-

[Lab_Rat]

To anyone who noticed the dip in hashrate this morning, there was a failover of 500-600GH to EMC... Unsure why, but they're back on the pool they should be.  Didn't lose out on any coins though.  I think were almost to 70BTC to be paid out already this week.

[maqifrnswa]

By the way, what are SNQI and SNQII? (Sorry if I'm being slow, and I did google first...)

shares of a group buy, listed on bifunder. I and II refer to the first day and later orders of KNC miners.

Fixed hashrate per share (determined by however much KNC delivers). 2% management fees, all dividends minus rent/electricity/etc. paid out to shareholders. organized by "soniq"

LabRat (LRM, less <25% management fee, also some amount of original cost per share went to management fees, <20%) and OgNasty (Nastyfans, 0% management fee) essentially run managed group buys with mandatory reinvestment; Addition (run by tyrion, 0% management fee but a known quantity of shares are held by organizers paid for by investors at purchase) and Soniqcoin (SNQI/SNQII, run by soniq, 2% management fee and a known quantity of shares held by organizers paid for by investors at purchase) are exchange-tradable group buys; ASICMINER and Activemining are shares in companies that mine with their own hardware (management pays themselves as seen on balance sheets/income statements, management owns significant shares in company).

All three types of securities have benefits/drawbacks, I think it's important for people to understand them since bitcoin is a self-regulated system -- simply chasing the highest profits may cause a bubble if investors don't spend the right time evaluating the fundamentals of competing offerings.

[bigasic]

Im a tad confused. I know that we are getting 75 percent of the coins. i was under the impression that the 25 percent went to operational expenses. I keep hearing that 25 percent is reinvested. so, could someone explain how it actually works? I just need some clarification....

25% is operational expenses and the remainder of that 25% goes towards reinvestment and management fees.

Lab, you say 25 is operation expenses and the remainder of that 25 percent goes towards reinvestment and fees. so, does that mean 50 percent is taken out 25 for fees and 25 for reinvestment?

Im a tad slow this morning, lol

From what I get from what your saying, you take 25 percent to pay for expenses, then the remainder of that 25 percent you take 25 percent of that for expansion.  Could you give us a breakdown if that is the case?

[mmmerlin]

By the way, what are SNQI and SNQII? (Sorry if I'm being slow, and I did google first...)

shares of a group buy, listed on bifunder. I and II refer to the first day and later orders of KNC miners.

Fixed hashrate per share (determined by however much KNC delivers). 2% management fees, all dividends minus rent/electricity/etc. paid out to shareholders. organized by "soniq"

LabRat (LRM, less <25% management fee, also some amount of original cost per share went to management fees, <20%) and OgNasty (Nastyfans, 0% management fee) essentially run managed group buys with mandatory reinvestment; Addition (run by tyrion, 0% management fee but a known quantity of shares are held by organizers paid for by investors at purchase) and Soniqcoin (SNQI/SNQII, run by soniq, 2% management fee and a known quantity of shares held by organizers paid for by investors at purchase) are exchange-tradable group buys; ASICMINER and Activemining are shares in companies that mine with their own hardware (management pays themselves as seen on balance sheets/income statements, management owns significant shares in company).

All three types of securities have benefits/drawbacks, I think it's important for people to understand them since bitcoin is a self-regulated system -- simply chasing the highest profits may cause a bubble if investors don't spend the right time evaluating the fundamentals of competing offerings.

That is an extremely useful comparison/run-down maqifrnswa, thank you! How does Basic-Mining BTC-TC compare with all of those by the way?

(https://bitcointalk.org/index.php?topic=130982.0)

It seems interesting to me as it appears to be run by a well known member of the community, be hashing at ~1.4TH/s, paying about 1/10th of LRM dividends at the moment, and trading with a share price ~50% higher... Are they expecting a huge influx of hardware that they've already paid for? And by huge it would have to be proportionately bigger than the hardware LRM is expecting to explain the enormous difference in both PE ratio and actual shareprice...

[Bargraphics]

Im a tad confused. I know that we are getting 75 percent of the coins. i was under the impression that the 25 percent went to operational expenses. I keep hearing that 25 percent is reinvested. so, could someone explain how it actually works? I just need some clarification....

