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

[Deprived]

I think there's just been a cockup on BTC raised in each line (and not anything dodgy going on) - as it appears from the table that 4 million shares at .0016 raise the first extra 7.5k public BTC then 3 million more public shares (at the same price) raise another 7.5k BTC.  When in fact neither of those sizes of public share sales raises anywhere near 7.5k.  It looks like the table was changed at some point and one of the columns (BTC raised) didn't get updated when the others did.

The examples in the table are for illustrative purposes and the numbers are correct. The public/private share ratio scales down/up such that a public share represents 10MH/s at the outset of the farm. The "BTC raised" in the table represents the capital expenditure for hashing power only and not the setup/logistics costs involved in deployment of the ~6 metric tons of actual mining equipment, which is covered by the 4400 BTC mentioned above.
See: https://i.imgur.com/Usl84Ah.png (as used in the BTC-TC listing), it includes the public/private share split.

Sorry - but the math just doesn't add up.  Let me explain why in more detail.

At the minimum (current level) you say:

20k BTC raised from public sales is being paid to Hashfast (on top of that there's 4400 BTC being used for infrastructure).

If it reaches the next tier your table says:

27.5K BTC raised from public sales is being paid to Hashfast (presumably the infrastructure costs are at least as much given there's now more hardware to be deployed).

So 7.5K more BTC from public sales is being paid to Hashfast.

But your table shows only 4 million more public shares having been sold.  4 million shares at .0016 is only 6400 BTC.  So even if all shares are sold on the market with zero fee you just aren't actually 7.5k more BTC from public sales.

The same problem exists but even worse for the last batch of shares.

I can think of various explanations for this and the NICEST one is that there's an error in the table (either in the numbers or in the labelling of the columns).  One such explanation would be that private investors are only putting cash in if the extra batches sell - and that their cash is listed as being as "Raised from Public" which is clearly wrong (and which would explain why your explanation of the numbers appears to include $0 from private investors if there are no future sales).  So the answer could simply be that the column titled "Raised from Public" should be titled "Paid to Hashfast" and includes payments from private investors that depend on the extent of future sales.

[bbxx]

We've collected 24400 BTC from public share sales in total. The 1150 BTC difference between the 25550 and 24400 represents the discounts for the block sales we did (sold at less than 0.0014). Those shares have been transferred to their respective owners on bitfunder. 4400BTC is in our possession (hasn't vanished) and will be used for deployment.

This seems very unfair.  It's called an "IPO - Initial Public Offering."  IceDrill sold shares for less than 0.0014 in private without notification to the public on block sales.  Now, shareholders who bought shares based on public information will feel screwed over.

yeah pre ipo sale is scam

just sell shares at 50% value to a friend, open an ipo
tell friend right moment to sell them and get 50% profit (or more)

[Mythoranium]

We've collected 24400 BTC from public share sales in total. The 1150 BTC difference between the 25550 and 24400 represents the discounts for the block sales we did (sold at less than 0.0014). Those shares have been transferred to their respective owners on bitfunder. 4400BTC is in our possession (hasn't vanished) and will be used for deployment.

This seems very unfair.  It's called an "IPO - Initial Public Offering."  IceDrill sold shares for less than 0.0014 in private without notification to the public on block sales.  Now, shareholders who bought shares based on public information will feel screwed over.

yeah pre ipo sale is scam

just sell shares at 50% value to a friend, open an ipo
tell friend right moment to sell them and get 50% profit (or more)

I fail to see how this would count as a scam. First of all, the fact that there were private investors was known and not hidden at the start of this offer. Secondly, the private shares are not the same as the public ones - the private shareholders don't receive any profit until the public shareholders will have received 0.0016 BTC per share. In other words, the public investors will get much more hash power than they have paid for, until they will have received full ROI. After that period, they will still get the hashing power they paid for. The situation couldn't be much better for public investors.

Disclaimer - I own (public) shares

[Deprived]

We've collected 24400 BTC from public share sales in total. The 1150 BTC difference between the 25550 and 24400 represents the discounts for the block sales we did (sold at less than 0.0014). Those shares have been transferred to their respective owners on bitfunder. 4400BTC is in our possession (hasn't vanished) and will be used for deployment.

