[BitFunder] IceDrill.ASIC IPO (235 Thash Mining Operation powered by HashFast)

[iCEBREAKER]

You guys should do a documentary while setting this up.

That would be some great bitcoiner porn!

*contacts Discovery Channel*

[moribana]

If IPO fails hitting target by Monday deadline, there will be a buy back shortly after?

Looks like people are trying to get out..

Ask on bitfunder: 52,878    ฿0.0013990

The IPO cannot fail unless they want it to fail. As DeadTerra said in his previous post:

"If we could and wished to lower the limit of fund raising we simply would announce a change in the batches, as we are allowed to."

So they can do whatever they want and there are no rules.

And who knows what happens after the IPO? Maybe the "private investors" will dump their cheap shares on the market...

[iCEBREAKER]

CMMPro is right, I'm not investing a single dime into this IPO because it's shady as hell..

Nobody here cares about your worthless biased opinion VaginicEruptor.  Unlike you, DT and Cypherdoc are among the most reputable members of the BTC investment community. 

Take the pom-poms and megaphone back to your insular little pep rally thread!   

[TsuyokuNaritai]

Let's give the OP an opportunity to clear things up. Please could you disclose/clarify...

• What price the private investors paid for their shares.
• Whether they will have the same management fee deducted.
• What insider knowledge, news ahead of public release, or otherwise preferential treatment might be available to some or all private investors.
• On what basis the private investors were given the opportunity to be so.
• Whether the private investors give or receive any other benefits as part of the deal.
• Whether any of this is against the IPO rules, either your own or those of the exchanges.
• To what extent the operators of the exchanges running the IPO were made aware of any of this.

Thanks.

[lophie]

Let's give the OP an opportunity to clear things up. Please could you disclose/clarify...

• What price the private investors paid for their shares.
• Whether they will have the same management fee deducted.
• What insider knowledge, news ahead of public release, or otherwise preferential treatment might be available to some or all private investors.
• On what basis the private investors were given the opportunity to be so.
• Whether the private investors give or receive any other benefits as part of the deal.
• Whether any of this is against the IPO rules, either your own or those of the exchanges.
• To what extent the operators of the exchanges running the IPO were made aware of any of this.

Thanks.

+1

[joele]

If IPO fails hitting target by Monday deadline, there will be a buy back shortly after?

Looks like people are trying to get out..

Ask on bitfunder: 52,878    ฿0.0013990

Selling low?, I'll just wait for refund.

[DeaDTerra]

Let's give the OP an opportunity to clear things up. Please could you disclose/clarify...

What price the private investors paid for their shares.
Whether they will have the same management fee deducted.
What insider knowledge, news ahead of public release, or otherwise preferential treatment might be available to some or all private investors.
On what basis the private investors were given the opportunity to be so.
Whether the private investors give or receive any other benefits as part of the deal.
Whether any of this is against the IPO rules, either your own or those of the exchanges.
To what extent the operators of the exchanges running the IPO were made aware of any of this.

Thanks.

First and foremost, I would like to remind everyone that this is not a traditional IPO. These are not traditional securities nor voting shares of the company. Having said that, we respect the rules set by securities regulators because they are very important to mitigate conflict of interest and protect interests of  investors. The self-governance spirit of BitCoin is observed and practiced by DigiMex.

In terms of investment process in the traditional sense, I would highly recommend everyone to read this on wiki to learn more about private equity investments.

http://en.wikipedia.org/wiki/Private_equity

In general, when you want to start a company and you need funding, there are several ways to do it. One way is to approach ‘private equity’ investors. These investors are the ones that believe in you at the earliest phase of the business. Sometimes, they are called cornerstone investors because they provide the chunk of capital that you need to start your business. Because they believe in your ability and your integrity, they are willing to take on the risk by investing early. Their trust is also rewarded by a higher rate of return on investment if the company succeeds. That would only seem fair to those early investors.

Before DigiMex was formed, much time was spent to gather a critical amount of capital in order to make ourselves relevant enough to negotiate with Hashfast (our supplier). We needed financial commitments from private investors and founders to make it happen.

