[FIMB] Fixed-Interest-Mining-Bond on BTC-TC

[Garr255]

Previous mining bonds have all had a hashpower-denominated face value. This is simply not a feasible way to value an asset due to the ever-growing bitcoin difficulty. The said difficulty increases render the traditional bonds nearly worthless, making the asset a great way for the issuer to make a quick buck, and certainly not having the investor's best interest in mind. A fixed interest bond will solve the problem by guaranteeing the investor a return, and that is exactly what I am offering here.

Updated contract:
Offered is a fixed-term, fixed-interest, callable and puttable mining bond that has a face value of 0.01, and upon the sale of the initially issued 10,000 bonds, pays a fixed two percent (2%) interest on the first day of each month. The bond matures three (3) years from the date of issuance: Wednesday, July 1st, 2015. The bond can be repurchased by the issuer at any time for 102% of the face value, and can be sold back to the issuer at any time for 90% of the face value. The issuer can issue additional bonds at any time.

The first 10,000 bonds will be put up for sale on Saturday, June 29th at 8:00 AM PST.

https://btct.co/security/FIMB

This has been talked about a lot in the past, and people have shown a great deal of interest in this type of bond. This can easily be categorized as a "set-and-forget" asset, because you know exactly what will come of it Any constructive criticism is appreciated as always!

Let's get mining!

--Garrett

Thread rules: All posts must: add to the conversation and be constructive, and be relavent to mining/bonds. No spamming.

[Garr255]

Reserved.

Also, I know the asset is currently mislabeled "stock". It will be moved to the bond category soon.

[ThickAsThieves]

1. What does this have to do with mining?
2. How is your asset approved so quickly and with less than 5 votes?

[🏰 TradeFortress 🏰]

He renamed create I think:

oZoNo voted YES with comment: Note that this is more like a kickstarter-scenario than a business. There is no plan to generate income. -- odolvlobo

Yep, that's right.

[Garr255]

1. What does this have to do with mining?
2. How is your asset approved so quickly and with less than 5 votes?

1. To the bondholder, you are right that it does not matter what the funds are being used for, so long as the interest is paid. I am publicly announcing exactly what the funds will be used for for the sake of transparency and nothing more.
2. See TF's post.

[Factory]

for the sake of transparency and nothing more.

"Um..... Mining stuff" is hardly transparent.

[Entropy-uc]

1. What does this have to do with mining?
2. How is your asset approved so quickly and with less than 5 votes?

1. To the bondholder, you are right that it does not matter what the funds are being used for, so long as the interest is paid. I am publicly announcing exactly what the funds will be used for for the sake of transparency and nothing more.
2. See TF's post.

Graet is about the most trustworthy guy around here and he is paying 20% annual with daily coupons.

After all the BS you have pulled lately you really think people will lend to you at better terms than that?

[Garr255]

for the sake of transparency and nothing more.

"Um..... Mining stuff" is hardly transparent.

I have over 20,000 Avalon ASIC chips on order, and am working closely with a board developer to produce boards that will allow us to overclock the chips far above the clockrate they're being shipped at in the Avalon-spec miners. ~350mh/s per chip is the current projection.

[Garr255]

[...]20% annual with daily coupons[...]

Valid point. I will easily be able to up the rate to 2% monthly. Change made.

[🏰 TradeFortress 🏰]

So 26.8% APR (compounded)

[Factory]

[...]20% annual with daily coupons[...]

Valid point. I will easily be able to up the rate to 2% monthly. Change made.

A vague contract and then instantly doubling the monthly coupon just for the heck of it?

Regardless of your history and experience, you have to understand this raises eyebrows.

[killerstorm]

and upon reciept of hardware purchased from raised funds, pays a fixed two percent (2%) interest on the first day of each month

So there will be some delay before it starts paying interest?

In this case people actually need to know what is purchased.

Also it works only if you order one thing, and you cannot sell more bonds.

[Garr255]

[...]20% annual with daily coupons[...]

Valid point. I will easily be able to up the rate to 2% monthly. Change made.

A vague contract and then instantly doubling the monthly coupon just for the heck of it?

Regardless of your history and experience, you have to understand this raises eyebrows.

Sure, your position is definitely understandable. Mining is an extremely profitable business, I am offering these bonds as a mitigation of risk while still being involved in mining.

How would you recommend I improve and clarify the contract?

[Garr255]

and upon reciept of hardware purchased from raised funds, pays a fixed two percent (2%) interest on the first day of each month

So there will be some delay before it starts paying interest?

In this case people actually need to know what is purchased.

Also it works only if you order one thing, and you cannot sell more bonds.

Yes, there will be a delay, likely until mid-August, when the Avalon chips (as said above) have arrived and are hashing.

And I will be able to make multiple bond offerings so long as I am able to track which bonds were sold in what batch.

[🏰 TradeFortress 🏰]

And I will be able to make multiple bond offerings so long as I am able to track which bonds were sold in what batch.

No, you won't, on bitcoin exchanges shares must be fungible.

Your contract does not mention a delay. You'll be breaking it if you don't make an interest payment 3 days after the first issue.

[Factory]

How would you recommend I improve and clarify the contract?

As the current 'contract' is two sentences, I would suggest elaborating a bit.

Current Contract:

"Offered is a perpetual, callable mining bond that has a face value of 0.01, and upon reciept of hardware purchased from raised funds, pays a fixed two percent (2%) interest on the first day of each month. The bond can be repurchased by the issuer at any time for 102% of the face value."

Why is this perpetual? Why not have of a maturity date of 1, 2, or 5 years, or any length of time for that matter?