This seems very unfair.  It's called an "IPO - Initial Public Offering."  IceDrill sold shares for less than 0.0014 in private without notification to the public on block sales.  Now, shareholders who bought shares based on public information will feel screwed over.

yeah pre ipo sale is scam

just sell shares at 50% value to a friend, open an ipo
tell friend right moment to sell them and get 50% profit (or more)

I fail to see how this would count as a scam. First of all, the fact that there were private investors was known and not hidden at the start of this offer. Secondly, the private shares are not the same as the public ones - the private shareholders don't receive any profit until the public shareholders will have received 0.0016 BTC per share. In other words, the public investors will get much more hash power than they have paid for, until they will have received full ROI. After that period, they will still get the hashing power they paid for. The situation couldn't be much better for public investors.

Disclaimer - I own (public) shares

I don't think it's a scam either.

But your explanation is incorrect.  We aren't talking about private shares (the ones that don't receive dividends unless .0016 is ever reached) but about public shares that were sold off-market at below the official price.  It's debatable whether that was allowed by the contract (contract allowed changing price of batches but nowhere allows undocumented sales at below the stated price) but it's not something worth making a huge fuss over.

[moribana]

We've collected 24400 BTC from public share sales in total. The 1150 BTC difference between the 25550 and 24400 represents the discounts for the block sales we did (sold at less than 0.0014). Those shares have been transferred to their respective owners on bitfunder. 4400BTC is in our possession (hasn't vanished) and will be used for deployment.

This seems very unfair.  It's called an "IPO - Initial Public Offering."  IceDrill sold shares for less than 0.0014 in private without notification to the public on block sales.  Now, shareholders who bought shares based on public information will feel screwed over.

yeah pre ipo sale is scam

just sell shares at 50% value to a friend, open an ipo
tell friend right moment to sell them and get 50% profit (or more)

I fail to see how this would count as a scam. First of all, the fact that there were private investors was known and not hidden at the start of this offer. Secondly, the private shares are not the same as the public ones - the private shareholders don't receive any profit until the public shareholders will have received 0.0016 BTC per share. In other words, the public investors will get much more hash power than they have paid for, until they will have received full ROI. After that period, they will still get the hashing power they paid for. The situation couldn't be much better for public investors.

Disclaimer - I own (public) shares

In your reasoning you assume that mining will remain profitable for a long enough time that 0.0016 btc will actually be paid as dividends. It is absolutely not clear whether any of the companies starting now will ever be profitable. And in that case the only way to make a profit is to sell your shares cheaper than you bought them.

[creativex]

This force is strong with this one. ^^^

[will]

This seems very unfair.  It's called an "IPO - Initial Public Offering."  IceDrill sold shares for less than 0.0014 in private without notification to the public on block sales. 

From:
http://www.investopedia.com/terms/b/blocktrade.asp

A block trade involves a significantly large number of shares or bonds being traded at an arranged price between parties, outside of the open markets, in order to lessen the impact of such a large trade hitting the tape.

From:
http://en.wikipedia.org/wiki/Block_trade

A block trade is a permissible, noncompetitive, privately negotiated transaction either at or exceeding an exchange determined minimum threshold quantity of shares, which is executed apart and away from the open outcry or electronic markets...

...the selling fund gets a more attractive purchase price, while the purchasing company can negotiate a discount off the market rates. Unlike large public offerings, for which it often takes months to prepare the necessary documentation, block trades are usually carried out at short notice and closed quickly.

Sorry if I seem to only be lifting out the salient points, but block trades seem to be a fairly common occurence in securites exchange. I must concede that DT called them "bulk trades" instead of "block trades" (e.g. this notification: https://bitcointalk.org/index.php?topic=269216.msg2898310#msg2898310).

Now, shareholders who bought shares based on public information will feel screwed over.

If block trades were privy to more information than public investors, that information did not come from us. It's my understanding that you personally visited Hashfast (and signed the NDA), so it might be that you were privy to such information? We don't know what that information is, as that relationship is private between Hashfast and yourself. Apologies if it seems unfair to everyone else, but these were the parameters stipulated by Hashfast and we have to work within them.

Sorry - but the math just doesn't add up.

I agree. I've asked DT to go over the numbers in the table and post a detailed clarification and corrections where needed.

