Publicly traded mining business?

[yochdog]

This is an idea I have been toying with for sometime, and I would like to put it out there for discussion.  I know that a lot of the trolls will come out to belittle and tell me how stupid I am.....but I am hoping to recieve a fair amount of constructive feedback from intelligent forum members.

Let's assume for a moment the following entity exists:

BitCorp Mining Company

Bitcorp Mining Company (BitCO) owns and operates an extensive network of Bitcoin miners.  The main priority of BitCO is to ensure seemless operation of its current capacity, while strategically growing capacity when cost effective.  BitCO generates revenue through the production of BTC, as well as signing an occasional mining contract.  BitCO incures expenses from electricity usage, expansion of operations, and maintenence.  Currently, BitCO generates more BTC per month than are need for expansion, thus has significant free BTC flow.

Much like a gold mining company, BitCO owns a resource(a claim on future block discovery), there is a market for the resource, and thus there is value in the future claim. 

I think it would be tremendously cool for BitCO to have an IPO, have shares that are publicly traded, and pay dividends (in BTC) on those shares.

I imagine it would work something like this:

1)  BitCO issues 100 shares of stock.
2)  Stock is priced using a dutch auction to ensure fairness
3)  BitCO commences operations as a public entity
4)  BitCO begins declaring, and paying, monthly dividends

Let's assume that the shares are priced at 5 BTC per share.  Further, assume a conservative dividend policy that would pay out half the BTC production.  Thus, each share would pay a monthly dividend of .75 BTC.  That is a hell of a return on investment, especially given the current pay-back on new GPU's.

In my mind, the shares would quickly appreciate in value and settle somewhere in the neighborhood of a 10% dividend yield. 

I think it would be a great alternative for many people, rather than setting up their own mining operations and hassling with the well known issues of mining. 



OK, here is where I ask for feedback, and help in filling in the gaps.  I know this is rough, and very theoretical.....just looking to start a constructive dialogue. 

[Anonymous]

It's been done and many have fallen because they overestimated their abilities.

Fair warning: It takes more than a neckbeard and throwing some mining rigs together to start a profitable business. Proper planning and careful funding is required. Don't expect to type up a thread, create a stock and get rolling on a whim and expect profits, unless you have innate experience.

At the absolute least, properly think and write exactly what you intend to do. What value are you trying to create and for who? How do you ensure it gets made? How much? When? Answers those questions fully, follow through, and you will usually be successful.

Do your homework or stay off Newegg and away from other people's money. It's not worth your time and it isn't worth the community's if you can't put forth the effort required.

This isn't Pokemon or World of Warcraft. This is real life.

[yochdog]

It's been done and many have fallen because they overestimated their abilities.

check. 

Fair warning: It takes more than a neckbeard and throwing some mining rigs together to start a profitable business. Proper planning and careful funding is required. Don't expect to type up a thread, create a stock and get rolling on a whim and expect profits unless you have innate experience.

thank you....I already own a business that is quite successful. 

At the absolute least, properly think and write exactly what you intend to do. What value are you trying to create and for who? How do you ensure it gets made? How much? When? Answers those questions fully, follow through, and you will usually be successful.

Do your homework or stay off Newegg and away from other people's money. It's not worth your time and it isn't worth the community's if you can't put forth the effort required.

This isn't Pokemon or World of Warcraft. This is real life.

Thanks for that heads up.  I really thought this was Pokemon.  My bad.

[Anonymous]

It's been done and many have fallen because they overestimated their abilities.

check.  

Fair warning: It takes more than a neckbeard and throwing some mining rigs together to start a profitable business. Proper planning and careful funding is required. Don't expect to type up a thread, create a stock and get rolling on a whim and expect profits unless you have innate experience.

thank you....I already own a business that is quite successful.  

At the absolute least, properly think and write exactly what you intend to do. What value are you trying to create and for who? How do you ensure it gets made? How much? When? Answers those questions fully, follow through, and you will usually be successful.

Do your homework or stay off Newegg and away from other people's money. It's not worth your time and it isn't worth the community's if you can't put forth the effort required.

This isn't Pokemon or World of Warcraft. This is real life.

Thanks for that heads up.  I really thought this was Pokemon.  My bad.

Sorry, this wasn't direct towards you. It was directed to all the individuals with failing pity stocks on GLBSE. I don't know you, so you have my admiration thus far. I tend to love humanity that way.

[hiVe]

Oh god, there comes another one -.- i lol at many of my early "warning" comments in many of those "mining company" threads i've visited back in the days...if only people would have listened to me heh...

[Anonymous]

Dishwara and most of those companies are smoking remains right now. They aren't really to be looked up to, haha. Competitors? Hardly, if you have any tact.

Anyways, yeah, you are going to need to go big with a long-term perspective if you want any substantial profit in this industry. 1 Gigahashes is laughable.

[Anonymous]

Dishwara and most of those companies are smoking remains right now. They aren't really to be looked up to, haha. Competitors? Hardly, if you have any tact.