Were their shares cheaper than the IPO price? Yes, we gave slight discounts for bulk purchases.

Would they be subject to management fees? No, IPO management fees (as previously stated) is nil, this applies to both public and private shares.  The private shares’ return on this project is via dividend payouts of the farm AFTER the IPO shareholders have been paid 0.0016 BTC.

Was there insider knowledge? No and they don’t need to. They know that we are trustworthy individuals with the right abilities to execute this project AND they know we have a good relationship with HashFast.

[DeaDTerra]

Hi!
We are currently renegotiating the deal with HashFast as it looks like we might not be hitting our goal (though there are still 12 hours left).
At the moment it looks like we will be able to move forward without the full amount, with some changes in the deal.
We will still uphold the commitments made to the investors, we will scale down on the mine but the shares will still be worth 10 mhash each at startup.
The exact details of the deal and what it means for the IPO will be posted in an announcement later.

[ArcticWolf]

The shares will be sold in three batches:

The first batch is a initial sale of 14,500,000  (14.5 million) shares, which will be sold on BitFunder for 0.0014 BTC per share. The first batch will raise money to partially pay for chips and mining equipment from the manufacturer (HashFast, see thread https://bitcointalk.org/index.php?topic=262052.0) This money needs to be raised before the 12th of August (00:00:00 UTC, 12 August 2013) for this IPO to be deemed successful.

The second batch of 3,500,000 (3.5 million) shares and will be sold at 0.0015 BTC per share. Proceeds raised from this sale will help pay for more hardware and build out of the compute center/mine location. This batch needs to be sold by the 25th of August (00:00:00 UTC, 25 August 2013) for the IPO to be deemed a success. If this does not occur then any money collected will be reimbursed to the investors. At the opening of the mine, this equates to a price of 0.15 BTC per Gh.s.

The third batch is of 12,000,000 (12 million) shares and will be sold at the price of 0.0016 BTC per share. These shares have to be sold by the 4th of November (00:00:00 UTC, 4 November 2013)  for the IPO to be deemed a success. At the opening of the mine, this equates to a price of 0.16

The issuer has the right to change the price and/or amount of any scheduled batches of shares.

Has anyone else noticed that these two things conflict quite heavily?

[tyrion70]

Hey,

How come you don't get your miners in october since they are selling their BabyJets with that delivery date?
https://bitcointalk.org/index.php?topic=270384

Thx,

[crumbs]

The shares will be sold in three batches:

The first batch is a initial sale of 14,500,000  (14.5 million) shares, which will be sold on BitFunder for 0.0014 BTC per share. The first batch will raise money to partially pay for chips and mining equipment from the manufacturer (HashFast, see thread https://bitcointalk.org/index.php?topic=262052.0) This money needs to be raised before the 12th of August (00:00:00 UTC, 12 August 2013) for this IPO to be deemed successful.

The second batch of 3,500,000 (3.5 million) shares and will be sold at 0.0015 BTC per share. Proceeds raised from this sale will help pay for more hardware and build out of the compute center/mine location. This batch needs to be sold by the 25th of August (00:00:00 UTC, 25 August 2013) for the IPO to be deemed a success. If this does not occur then any money collected will be reimbursed to the investors. At the opening of the mine, this equates to a price of 0.15 BTC per Gh.s.

The third batch is of 12,000,000 (12 million) shares and will be sold at the price of 0.0016 BTC per share. These shares have to be sold by the 4th of November (00:00:00 UTC, 4 November 2013)  for the IPO to be deemed a success. At the opening of the mine, this equates to a price of 0.16

The issuer has the right to change the price and/or amount of any scheduled batches of shares.

Has anyone else noticed that these two things conflict quite heavily?

Look, if you don't like intrinsic contradictions, you don't have to invest.  This is bitcoin.

[narayan]

This IPO is pretty much "give deadterra money, he and private investors takes on no risk and reaps most of the profits while you take on the full risk including delivery delays and get less than half".

A horrible investment, but hey what can I say. There are dumbasses buying ASICMINER USB sticks or PMBs.