Has there been consideration to structure this offering as a puttable bond? Liquidity can often be an issue on exchanges, and with no maturity date it may be very appealing to investors to have the option. This would make the offering much more appealing to potential holders. Obviously, there would have to be specific provisions or a unique structure for this, as there would be no third party to guarantee payment.

Is this bond backed by any specific assets?

Why are you talking about receipt of hardware? This fixed rate bond (really) should not be dependent upon you receiving any hardware.

Is the capital raised from this bond offering to be used to further R&D efforts with the board developer?

Just a few questions to think about.

[usagi]

How would you recommend I improve and clarify the contract?

I'm not sure. I think it's a little short. But I am not so concerned with the contract just how the face value aspect works. How can you offer a fixed face value security based on mining when the money is being used to purchase hardware? What backs up the repurchase of shares at face value? thx for comments~

[MPOE-PR]

1. To the bondholder, you are right that it does not matter what the funds are being used for, so long as the interest is paid.

This is singularly the most condensed stupidity produced on this forum all of...I dunno, today? Past hour?

It does however have the merits of making it clear for anyone that still had any doubts whether you've actually crossed into the dark side with your shill bidding crap that was recently discovered.

Please go away. You have no business being involved in "shares", even if you think they're "bonds".

[Deprived]

1. What does this have to do with mining?
2. How is your asset approved so quickly and with less than 5 votes?

1. To the bondholder, you are right that it does not matter what the funds are being used for, so long as the interest is paid. I am publicly announcing exactly what the funds will be used for for the sake of transparency and nothing more.
2. See TF's post.

Regarding point 1, you need to do one of two things:

A.  Explain in detail what's being done with the cash - and how it can't possibly fail to produce sufficient cash to pay all commitments in respect of the bonds (this is impossible for anything related to mining - and, for that matter, for pretty much anything at all).
B.  Demonstrate that you have sufficient BTC-denominated assets to cover payment of interest and calling the bonds even if your mining investment totally fails.

B is the one to focus on.

You also need to define a fixed date at which interest will start to be paid.  It isn't a bond if payment depends on performance - and that includes the timing of payments as well as the amounts.  The date doesn't need to be immediate - but if it isn't then don't expect too many sales until the date gets close as until then it's just an interest-free loan.

[Garr255]

How would you recommend I improve and clarify the contract?

As the current 'contract' is two sentences, I would suggest elaborating a bit.

Current Contract:

"Offered is a perpetual, callable mining bond that has a face value of 0.01, and upon reciept of hardware purchased from raised funds, pays a fixed two percent (2%) interest on the first day of each month. The bond can be repurchased by the issuer at any time for 102% of the face value."

Why is this perpetual? Why not have of a maturity date of 1, 2, or 5 years, or any length of time for that matter?

Has there been consideration to structure this offering as a puttable bond? Liquidity can often be an issue on exchanges, and with no maturity date it may be very appealing to investors to have the option. This would make the offering much more appealing to potential holders. Obviously, there would have to be specific provisions or a unique structure for this, as there would be no third party to guarantee payment.

Is this bond backed by any specific assets?

Why are you talking about receipt of hardware? This fixed rate bond (really) should not be dependent upon you receiving any hardware.

Is the capital raised from this bond offering to be used to further R&D efforts with the board developer?

Just a few questions to think about.

I like the idea of a puttable bond. I'll add an embedded put option into the contract now. Also, I see how a defined maturity rate would make the offering more desirable. I feel as though three years would be a reasonable timeframe. Although I fully expect that I will be calling the bonds in less than two years.

What would you suggest as a fair rate for the put option? 90% of the face value is something I could do.

The bond wil be backed by the hardware purchased with raised funds, and no, the board devs have funding of their own to evolve the boards.

How would you recommend I improve and clarify the contract?

I'm not sure. I think it's a little short. But I am not so concerned with the contract just how the face value aspect works. How can you offer a fixed face value security based on mining when the money is being used to purchase hardware? What backs up the repurchase of shares at face value? thx for comments~

1. What does this have to do with mining?
2. How is your asset approved so quickly and with less than 5 votes?

1. To the bondholder, you are right that it does not matter what the funds are being used for, so long as the interest is paid. I am publicly announcing exactly what the funds will be used for for the sake of transparency and nothing more.
2. See TF's post.

Regarding point 1, you need to do one of two things:

A.  Explain in detail what's being done with the cash - and how it can't possibly fail to produce sufficient cash to pay all commitments in respect of the bonds (this is impossible for anything related to mining - and, for that matter, for pretty much anything at all).
B.  Demonstrate that you have sufficient BTC-denominated assets to cover payment of interest and calling the bonds even if your mining investment totally fails.

B is the one to focus on.

You also need to define a fixed date at which interest will start to be paid.  It isn't a bond if payment depends on performance - and that includes the timing of payments as well as the amounts.  The date doesn't need to be immediate - but if it isn't then don't expect too many sales until the date gets close as until then it's just an interest-free loan.

Alright, thanks for the good advice.

The funds are being used to purchase Avalon chips and host boards for them. I am already producing boards with over 20,000 chips so the likelihood of the project failing is very slim. However, if the investment completely and utterly fails, I have more than enough BTC on hand to repay the bond with interest. You can view the balance of my public address here. It typically has a balance of over BTC100 which should prove to you that I own sufficient BTC to repay the bond in the case of the mining endeavor totally failing.

And I will be able to make multiple bond offerings so long as I am able to track which bonds were sold in what batch.

No, you won't, on bitcoin exchanges shares must be fungible.

Your contract does not mention a delay. You'll be breaking it if you don't make an interest payment 3 days after the first issue.

This problem is easily solved by creating "FIMB.2" "FIMB.3" etc.

Thanks for the constructive criticism, I want to make this the best offering I can!