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Author Topic: [Cryptostocks]Variable Mining Reinvestment  (Read 910 times)
GT3000
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February 16, 2014, 02:46:55 PM
 #1

Has anyone looked at the profitability of this one? Looks like the IPO is over on Tuesday.


Pulled directly from Cryptostocks page:


Welcome To Variable Reinvestment Mining

Variable Reinvestment Mining represents a unique approach to investing in Bitcoin Mining. Our team is made up of an experienced technology company executive and a seasoned Bitcoin mining enthusiast.

By its nature, investing in Bitcoin mining means you are investing in an asset that will depreciate over time. Our approach involves reinvesting in hashing power from mined BTC as a function of the increase in the overall hashing power of the network. This approach ensures that the equity value of your Bitcoin mining asset is maintained over the long run. We leverage a mix of Cloud hashing contracts and hardware we own and operate to generate immediate dividends for shareholders while also ensuring the lowest possible cost per GigaHash.

Our reinvestment strategy involves investing in hashing power as a direct function of the rate of change of Bitcoin difficulty. The objective with this approach is to generate a fixed number of Bitcoins as difficulty increases. After reinvestment, we return 100% of the Bitcoins generated for the period as dividends to our shareholders. Dividends are paid three times a week.

We will generate funds through the sales of 40,000 shares @ ฿0.01/share. An additional 10,000 shares will be held by management. No new shares will ever be created for the fund. The fund will use proceeds from this IPO to reach an initial hash rate of at least 40TH. This rate will increase through reinvestment at a rate proportional to increases in Bitcoin difficulty. The IPO will run until all shares have been placed, and investment in hashing power will be made on a rolling basis as shares are purchased to ensure immediate returns for early shareholders.

Complete visibility into the approach will be made available through our reporting interface: https://docs.google.com/a/variablereinvestmentmining.com/spreadsheet/ccc?key=0ApanbLtqlSgpdHREaU11bjRiYVZST0dyWjRDY3R4QXc&usp=drive_web#gid=5. Any matters requiring decisions which impact the fund will be made through simple majority by shareholders through votes. Votes will be posted for a minimum of seven days.

Additional information can be found on our website: http://variablereinvestmentmining.com/, or  please feel free to contact us with any questions: info@variablereinvestmentmining.com.
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Rannasha
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February 16, 2014, 03:02:45 PM
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In your spreadsheet, on the model assumptions page:

With the starting difficulty you use, (3.02B), the amount mined in 14 days is 2.33 mBTC per GHash/s, not 3.93 mBTC per GHash/s as it is listed in your sheet. With increasing difficulty, the time between difficulty adjustments goes down. With a 14% increase as your model uses, it's 12.28 days between increases. This reduces the amount mined in the initial cycle to 2.04 mBTC per GHash/s.

However, an assumption of a difficulty increase of just 14% is absurd. Since june last year, the difficulty increase has never been lower than 19%, often going over 25% or 30%.

You're painting a far prettier picture than what reality will show. Redo the math.
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February 16, 2014, 03:49:53 PM
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In your spreadsheet, on the model assumptions page:

With the starting difficulty you use, (3.02B), the amount mined in 14 days is 2.33 mBTC per GHash/s, not 3.93 mBTC per GHash/s as it is listed in your sheet. With increasing difficulty, the time between difficulty adjustments goes down. With a 14% increase as your model uses, it's 12.28 days between increases. This reduces the amount mined in the initial cycle to 2.04 mBTC per GHash/s.

However, an assumption of a difficulty increase of just 14% is absurd. Since june last year, the difficulty increase has never been lower than 19%, often going over 25% or 30%.

You're painting a far prettier picture than what reality will show. Redo the math.

Unfortunately, I'm not in charge of the security. I just didn't see a topic on this particular security on the forums and thought I'd bring it up. Probably should email that there's a topic on them here.
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February 18, 2014, 04:52:27 AM
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Last day of IPO.
thy
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February 18, 2014, 05:17:54 AM
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In your spreadsheet, on the model assumptions page:

With the starting difficulty you use, (3.02B), the amount mined in 14 days is 2.33 mBTC per GHash/s, not 3.93 mBTC per GHash/s as it is listed in your sheet. With increasing difficulty, the time between difficulty adjustments goes down. With a 14% increase as your model uses, it's 12.28 days between increases. This reduces the amount mined in the initial cycle to 2.04 mBTC per GHash/s.

However, an assumption of a difficulty increase of just 14% is absurd. Since june last year, the difficulty increase has never been lower than 19%, often going over 25% or 30%.

You're painting a far prettier picture than what reality will show. Redo the math.
Incorrect
Date              Difficulty         Change    Hash Rate                 
Nov 29 2013    707,408,283    16.07%    5,063,826 GH/s (up from 4,362,847 GH/s last)

I do agree with you that using 14% in a models is way to low, 25-30% is probably a good assumption for the shorter time period and maby 20% is a good number to use then after KnC has send out there new batch and after CoinTerra has delivered most of there TerraMiner IV miners.

Rannasha
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February 18, 2014, 06:46:41 AM
 #6

In your spreadsheet, on the model assumptions page:

With the starting difficulty you use, (3.02B), the amount mined in 14 days is 2.33 mBTC per GHash/s, not 3.93 mBTC per GHash/s as it is listed in your sheet. With increasing difficulty, the time between difficulty adjustments goes down. With a 14% increase as your model uses, it's 12.28 days between increases. This reduces the amount mined in the initial cycle to 2.04 mBTC per GHash/s.

However, an assumption of a difficulty increase of just 14% is absurd. Since june last year, the difficulty increase has never been lower than 19%, often going over 25% or 30%.

You're painting a far prettier picture than what reality will show. Redo the math.
Incorrect
Date              Difficulty         Change    Hash Rate                 
Nov 29 2013    707,408,283    16.07%    5,063,826 GH/s (up from 4,362,847 GH/s last)

I do agree with you that using 14% in a models is way to low, 25-30% is probably a good assumption for the shorter time period and maby 20% is a good number to use then after KnC has send out there new batch and after CoinTerra has delivered most of there TerraMiner IV miners.

Oh, I overlooked that one. Regardless, the main message that 14% is too low an estimate is still correct.
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