[Deprived]

I think some people are too concerned with who the private investors and why some shares were sold off the exchange - there's entirely valid reasons for the latter.  But there ARE legitimate questions that should be addressed, especially if the deal is going to be somehow changed mid-flight.

1.  Are all funds raised from IPO going to the company and being used to the benefit of investors?  i.e. if there's surplus after purchasing the hardware etc does that extra get used to expand the hashing power or disappear into someone's back pocket?

2.  Whilst the number of shares and timing of each batch can be changed there's no entitlement to change the TOTAL shares that will be sold to the public (or the private shares would end up not just owning a disproportionate amount of initial hashing power - but also of reinvested capital).  Can reassurance be given that:
a) All shares stated to be sold to the public WILL be sold - even if the exact dates/batches on which they're sold changes.
b) No shares will be sold at below the initial price for the shares already sold.

3.  Can reassurance be given that no management fees, consultancy fees or similar will be paid to the managers, private investors or their friends/family to dilute earnings.

4.  Some of the documentation reads as though a new data centre is being constructed for this project.  If this is the case can assurances be provided that any other income from a data-centre/infrastructure funded by investors in this IPO will also be treated as revenue to be distributed after costs to investors.  We wouldn't want other people's mining gear free-loading off investors there without benefit to investors.

5.  Whilst transparency of costs has been promised, no comment has been made about transparency of handling of IPO funds.  Is it the intention to provide accounts properly documenting the use of funds raised in IPO and from private investors?

6.  Is the initial hashing power per share a minimum, an estimate or a maximum?  i.e. what happens if actual hashing pwoer received varies due to circumstances beyond the issuer's control?

7.  What guarantees have been provided by the hardware supplier in terms of delivery date?  We may not know exactly WHAT the date is, but there's a date after which a refund would be preferable to delivery (as the hardware would never pay for itself from mining).  At what date is a full refund of all funds paid to them allowed to be requested?  Have they provided sufficient financial disclosure that issuer is confident such a refund could and would be honoured in the event they were unable to deliver the hardware by such a deadline?  Estimates of delivery are fine for planning purposes - but a hard deadline beyond which they are in default and must refund (and/or pay penalties) is essential when signing a contract.

I didn't bother asking questions whilst this was only on Bitfunder - as contracts can be edited by issuers there at will.  But now it's showing for approval on BTC-TC some due diligence is appropriate as contracts there are intended to be final and certainly can't just be arbitrarily changed by an issuer.

[CMMPro]

Note he didn't answer most of the questions other than admitting they paid less than all the other shareholders.
This is preferential treatment of one group of shareholders over all the others plain and simple. If you think that they won't continue to get preferential treatment in the future you are being willfully blind.

Oh and he also "schooled us" on private equity investment...which is still a lot of horseshit. Private investment should be done in a different class of shares or another round of fund raising.

The bottom line is he gave someone who invested a lot of bitcoins a favorable price and performed their sale out the back door.
Once the share sales went public this is totally inappropriate.

Now it looks as though they are going forward with the IPO regardlss of the number of shares held.

I'm not buying into any of these shady IPO's if their prospectus gives them the ability to make significant changes to the number or class of shares or other major decisions that would affect the value of my shares without a majority vote.


Right now no shares are worth more than what these private investors paid....and you have no idea what they paid because that has been purposefully concealed from everyone. In criminal law, fraud is intentional deception made for personal gain or to damage another individual. This is IPO fraud.

[kingcrimson]

This IPO is pretty much "give deadterra money, he and private investors takes on no risk and reaps most of the profits while you take on the full risk including delivery delays and get less than half".

A horrible investment, but hey what can I say. There are dumbasses buying ASICMINER USB sticks or PMBs.

Feel bad for shareholders who were expecting a refund upon its failure, now stuck with it. The 'private' holders can sell at any time for profit or gut the value to break even.

[kingcrimson]

Hi!
We are currently renegotiating the deal with HashFast as it looks like we might not be hitting our goal (though there are still 12 hours left).
At the moment it looks like we will be able to move forward without the full amount, with some changes in the deal.
We will still uphold the commitments made to the investors, we will scale down on the mine but the shares will still be worth 10 mhash each at startup.
The exact details of the deal and what it means for the IPO will be posted in an announcement later.