25% is operational expenses and the remainder of that 25% goes towards reinvestment and management fees.

Lab, you say 25 is operation expenses and the remainder of that 25 percent goes towards reinvestment and fees. so, does that mean 50 percent is taken out 25 for fees and 25 for reinvestment?

Im a tad slow this morning, lol

From what I get from what your saying, you take 25 percent to pay for expenses, then the remainder of that 25 percent you take 25 percent of that for expansion.  Could you give us a breakdown if that is the case?

Hey BigAsic,

It goes like this

25% gets taken out to pay for Expenses.

So 25% - Expenses = Remainder

Whatever is in the Remainder goes towards Reinvestment and Management Fees.

We do not know what percentage of the remainder goes towards either of those.

While I don't believe we have a right to see a "Balance Sheet", I think it would promote honesty and good will towards shareholders if LabRat made a Weekly, Bi-Weekly, or Monthly Balance sheet to show what expenses were paid, what management fees were paid, and what reinvestments have collect.

Transparency is the key to maintaining shareholder confidence and I believe Lab is off to a good start so far.

[Lab_Rat]

Im a tad confused. I know that we are getting 75 percent of the coins. i was under the impression that the 25 percent went to operational expenses. I keep hearing that 25 percent is reinvested. so, could someone explain how it actually works? I just need some clarification....

25% is operational expenses and the remainder of that 25% goes towards reinvestment and management fees.

Lab, you say 25 is operation expenses and the remainder of that 25 percent goes towards reinvestment and fees. so, does that mean 50 percent is taken out 25 for fees and 25 for reinvestment?

Im a tad slow this morning, lol

From what I get from what your saying, you take 25 percent to pay for expenses, then the remainder of that 25 percent you take 25 percent of that for expansion.  Could you give us a breakdown if that is the case?

Hey BigAsic,

It goes like this

25% gets taken out to pay for Expenses.

So 25% - Expenses = Remainder

Whatever is in the Remainder goes towards Reinvestment and Management Fees.

We do not know what percentage of the remainder goes towards either of those.

While I don't believe we have a right to see a "Balance Sheet", I think it would promote honesty and good will towards shareholders if LabRat made a Weekly, Bi-Weekly, or Monthly Balance sheet to show what expenses were paid, what management fees were paid, and what reinvestments have collect.

Transparency is the key to maintaining shareholder confidence and I believe Lab is off to a good start so far.

The remainder will change over time as difficulty and hardware quantity increases.  We haven't seen the bulk of hardware yet so re-investment isn't really an issue.  Once the bulk of BF gear is in, I will be announcing how much has been reinvested.

[maqifrnswa]

That is an extremely useful comparison/run-down maqifrnswa, thank you! How does Basic-Mining BTC-TC compare with all of those by the way?

(https://bitcointalk.org/index.php?topic=130982.0)

It seems interesting to me as it appears to be run by a well known member of the community, be hashing at ~1.4TH/s, paying about 1/10th of LRM dividends at the moment, and trading with a share price ~50% higher... Are they expecting a huge influx of hardware that they've already paid for? And by huge it would have to be proportionately bigger than the hardware LRM is expecting to explain the enormous difference in both PE ratio and actual shareprice...

BASIC: Managed group buy (like LRM/Nasty) 0% management fee, 25% fee taken out at time of IPO used to pay for management shares in hardware. 30% of net proceeds are retained earnings for reinvestment in hardware (OgNasty does 25%, labrat does 25% minus management fee).

A fundamental difference between BASIC and LRM is that you actually own the hardware in BASIC, while LRM owns the hardware for LRM. Since hardware essentially depreciates to 0 in two years, it's not too much of a difference. It's hard to compare future deals since we don't know what's on order or who will actually deliver (on time), but the market seems to show equal confidence in both securities to secure hashrate.

basic has extremely transparent accounting of expenses and hardware, balance sheets and income statements are readily available.

Dividends are paid daily, so they are about the same as labrat's (basic: ~0.0007/week, LRM: ~.0011), and the shares cost about the same as labrats (basic: ~0.12, LRM: ~0.17). I think the yield of the two is pretty similar and PE is pretty similar (basic: 0.58%/week, LRM: 0.64%/week)
https://btct.co/security/BASIC-MINING

[creativex]

I should be so eloquent, thank you maqifrnswa. The history of PMBs is well known.

