usagi (OP)
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January 24, 2014, 04:26:55 PM Last edit: March 27, 2014, 06:24:06 PM by usagi |
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Hello friends;
I've promised many of BMF's investors that a news update would be coming in January and I've been dragging my heels a bit over it, but here are the basics.
Essentially, when BTC-TC shut down, I was one of the first people to start selling. Indeed some of you may remember that infamous post of mine responding to burnside which predicted the shutdown of BTC-TC just a few hours before it was announced. Unfortunately despite our prescience we did not escape unscathed. I can estimate losses of 25% due to selling into the bid. Those who doubt this strategy please be aware that the securities we did not sell (like FIMB) are now unrecoverable. For example, I haven't heard a response from Cognitive over the FIMB bonds we held (I believe we held 500, worth approx. 8 BTC at the time). That isn't to say I've put much work into recovering them. We do have contact with BitVPS over our BitVPS shares (4000+) and we have decided to hold the BitVPS shares for now.
Anyways, after the BTC-TC shutdown I decided to move forward on the silver conversion (essentialy the merge with TU.SILVER) despite Deprived voting no. There are a few reasons why I did this. First, what Deprived voted no on was a series of warrants attached to the deal. Secondly, because as CEO I believed moving into silver was the best thing that could be done with the money at the time, and third because I issued an additional 5,000 shares at 0.03 to myself, tied to the real estate project I mentioned just before BTC-TC shut down (more on that in a moment) giving me 70% control of the company. With insider ownership that strong, all I can say is that my personal interests were definitely aligned with every other holder of BMF and TU.SILVER, and with no possible way to hold a vote I just went ahead and bought as much silver as I could. We got out around $120/BTC on average as I recall.
We moved most of what we had after than into BitFunder, and therein lies a sad, sad tale. It's ironic, that after fighting for over a year to get into BTC-TC it should shutdown just a few short months later, and that BitFunder would shutdown right after BTC-TC. I had primarily invested in Ukyo's bond and Graet's bond (i.e. the weexchange bond) and shares like JAH and PAMB. When the shutdown news for BitFunder came I sold what I could and invested into places like Just-dice and so forth. But having to go through another 20% loss to get out before the herd really made me feel like shit. I believe I was justified in dumping our holdings, in hindsight had I not done it I probably would have lost everything. And on that note I really feel for the people who still have (hundreds) of BTC stuck with Ukyo.
I have now begun a process of moving our silver assets back into mining, and I am extremely pleased to say that as a result of me coughing blood until 5am every night trading and investing we have increased our megahash per share by over 50%, from ~5 mh/share to 7.5 mh/share fully diluted. The bad news of an increased difficulty has been strongly tempered with high bitcoin prices.
Let me try and summarize where our value is coming from these days so investors can get a fuller picture of our worth.
1. Income stream #1: 7.5 mHash/share = .0075 gH/share * 0.044 (price on ghash.io) = 0.00033 per share in mining assets
In addition, there is a sizable amount of silver remaining from the buyout of TU.SILVER -- ~140 oz. mainly in canadian silver maples. There is also a small quantity (less than 1oz.) of gold. At an optimistic $30 for silver, that adds approx. 0.00038 BTC/share in value at current rates (I am using canadian dollars, not US dollars atm). [edit: investors in bmf and tu.silver have now redeemed over 200 oz. of physical silver. If you still own shares of tu.silver, you now own shares of BMF. your purchasing power remains the same, you can still redeem 1 share for 1/10th an oz. of silver if you wish]
2. Approx 0.00038 BTC/share from remaining silver holdings.
Finally, there's the real estate deal I mentioned earlier. The return on that investment is a baked into the cake minimum 100% which will be realized over the next 3 to 5 years. How do I know that? Because we're being matched $2 per $1 and it was a distressed property. I'm going to be honoring the full value of that deal for shareholders by including that value in the "NAV" calculation we use to place the bid at 95% of "NAV" if/when we relist. A quick back of the envelope calculation shows that the $16,000 cash I put into that deal, if it does return 100%, would be worth 0.00237 BTC per share at current rates.
3. Approx. 0.00237 per share from our real estate holdings.
4. We have about 5 bitcoins left sitting in a wallet which I will probably use to buy the new butterfly labs hardware or maybe put it up on ghash.io. I was saving it for applying to list on havelock or 796, not sure. That works out to 0.00033 per share.
There will be residual income from the real estate in the form of rent which will begin paying out before the end of the year. I haven't included it in the calculations here because I have no idea what those costs will be.
Total is: 0.00033 0.00038 0.00237 0.00033 -------- 0.00341 BTC/share
All things considered, I'd say we did a pretty good job of preserving purchasing power in the rise from $100 to $1000 BTC. During that time we went from about 0.032/share to 0.0034/share.
In retrospect...
I've learned a heck of a lot over the past 2 years running BMF and various other businesses. The most important lesson I have learned is that bitcoin is not legal tender. You cannot invest bitcoin and expect a return in bitcoin. It is a break in logic. If I invest $1000 in mining hardware, that mining hardware is going to be worth ~$1,000 next month no matter what the price of a bitcoin is. Once you invest your bitcoins, you no longer own bitcoins, you own what you invested in and if that happens to be worth 1, 100 or 0.1 bitcoins, has nothing to do with what you paid for it. This hard lesson was to understand the difference between price and value. Price is what you pay. Value is what you get.
I also strongly suspect that the rise in $/bitcoin is due to the rise in difficulty. Mining must always be profitable. This is a somewhat perverse idea, but it seems to make sense to me on some level. I am not sure if it is true.
Where we go from here with BMF is into a bright future. We are making 1%+ per week accreting gHash/share on ghash.io, and the silver and real estate saved our necks in terms of purchasing power. It's pretty much the same accross the board really. COGNITIVE fell from 0.55 btc/share on BTC-TC to 0.055/share today on Havelock, so I guess we did our job tracking the market. But going forward the least change I am making in how I run BMF is to never invest entirely on one platform. For example we will not be investing/living on havelock the way we used to "live" on BTC-TC. We're spread out over a number of different projects and investment vehicles. Had I done that long ago I don't think we would have lost so much money when BTC-TC and BitFunder shut down.
In terms of management guidance, and lessons learned from the past, I feel confident in predicting forward momentum for BMF in 2014. The goal is to relist somewhere by March/April, keep the assets mainly off-exchange this time, and I feel confident with a share price around 0.004 by that time (in terms of current $800/BTC exchange rates).
Questions or comments welcome. This is a self-moderated thread.
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