, the dividends paid per contract must have been below 0.1% of listing price per month for no less than three consecutive months. At this point, the contracts will return less than 1.2% per year.

I would like to stress that this clause is to protect contract holders from early buy-back and that buy-backs are still at the discretion of the issuer and not guaranteed to happen at any time (assuming I live forever or can't find a replacement operator when I knock on hell's door).

I would also like to stress that although the buy-back based on dividends paid gives some insurance to investors of not losing their entire contract price, there is still a risk that investors may lose some of the investments if difficulty rises perpetually.

Please let me know what you think about this new idea. I understand this introduces much more risk to me, but should also assure investors that I am willing to put my money where my mouth is when I say that I think mining contracts (formerly known as PMBs) can make money for its investors.

.b

[furuknap]

Update: BFMines Approved - Trading Commences July 3, 2013, at 1800/6PM UTC
I'm happy to report that the BFMines mining contracts have been approved for trading on BTCT as of today. Trading will commence on Wednesday, July 3, at 1800/6PM UTC.

As previously announced, here is what's going to happen over the next couple of days.

First the date: Trading will commence on Wednesday, July 3, 2013, at 1800/6PM UTC.

The asset is now available for bidding. You can place your bids now, presumably at BTC0.004, on the exchange site at https://btct.co/security/BFMINES. You can place orders for as many contracts as you like.

When the countdown reaches zero, an ASK order of 100,000 contracts at BTC0.004 each will be placed on the market. The ASK will remain on the market until filled and at the BTC0.004 price.

Please review the contract carefully before investing, do your own research, do not invest more than you can afford to lose, and feel free to reach out should you need clarification on anything.

.b

[TheSwede75]

I may very well be misunderstanding the offering or maybe I am just daft. Is this mining bond really just selling shares of a 120 Gh/S Bitfury for initial market value of 400 BTC?

[furuknap]

I may very well be misunderstanding the offering or maybe I am just daft. Is this mining bond really just selling shares of a 120 Gh/S Bitfury for initial market value of 400 BTC?

No, this is a mining contract for 1mhs per contract initially sold at BTC0.004. There's more to it than just shares of hardware, but technically, these contracts can be backed by anything.

I've addressed this to some extent in my latest article (which should be mandatory reading for anyone considering purchasing contracts):

http://coin.furuknap.net/bfmines-bitcoin-mining-contracts-ready-for-listing-heres-how-you-should-evaluate-investing/

.b

[helixone]

I may very well be misunderstanding the offering or maybe I am just daft. Is this mining bond really just selling shares of a 120 Gh/S Bitfury for initial market value of 400 BTC?

No, this is a mining contract for 1mhs per contract initially sold at BTC0.004. There's more to it than just shares of hardware, but technically, these contracts can be backed by anything.

I've addressed this to some extent in my latest article (which should be mandatory reading for anyone considering purchasing contracts):

http://coin.furuknap.net/bfmines-bitcoin-mining-contracts-ready-for-listing-heres-how-you-should-evaluate-investing/

.b

DO NOT BUY!! RIPOFF!!

For those that don't know, furknap sold all his ASICMINER shares for 1.7btc and apparently used the proceeds to purchase this miner. He must, by now, realize his folly, and that there is an almost 100% likelihood that buying this miner is a losing trade and will never earn back what he paid.

He is trying to pass on this loss to bitcoin investors like you by launching this offering.

Although the asset has been approved, I strongly encourage people to stay away as it is a guaranteed money loser. IE: You will NEVER earn back in divs what you will pay for it. Furknap knows and is basically offering a way overpriced PMB.

-helixone

[furuknap]

DO NOT BUY!! RIPOFF!!

For those that don't know, furknap sold all his ASICMINER shares for 1.7btc and apparently used the proceeds to purchase this miner. He must, by now, realize his folly, and that there is an almost 100% likelihood that buying this miner is a losing trade and will never earn back what he paid.

He is trying to pass on this loss to bitcoin investors like you by launching this offering.

Although the asset has been approved, I strongly encourage people to stay away as it is a guaranteed money loser. IE: You will NEVER earn back in divs what you will pay for it. Furknap knows and is basically offering a way overpriced PMB.