I'll not crap up this thread out of respect to Lab_Rat.

Cheers.

[mmmerlin]

That is an extremely useful comparison/run-down maqifrnswa, thank you! How does Basic-Mining BTC-TC compare with all of those by the way?

(https://bitcointalk.org/index.php?topic=130982.0)

It seems interesting to me as it appears to be run by a well known member of the community, be hashing at ~1.4TH/s, paying about 1/10th of LRM dividends at the moment, and trading with a share price ~50% higher... Are they expecting a huge influx of hardware that they've already paid for? And by huge it would have to be proportionately bigger than the hardware LRM is expecting to explain the enormous difference in both PE ratio and actual shareprice...

BASIC: Managed group buy (like LRM/Nasty) 0% management fee, 25% fee taken out at time of IPO used to pay for management shares in hardware. 30% of net proceeds are retained earnings for reinvestment in hardware (OgNasty does 25%, labrat does 25% minus management fee).

A fundamental difference between BASIC and LRM is that you actually own the hardware in BASIC, while LRM owns the hardware for LRM. Since hardware essentially depreciates to 0 in two years, it's not too much of a difference. It's hard to compare future deals since we don't know what's on order or who will actually deliver (on time), but the market seems to show equal confidence in both securities to secure hashrate.

basic has extremely transparent accounting of expenses and hardware, balance sheets and income statements are readily available.

Dividends are paid daily, so they are about the same as labrat's (basic: ~0.0007/week, LRM: ~.0011), and the shares cost about the same as labrats (basic: ~0.12, LRM: ~0.17). I think the yield of the two is pretty similar and PE is pretty similar (basic: 0.58%/week, LRM: 0.64%/week)
https://btct.co/security/BASIC-MINING

Again, many thanks for the comprehensive review! I had missed that their dividends are daily, that does indeed account for pretty much the whole discrepancy (and the fact that I somehow got their shareprice wrong by a factor of around 2!)

As you say, the difference in owning the hardware is pretty much moot as it dwindles to nothing, plus, although bond holders don't "own" the hardware in LRM, the company is obliged to keep mining with it on behalf of investors pretty much indefinitely, so it's virtually the same.

Looks like the valuations are pretty similar as it stands then, which is good as it shows some consistency in the market. This should mean though, that unless BASIC have a whole load of hardware on order and paid for then it's hard to imagine LRM's valuation increasing a lot when the big delivery of hardware comes in. What I mean by this is that because BASIC is a long standing proposition, and thus has had plenty of time to find an equilibrium/"true valuation", and given that LRM is performing similarly and is valued similarly, this shows that its valuation is approximately based on current performance (i.e. hashrate) and not on forecasted performance, and so once it's shown that LRM is achieving what is promised then the value should move to reflect that.

And yes, I had noticed that the transparency of BASIC is exemplary. I think we can expect more of that once the BitFury hardware is delivered.

[mmmerlin]

I should be so eloquent, thank you maqifrnswa. The history of PMBs is well known.

I'll not crap up this thread out of respect to Lab_Rat.

Cheers.

BTW, what do you mean you'll not "crap up this thread"?!  

[||bit]

Buying and receiving Bitfury hardware mid-October (at retail cost) would ROI by mid January (assuming: +70% difficulty per month, and BTC=$140).
Basically operating at $20/GH

But I'm curious how long ROI will take with LRM's plan.

Keep in mind for the below, the first half of October you don't have equipment to mine with. So, deduct about half of October profit from the totals.

The lowest bond price has been BTC0.15
Lowest BTC has been is about $100 since inception of LRM.
That equates to $15/bond in a best case.
If MH/bond reaches 700MH, that is $21.5/GH (very best case).
That is the equivalent of buying an October Bitfury 400GH rig now for $8,600.
That would possibly have an ROI in a few months if you can account for some re-investment.
See here: http://mining.thegenesisblock.com/a/84f74d8b86


But what about more realistic numbers of an average bond holder?...