[DeaDTerra]

Hi!
Here are the updated numbers.
The reason why the other one showed some weird numbers is because it had some faulty assumptions based on old data which I had missed.
This one has been triple checked and is updated for the current numbers.
The table starts at the current raised amount of 23910 BTC and the current amount of sold public shares.
It then increases by 5000 BTC/3.125 Mill public shares.
The reason why we are currently not at 18 mill planned but instead at 18.5 is due to that we had an one batch of public shares open for sale at the same time as we closed a private deal.
The public to private shares scales up due the minimum requirement of 10 Mhash per share, to honor this the amount of private shares scales down at lower levels.
We also reduced batch three from 7 million to 6.25 million shares, this is due to the BTC price increase, we need less amount of Bitcoins for the budget for the data center.

We also added the % of private shares compared to the total amount of shares, we also included the mhash per share (with the investor protection clause).
Hopefully this will give you a better picture of how the distribution of shares will look once the IPO is complete.

//DeaDTerra

[Deprived]

Thanks DT.

I didn't need to use a calculator to immediately see that the old table was wrong.  This one from very quick mental arithmetic makes sense.

This new table also makes plain that it's in the interests of existing investors for more shares to sell (by showing how initial hashes/share rises as more shares sell).

[will]

It seems a lot of people are not aware of this IPO for whatever reason. Someone brought it up in one of the Custom Hardware threads and everyone acted surprised (Even though it has been listed for a while now)

What's even more sad is that once HashFast starts delivering these shares will be eaten up, I fear by then any bulk discounts will be out of the question.

Link please?

[Deprived]

From:
http://www.investopedia.com/terms/b/blocktrade.asp

A block trade involves a significantly large number of shares or bonds being traded at an arranged price between parties, outside of the open markets, in order to lessen the impact of such a large trade hitting the tape.

From:
http://en.wikipedia.org/wiki/Block_trade

A block trade is a permissible, noncompetitive, privately negotiated transaction either at or exceeding an exchange determined minimum threshold quantity of shares, which is executed apart and away from the open outcry or electronic markets...

...the selling fund gets a more attractive purchase price, while the purchasing company can negotiate a discount off the market rates. Unlike large public offerings, for which it often takes months to prepare the necessary documentation, block trades are usually carried out at short notice and closed quickly.

I am sorry will, but if you re-read what you quoted from Wikipedia on your own entry you will find that IceDrill did not sell block shares due to reasons the wikipedia entry intended.

A block trade involves a significantly large number of shares or bonds being traded at an arranged price between parties, outside of the open markets, in order to lessen the impact of such a large trade hitting the tape.

So if someone wanted to buy more than 14.5 million shares at .0014 BTC but there aren't enough shares since it would enter into the .0015 BTC price I can certainly understand why IceDrill would grant block share privileges and there is no ill will there.  I understand the discount would be to sell the whole block at .0014 instead of .0015.  The point of block shares is to not move the market prices due to massive buys and sells.  However, the private "block share" IceDrill sold was executed at a price below 0.0014.  In this case the discount was not based on the buyer potentially moving the market.  So, I still think it is unfair.

Yeah the key part is "the selling fund gets a more attractive purchase price" which obviously wasn't the case.  Had there been a block sale at .0014 - half the transaction fee then it would have made sense (as both the buyer and the fund would be better off than had it been done on the market).

[Jutarul]

So if someone wanted to buy more than 14.5 million shares at .0014 BTC but there aren't enough shares since it would enter into the .0015 BTC price I can certainly understand why IceDrill would grant block share privileges and there is no ill will there.  I understand the discount would be to sell the whole block at .0014 instead of .0015.  The point of block shares is to not move the market prices due to massive buys and sells.  However, the private "block share" IceDrill sold was executed at a price below 0.0014.  In this case the discount was not based on the buyer potentially moving the market.  So, I still think it is unfair.

Maybe will should disclose the applied key for any discounts. Also it should be clearly advertised.

To give you an example, the ASICMINER IPO about a year ago had two discounts for bulk purchases. 7.5% for >=10,000 shares and 5% for >= 5,000 shares. That was for a total of 200,000 shares offered, where only 30,000 were accessible through the exchange. These purchases were not available through GLBSE, but had to be requested and settled per PM.