-helixone

Thank your for your input,

I did sell my AM shares at around 1.7 because that was the rate where the fundamental support for the price was right for my risk profile. Right now, AM is hashing at 100mhs per share and charges 0.044 per mhs, more than 10 times what my contracts do. In other words, AM must increase their hashrate by 10 times just to match the mining yield my contracts do. They do sell hardware, but not near 10x what their mining revenue is.

They may do that at some point, but when they do, the rest of the network needs to be at roughly 1500 THs. If you believe in a 10x increase in global hash rate very quickly then, as I explained in the article, you should not buy this contract (or any mining investment, really).

Further, an ASICMiner investment in an additional 600 THs needs to be paid for through the dividends, whereas my asset has no such provisions. In other words, with AM, you first have to pay for the shares and then pay for the hardware before you get your dividends.

These are two widely different assets, though. Perhaps an article elaborating on why they are different will help clarify?

However, I stand by my ASICMiner sale; I sold at a time when the price was around 2x higher than what I believe mining investments plus the growth that AM is capable of, are worth. There's no loss there for me; I earned good money on investing in AM. If people are indeed willing to pay twice for what I sold, then that is their choice.

.b

[eltopo]

On the positive side, I think your contract is clear and complete.

On the negative side, your asset is (just like nearly all other mining bonds) overpriced.

Please tell me, how high would the average difficulty increase allowed to be at a maximum, if I want the profit to be at least as high as with coinlenders? (27% APR)

Mining Bonds are simply a bet of the issuer against their own investors. One side has to lose, and I doubt it'll be the side who makes the rules...

[furuknap]

On the positive side, I think your contract is clear and complete.

On the negative side, your asset is (just like nearly all other mining bonds) overpriced.

If you think so, you should not buy. I can't make that decision for you, only give you the information I can.

Please tell me, how high would the average difficulty increase allowed to be at a maximum, if I want the profit to be at least as high as with coinlenders? (27% APR)

In what timeframe?

Your question is loaded, though. I don't think you're not really looking for an answer, just an argument about why fish are so much better than apples.

I have stated why I do not believe in the perpetual proportional growth theory (the one you call average difficulty increase) before and I really don't see why repeating it will make it clearer, especially since you seem to have already made up your mind.

Mining Bonds are simply a bet of the issuer against their own investors. One side has to lose, and I doubt it'll be the side who makes the rules...

I don't think this is true. I believe this contract will be profitable for investors, but I also believe that having that cash in hand for me allows be a better return on investment as I invest the time and resources to stay on top of the investment game.

Investors who are not interested in spending that time will get a reasonable return for a reasonable risk. They may lose everything or they may swim in cash, or anything in between.

.b

[eltopo]

Please tell me, how high would the average difficulty increase allowed to be at a maximum, if I want the profit to be at least as high as with coinlenders? (27% APR)

In what timeframe?

Whatever you like, just use 6 or 12 months. You also don't have to use "perpetual proportional growth" numbers, you can take whatever numbers you want for the difficulty jumps. It only has to generate more profit than coinlenders in the same period and the numbers should be valid (thats to be discussed I guess).

[furuknap]

Whatever you like, just use 6 or 12 months. You also don't have to use "perpetual proportional growth" numbers, you can take whatever numbers you want for the difficulty jumps. It only has to generate more profit than coinlenders in the same period and the numbers should be valid (thats to be discussed I guess).

That discussion is not really interesting because we're talking about two vastly different assets. However, to please your inquiry, assuming 350TH/s netowrk hash rate and mining start in August (mining could also start in September), BFMines makes more money (about double) than coinlenders for the first 6 months with a difficulty increase of 10% per month.

After that, PPG difficulty will make it about the same for the next 6 months, and then be below. Also, the moon may fall down by then.

Now you can argue that coinlenders insures their deposits against loss, that you can repeat your investments, that tradefortress is certainly a nice guy, and all that, but you'll only be arguing about one thing; whether difficulty will rocket up or continue upwards on a declining slope, and possible how high it will go before it flattens out this time. That is what separates coinlenders from mining investments if you just look at numbers. Coinlenders does not have exposure to difficulty, mining does.