A reasonable guess for average bond price is maybe BTC0.18
Average BTC has been is about $125 since inception of LRM.
That equates to $22.5/bond in an realistic average case.
If MH/bond reaches 500MH, that equates to $22.5/500MH or $45/GH (realistic case).
That is the equivalent of buying an October Bitfury 400GH rig now for $18,000!
Plugging those numbers in here, and there is no ROI achievable without a re-investment that works:
http://mining.thegenesisblock.com/a/47ff308a62

So, let's consider the re-investment strategy is at the best a 25% gain on hashrate at the start. What if we plug in a generous doubling of that with a 50% increase over the very starting hash rate in a supposed mid October hardware, by changing startgin rate from 400GH to 600GH per Bitfury rig at $18,000? It yields:
http://mining.thegenesisblock.com/a/0b15e224f4

Still no ROI. What am I missing? Despite expecting some nice dividends next month, is LRM on a trajectory for long term loss?

[bittymitty]

The hash rate per bond is after the power and pool fees have been taken out(plus you have postage and other expenses in the calculation).

I would also speculate that the reinvested funds will buy a lot more gh/$ than you can currently buy.  So by Jan 2014 the hash rate per bond could be more than the 500-700MH/s quoted.  This would mean you will need to re-adjust the calculation and in theory get a higher return.  Also lab_Rat still has 50,000 bonds to sell which again will increase the mine accordingly.

[mmmerlin]

The hash rate per bond is after the power and pool fees have been taken out(plus you have postage and other expenses in the calculation).

I would also speculate that the reinvested funds will buy a lot more gh/$ than you can currently buy.  So by Jan 2014 the hash rate per bond could be more than the 500-700MH/s quoted.  This would mean you will need to re-adjust the calculation and in theory get a higher return.  Also lab_Rat still has 50,000 bonds to sell which again will increase the mine accordingly.

LabRat has ∞ bonds to sell to "increase the mine". The questions are: will anyone buy? will it increase the rate of prior bonds i.e. does it increase the mine proportionally? how should it be handled? is it even a good idea to expand?

To be clear: I don't have doubts in the operation, but I would question whether the issue of longevity is addressed in any way by simply stating that "there are more bonds to sell".

[bittymitty]

Will anyone buy more bonds? Depends on the the current bonds providing a good return and the price per bond.
Will it increase the current bonds?  Yes any extra hashing power is added to the total amount and this is divided between all the bonds sold.  The expansion has been part of the plan from the start.
Expanding is essential to the survival of the mine.  lab_Rat is aiming for a percentage of the hash rate and wants to maintain that percentage.  Without expanding the mine will produce less BTC every week until it is no longer profitable.

[mmmerlin]

Will anyone buy more bonds? Depends on the the current bonds providing a good return and the price per bond.
Will it increase the current bonds?  Yes any extra hashing power is added to the total amount and this is divided between all the bonds sold.  The expansion has been part of the plan from the start.
Expanding is essential to the survival of the mine.  lab_Rat is aiming for a percentage of the hash rate and wants to maintain that percentage.  Without expanding the mine will produce less BTC every week until it is no longer profitable.

I think you're missing to the point.

Say I have two apples, and two people come along, each with their own two apples. Then when the "extra hashing power[apples] is added to the total amount and this is divided between all the bonds sold [people at the apple party]" this doesn't result in expansion, it results in everyone still having two apples. So selling bonds may or may not increase the hashrate of existing bondholders.

In fact, due to the preorder madness phase that we're in, it actually detracts from the current hashrate/bond, at least temporarily, as all bonds instantly start paying dividends, but the hardware that can be bought with the capital raised takes time to arrive, and in the interim period the current bonds are therefore diluted by the new purchases.

This is, in fact, the reason that there are not unlimited (IPO) bonds on sale at this very moment, as the concern was that as soon as decent dividends started being paid that someone with deep pockets could buy so many bonds that existing shareholders would see a significant hit, and it would then be ages before the capital could be put in hashing action.

[||bit]

The hash rate per bond is after the power and pool fees have been taken out(plus you have postage and other expenses in the calculation).

I would also speculate that the reinvested funds will buy a lot more gh/$ than you can currently buy.  So by Jan 2014 the hash rate per bond could be more than the 500-700MH/s quoted.  This would mean you will need to re-adjust the calculation and in theory get a higher return.  Also lab_Rat still has 50,000 bonds to sell which again will increase the mine accordingly.