As I said before, it doesn't matter if all the shares are sold they will break their terms of a buyback and carry on.

That being said your shares are highly overpriced for what you are probably paying HashFast. It's basically the same price as if we bought a machine ourselves (Which can't be right since you'll be spending millions of dollars with them) You'll get around 7M if all of your funding is completed which makes it around $14/GH.

Secondly, HashFast's prices are going to be one of the highest in the industry come October.

KnCMiner already said they would be doing <$5,000 for November Delivery on 400GH ($12.5/GH Max)

We're waiting to hear from others but XCrowd is saying they will be doing $7/GH (I'm sure later than November Delivery though)

I don't think you are giving the "Initial" investors the best deal and you are taking in much more money than you need for what you are proposing.

On a side note, All "Private Investors" should have been contacted prior to the IPO release. Their shares taken initially out of the IPO and the rest released on bitfunder without being tainted.

It just seems underhanded to do it in the middle of the IPO with discounted shares.

Disclaimer: I have shares of this IPO, not many compared to the "Private Investors" though.....

The private investors are probably the founders, used the coins raised to buy up a few million shares at half cost.

[VolanicEruptor]

Hi!
We are currently renegotiating the deal with HashFast as it looks like we might not be hitting our goal (though there are still 12 hours left).
At the moment it looks like we will be able to move forward without the full amount, with some changes in the deal.
We will still uphold the commitments made to the investors, we will scale down on the mine but the shares will still be worth 10 mhash each at startup.
The exact details of the deal and what it means for the IPO will be posted in an announcement later.

You're renegotiating with hashfast on a sunday?

[Stuartuk]

In criminal law, fraud is intentional deception made for personal gain or to damage another individual. This is IPO fraud.

If not it is certainly very close. Investors paying full IPO price have been ripped off, they should be offered full reimbursement if they choose - to exit without a loss.

[Jutarul]

I see a lot of distrust with this "IPO". Some are valid concerns, some is unjustified.

I don't know whether the fear of a rip-off is the former or the latter. The fact is, the organizational structure of this project is more of a split nature, than e.g. ASICMINER. Some may be due to legal reasons, where you actually want a separation between self mining and the producer of the hardware, in case mining activities become illegal in the jurisdiction of the producer. It may be interesting to speculate whether Hashfast is part of the private investor group. Of course a split like this allows the hardware producer to maximize the profits, while the expansion costs for the mining farm can be held close to market prices for hash power. The only way to make the offer for the mine competitive again is to achieve discounts/preferential treatment on a contractual level with the supplier. However, that information is likely to be confidential.

The fear of a rip-off is likely to come from the fact:
- Direct supplier IPOs (e.g. ASICMINER) allow their shareholders to benefit from the profit margin between hardware production costs and yield.
- IceDrill.ASIC allows their shareholders to benefit from a discounted(?) open market price for hash power against yield.
Risks aside, this alone warrants a higher valuation of direct supplier IPOs over this offering, as open market prices for hash power tend to converge against their expected yield.

So why should anyone invest in this? The answer is not really profit based, but should be understood in terms of diversification. As pointed out before, from a cost/GH perspective, buyers of Hashfast hardware are in no better position than buyers of IceDrill.ASIC shares. However, running hardware has it's own risk profile, and that's where pooling the hardware can help. Having shares instead of hardware means that you can go on vacation and don't run into scalability issues down the road. Having your own hardware allows you to benefit from a lower cost structure which you may have access to.

Changing the terms of the IPO on the fly only increases uncertainty. It may be advisable to offer a bail option for investors for the case that the IPO is not successful by its own definition. That said - the changes so far are attempts to accommodate the requests by shareholders - so I don't see any harm done.

[Panterino]

I'm optimistic about IceDrill. It's basically DeadTerra's mining company. Being based in Europe makes it safe, DT has a history of making investors money. I'll be in when it launches on btct. my .02btc