[Mythoranium]

I fail to see how this would count as a scam. First of all, the fact that there were private investors was known and not hidden at the start of this offer. Secondly, the private shares are not the same as the public ones - the private shareholders don't receive any profit until the public shareholders will have received 0.0016 BTC per share. In other words, the public investors will get much more hash power than they have paid for, until they will have received full ROI. After that period, they will still get the hashing power they paid for. The situation couldn't be much better for public investors.

Disclaimer - I own (public) shares

I don't think it's a scam either.

But your explanation is incorrect.  We aren't talking about private shares (the ones that don't receive dividends unless .0016 is ever reached) but about public shares that were sold off-market at below the official price.  It's debatable whether that was allowed by the contract (contract allowed changing price of batches but nowhere allows undocumented sales at below the stated price) but it's not something worth making a huge fuss over.

Thank you for the clarification. I hadn't noticed these were also public shares and was under the impression that they were private.
Although I do agree that this is not worth making a fuss about, as an investor, I would be much more comfortable if the amounts and discounts needed to qualify for the "block sales" had been made public at the very start. After all, I might have qualified for a slight discount if I had asked.
Still, this is not meant as a serious criticism to Ice Drill managers. Being involved with enterprise level devices, I know it is quite a common practice for an entity to offer volume discounts only when asked for them or when said entity expects the customer might choose a competitors product, because of a better price offer. There exists such thing as a "list price" for a reason.

In your reasoning you assume that mining will remain profitable for a long enough time that 0.0016 btc will actually be paid as dividends. It is absolutely not clear whether any of the companies starting now will ever be profitable. And in that case the only way to make a profit is to sell your shares cheaper than you bought them.

Yes, I do assume that. But this is irrelevant to my reasoning. In the case of the mine not generating enough returns to pay the 0.0016/share, the public investors would get at least some of their money back. The private investors would get exactly 0.0 satoshis per share. That still seems to be quite in favour of the public investors.

[moribana]

Thank you for the clarification. I hadn't noticed these were also public shares and was under the impression that they were private.
Although I do agree that this is not worth making a fuss about, as an investor, I would be much more comfortable if the amounts and discounts needed to qualify for the "block sales" had been made public at the very start. After all, I might have qualified for a slight discount if I had asked.
Still, this is not meant as a serious criticism to Ice Drill managers. Being involved with enterprise level devices, I know it is quite a common practice for an entity to offer volume discounts only when asked for them or when said entity expects the customer might choose a competitors product, because of a better price offer. There exists such thing as a "list price" for a reason.

In your reasoning you assume that mining will remain profitable for a long enough time that 0.0016 btc will actually be paid as dividends. It is absolutely not clear whether any of the companies starting now will ever be profitable. And in that case the only way to make a profit is to sell your shares cheaper than you bought them.

Yes, I do assume that. But this is irrelevant to my reasoning. In the case of the mine not generating enough returns to pay the 0.0016/share, the public investors would get at least some of their money back. The private investors would get exactly 0.0 satoshis per share. That still seems to be quite in favour of the public investors.

The reason I think this is relevant is that if mining fails to create dividends comparable to the IPO share price then the only way one can make a significant profit is to sell the shares for a profit. And here the private investors clearly have an advantage. Although at this point it is only speculation, I strongly believe that none of the mining companies starting now will create mining income comparable to the IPO share price. (Hardware sales can possibly remain profitable a bit longer.)

[will]

Hi everyone

Couple of updates:

1. http://www.coindesk.com/hashfast-tapes-out-400-ghsec-28-nm-mining-chip/
Summary:
    TSMC announced as the chip fab
    some talk about the Hashfast gen 2 chip design technology and progress).

2. https://hashfast.com/shop/sierra/ (specs on the Batch 1 Sierra units we've bought).
Summary:
    Contains 3 HashFast Golden Nonce (GN) ASICs
    Performance: 1,200 Ghash/s at nominal clock speed
    Chassis: 2U rack mounted
    Cooling System: High performance liquid cooling on each of 3 chips, dissipates heat via back mounted radiator
    Requires a 1U control unit

[will]

I am sorry will, but if you re-read what you quoted from Wikipedia on your own entry you will find that IceDrill did not sell block shares due to reasons the wikipedia entry intended.