That's true. But in my scenario, I added a generous instantaneous 50% reinvestment (with the Bitfury order) for a 50% higher hashrate at today's difficulty (technically from mid October when hardware might be received). That seems to me to be as good as, if not better, than a future higher hash rate at higher difficulty. I could be wrong, but don't see it unless $/GH drops faster than difficulty's 70%/month increase. The only reasonably obvious saving factor, that I see, will be much higher value for bitcoins... or difficulty stopping (not expecting that anytime soon).

[mmmerlin]

The hash rate per bond is after the power and pool fees have been taken out(plus you have postage and other expenses in the calculation).

I would also speculate that the reinvested funds will buy a lot more gh/$ than you can currently buy.  So by Jan 2014 the hash rate per bond could be more than the 500-700MH/s quoted.  This would mean you will need to re-adjust the calculation and in theory get a higher return.  Also lab_Rat still has 50,000 bonds to sell which again will increase the mine accordingly.

That's true. But in my scenario, I added a generous instantaneous 50% reinvestment (with the Bitfury order) for a 50% higher hashrate at today's difficulty (technically from mid October when hardware might be received). That seems to me to be as good as, if not better, than a future higher hash rate at higher difficulty. I could be wrong, but don't see it unless $/GH drops faster than difficulty's 70%/month increase. The only reasonably obvious saving factor, that I see, will be much higher value for bitcoins... or difficulty stopping (not expecting that anytime soon).

Not soon, but it will happen (though there are some hilarious car-crash scenarios that are possible with that... )

[||bit]

Will anyone buy more bonds? Depends on the the current bonds providing a good return and the price per bond.
Will it increase the current bonds?  Yes any extra hashing power is added to the total amount and this is divided between all the bonds sold.  The expansion has been part of the plan from the start.
Expanding is essential to the survival of the mine.  lab_Rat is aiming for a percentage of the hash rate and wants to maintain that percentage.  Without expanding the mine will produce less BTC every week until it is no longer profitable.

The only way that can happen is if he can purchase more hashing power per dollar invested than the first round (normalizing for difficulty). Well, on the second set of bonds sells, that should be the case, considering [also] he should have a little less start up costs. Anyway, when you normalize for difficulty, things dilute down. If he did or didn't sell new bonds, it won't make much difference in general.

Personally, I don't care about actual hashrate per bond so much as how it relates to difficulty. I would be happy with 1kilohash/bond if it was difficulty of 1

[bittymitty]

Lets speculate some more

lets say by December Lab_Rat has received all the miners currently expected  = 30 TH/s
This would produce 675 BTC * .25(management and reinvestment fund)= 168 BTC  or $23,000  
Lets say Lab_Rat reinvests 50% or $11,500 in to 2x Cointerra 2TH/s miners @$6000 each this would increase the mine by 4TH/s up to 34TH/s  
This would increase the MH/bond rate from 30,000 GH/s/50,000 B  = 0.6 GH/s to 34,000 GH/s/50,000 B = 0.68 GH/s
Lets say he also sells 5000 more bonds for .18 = 900 BTC or 126,000 USD and uses this to buy the same Cointerra miners
$126,000/$6000 = 21*2 TH/s = 42 TH/s add this to the current 30 TH = 72 000 GH/s  

72000/55000 = 1.3 gh/s per bond

TLDR - The hash rate per bond will go up (maybe)

* All the numbers above are speculative

[mmmerlin]

Lets speculate some more

FML.

TLDR - The hash rate per bond will go up (maybe)

* All the numbers above are speculative

Maybe indeed.

I didn't say it wouldn't, I'm just pointing out that a) bonds sales might help, they might not, but it's not a given, and b) even when the theoretical hashrate/bond goes up from IPO sales, the dividends still go down in the short-term, where the length of that term is defined by the purchase-to-delivery latency, which at the moment is bonkers.

And finally, the arms race will end. Yes, you want to keep pace with the network ideally, but this is never going to be possible if people are expecting LRM to maintain the share it will have at it's peak, that's daft to expect. Just maintaining the share it has of the network at this moment would be a great result long term.