.b

[eltopo]

Whatever you like, just use 6 or 12 months. You also don't have to use "perpetual proportional growth" numbers, you can take whatever numbers you want for the difficulty jumps. It only has to generate more profit than coinlenders in the same period and the numbers should be valid (thats to be discussed I guess).

That discussion is not really interesting because we're talking about two vastly different assets. However, to please your inquiry, assuming 350TH/s netowrk hash rate and mining start in August (mining could also start in September), BFMines makes more money (about double) than coinlenders for the first 6 months with a difficulty increase of 10% per month.

I think that is wrong.

Ok, lets assume the following:

-   buy IPO share at 0.004
-   mining start at beginning of September
-   network hashrate 350 TH/s at beginning of September (that means ~100% increase from now and 130% increase in difficulty, 23% per jump!)
-   10% difficulty increase from September each month in the next 6 month until end of February

The dividend at beginning of September will have been dropped down to 0.00001028. Your 20% bonus in the first 6 month included, it’ll be 0.00001234.

The dividend will be lowered by every 10% difficulty jump. After 6 month, about ~0.00135 will have been paid out in dividends per share.

The bondprice will drop due to lowered dividends, and will be worth about ~0.00125 after those 6 months.

All paid dividends and bondprice together will be about ~0,0026 at the end of February. The price we paid at IPO was 0,004.

At the same time, Coinlenders will be at ~0,00465 (profit ~16%).

I don't know why you choose those high difficulty increases. If you assume an average increase below 8%, investments could be profitable with those numbers.

Please show me where I made mistakes in my calculation!

[furuknap]

Notification of Insider Trade

Although not required in unregulated markets, I try to maintain a standard I would like all crypto assets to maintain, including what would in a regulated market be a mandatory notification. I am making a purchase of contracts for myself and on behalf of a friend, and as I am a primary insider, this information should be public.

As such:

As part of the IPO process, Bjørn Furuknap, the asset issuer and key insider, will purchase 10000 (ten thousand) contracts of BFMines. 5000 (five thousand) of these will be held personally by Bjørn Furuknap, and 5000 (five thousand) will purchased on behalf of a friend.

These contracts will be directly issued from the pool of 100000 (one hundred thousand) contracts total. The purchase price is BTC0.004 per contract.

After the trade, Bjørn Furuknap holds 10000 (ten thousand) contracts.

.b

[furuknap]

Please show me where I made mistakes in my calculation!

I will, later today :-)

.b

[furuknap]

It's now 22 hours left until the first shares hit the market, and over 30% of the IPO assets have been ordered (including my announced stake).

Pending trade start, I encourage any potential investors to read through this article that describes the risks involved with this asset.

http://coin.furuknap.net/bfmines-bitcoin-mining-contracts-ready-for-listing-heres-how-you-should-evaluate-investing/

.b

[TheSwede75]

I may very well be misunderstanding the offering or maybe I am just daft. Is this mining bond really just selling shares of a 120 Gh/S Bitfury for initial market value of 400 BTC?

No, this is a mining contract for 1mhs per contract initially sold at BTC0.004. There's more to it than just shares of hardware, but technically, these contracts can be backed by anything.

I've addressed this to some extent in my latest article (which should be mandatory reading for anyone considering purchasing contracts):

http://coin.furuknap.net/bfmines-bitcoin-mining-contracts-ready-for-listing-heres-how-you-should-evaluate-investing/

.b

DO NOT BUY!! RIPOFF!!

For those that don't know, furknap sold all his ASICMINER shares for 1.7btc and apparently used the proceeds to purchase this miner. He must, by now, realize his folly, and that there is an almost 100% likelihood that buying this miner is a losing trade and will never earn back what he paid.

He is trying to pass on this loss to bitcoin investors like you by launching this offering.

Although the asset has been approved, I strongly encourage people to stay away as it is a guaranteed money loser. IE: You will NEVER earn back in divs what you will pay for it. Furknap knows and is basically offering a way overpriced PMB.

-helixone

You can of course believe what you want, but there is no reason to be a douchebag about it. What does the fact that he sold ASICMINER at 1.70 have to do with anything? I sold a bunch at 2.20 and sure, while it in hindsight was a bad sell I also purchased them under 0.50 so why cry over making 5x your money?