A block trade involves a significantly large number of shares or bonds being traded at an arranged price between parties, outside of the open markets, in order to lessen the impact of such a large trade hitting the tape.

...However, the private "block share" IceDrill sold was executed at a price below 0.0014.  In this case the discount was not based on the buyer potentially moving the market.  So, I still think it is unfair.

After reading up more about block trades I feel I must concur with the sentiment that we went about doing these block trades incorrectly. During an IPO there is no "tape" as of yet (like when the shares start to float post-IPO). I took the "arranged price" as stated above to mean that it was permitted for us to negotiate a price based on the block size and timing constraints beyond our control. A better way to have gone about it would have been to announce/advertise potential discounts publically based on a schedule/key (as Jutarul mentions in the ASICMINER example) in the IPO contract itself.

Maybe will should disclose the applied key for any discounts. Also it should be clearly advertised.

I agree now that it should have been clearly advertised. At this stage an exact key would be difficult to state as it changed based not only on size, but also on the timing of the trade. The average discount given per block trade was 13.9%.

As I am personally responsible for approving the IPO wording and authorizing the block trades/bulk sales I am also responsible for rectifying the issues mentioned. I just don't know what to do here to repair the situation, if anything can be done at all? It has been suggested before that a board of investors should be formed to put decisions of this magnitude to a vote. Technically bitfunder doesn't allow for share-based voting, but I'm all for working towards a viable solution in this regard. What are your thoughts?

[Deprived]

I am sorry will, but if you re-read what you quoted from Wikipedia on your own entry you will find that IceDrill did not sell block shares due to reasons the wikipedia entry intended.

A block trade involves a significantly large number of shares or bonds being traded at an arranged price between parties, outside of the open markets, in order to lessen the impact of such a large trade hitting the tape.

...However, the private "block share" IceDrill sold was executed at a price below 0.0014.  In this case the discount was not based on the buyer potentially moving the market.  So, I still think it is unfair.

After reading up more about block trades I feel I must concur with the sentiment that we went about doing these block trades incorrectly. During an IPO there is no "tape" as of yet (like when the shares start to float post-IPO). I took the "arranged price" as stated above to mean that it was permitted for us to negotiate a price based on the block size and timing constraints beyond our control. A better way to have gone about it would have been to announce/advertise potential discounts publically based on a schedule/key (as Jutarul mentions in the ASICMINER example) in the IPO contract itself.

Maybe will should disclose the applied key for any discounts. Also it should be clearly advertised.

I agree now that it should have been clearly advertised. At this stage an exact key would be difficult to state as it changed based not only on size, but also on the timing of the trade. The average discount given per block trade was 13.9%.

As I am personally responsible for approving the IPO wording and authorizing the block trades/bulk sales I am also responsible for rectifying the issues mentioned. I just don't know what to do here to repair the situation, if anything can be done at all? It has been suggested before that a board of investors should be formed to put decisions of this magnitude to a vote. Technically bitfunder doesn't allow for share-based voting, but I'm all for working towards a viable solution in this regard. What are your thoughts?

It's not a huge issue provided the block sales were done on the basis that they couldn't sell the shares on the market before the IPO had ended.  It would obviously be a big pain for you and other investors if the decline in price turned out to be block-holders flipping their shares for a small profit at below the official price for batch 1 - let alone the current price.  Ideally those shares shouldn't have been transferred at all until all public sales from the company had ended.  The benefit to the company of such sales is selling more - which ceases to be the case if the block ones can be flipped and so have to be bought again before the company sells more itself.

[Deprived]

I believe all of the "Block Sales" were OFF Bitfunder, if this is the case there would be no way for them to sell their shares on Bitfunder (Regardless of what they "agreed" to) correct?

Incorrect.  The payments were made off Bitfunder but the shares have already been transferred on Bitfunder (somewhere a page or so back that was stated).

[bittymitty]

What's the deal with Icedrill shares tanking,  or are the pre-ipo investors still cashing out?

[HeRetiK]

What's the deal with Icedrill shares tanking,  or are the pre-ipo investors still cashing out?

I think that's mostly because right now there's very little buying pressure until either a) the batch 2 wall @ 0,0016 gets eaten up and b) icedrill actually just hashing.