I guess the next question to be asked is how do you avoid the fate of DISHWARA? For those who don't know, he had hardware problems (and other problems), and the company is in the process of going belly up.

Good insurance whether it be warranties or quality hardware is not optional: It's common sense.

[yochdog]

How will you differentiate yourself from the other publicly traded mining operations, Skepsidyne (SIN), Smokey Mountain Mining (SMM), BlockMiners (BMMO), Shades Minoco (SDM), Dishwara (DISHWARA), etc?

Can you give details of how you would do a dutch auction on the stock?

You say you would start with 100 shares x 5 btc = 500 btc, at current market rate = 2500 USD. That would get you what, 1 Ghs mining power? I think a company dedicated to mining would have to start bigger.

You say you already have a company, what type of company is it? Would running a mining operation interfere - could you do both successfully? (I'm just getting you warmed up, bitcoin investors have learned to be pretty brutal trying to get down to who runs each company, we don't want to get scammed )

Hey there Peter.  Thanks for the response....this is what I appreciate.  Concise comments without the snarky comments and condescending undertone.  

I am unfamiliar with the companies you listed (I will go take a look).  Do they currently pay dividends?

Interestingly enough, I already own a 10 GH/s farm.  I would not be looking for start-up capital.  I think of it more akin to an existing, private company that is looking to go public.  

Mining does not interfere with my career at all.  I don't want to go into detail about what I do....but mining is fairly complimentary as a bolt-on.  

[speeder]

Some of these companies failed.

Some of these companies, failed to fail (erm... DISHWARA, that WANTS to fail, but keeps paying dividends and buying back shares... I wish someone helped that guy get rid of his mining business while still saving the shareholders).

I dunno if any of them are actually profitable.



Your project, sell shares of a already existing company, is nice

[Anonymous]

Your project, sell shares of a already existing company, is nice

Yes, I wish he said this before. : ) I'm interested.

[hiVe]

Indeed, this is how all of them were supposed to start, not rise capital from $0. Though i still think its not a good idea, although the idea itself is far superior to the existing GLBSE scams.
Good luck anyway.

[yochdog]

Let's assume for a moment the following entity exists:

BitCorp Mining Company

Bitcorp Mining Company (BitCO) owns and operates an extensive network of Bitcoin miners.  The main priority of BitCO is to ensure seemless operation of its current capacity, while strategically growing capacity when cost effective.  BitCO generates revenue through the production of BTC, as well as signing an occasional mining contract.  BitCO incures expenses from electricity usage, expansion of operations, and maintenence.  Currently, BitCO generates more BTC per month than are need for expansion, thus has significant free BTC flow.

I thought putting this in my original post would get the point across......my apologies on being vaugue.


I already have 10,000 MH/s, and I can probably take that to 15,000 MH/s before I run into problems.  I already sell mining contracts, and am a very reliable and trustworthy business partner.  see here: https://bitcointalk.org/index.php?topic=41888.0

I think it might actually be more efficient to sell shares in my operation rather than sell mining contracts continually.  

[yochdog]

Indeed, this is how all of them were supposed to start, not rise capital from $0. Though i still think its not a good idea, although the idea itself is far superior to the existing GLBSE scams.
Good luck anyway.

Could you elaborate on why you still think it is a bad idea?  Simply trust and verification issues?  Or is the business plan flawed in your mind? 

thanks! 

[yochdog]

How will you differentiate yourself from the other publicly traded mining operations, Skepsidyne (SIN), Smokey Mountain Mining (SMM), BlockMiners (BMMO), Shades Minoco (SDM), Dishwara (DISHWARA), etc?

I am unfamiliar with the companies you listed (I will go take a look).  Do they currently pay dividends?

SIN gives weekly dividends that come about every two weeks. SMM has been giving daily dividends. BMMO gives monthly dividends, but they started in the past couple weeks so the first payment has not gone out yet. SDM initially said dividends every 6 months, but they are considering moving to monthly paymetns, they also just started. Dishwara gave dividends a couple times before crashing.

Interesting....  I think I need a private placement.  Just find 10-20 investors who want in without dealing with a 3rd party. 

[jjiimm_64]

You say you would start with 100 shares x 5 btc = 500 btc, at current market rate = 2500 USD. That would get you what, 1 Ghs mining power? I think a company dedicated to mining would have to start bigger.

this is not a yah or nah on bitco mining but a comment about the 1Gh
just ordered from newegg........  1999.00 usd  for 3 Ghs mining power (assuming I have the ONE motherboard and 2 psus which could be bought for the other 500 bucks)
4     

    AMD HD5970 Radeon HD 5970 2GB 256-bit GDDR5 PCI Express 2.1 x16 HDCP Ready CrossFireX Support Video Card - OEM
    Item #: N82E16814105001
    VGA Replacement Only Return Policy

   $1,999.96
($499.99 ea)
Subtotal    $1,999.96
Tax    $0.00
 UPS 3 DAYS    $0.00
Rush Processing (Preferred Account)    -$3.99
Rush Processing    $3.99
Order Total    $1,999.96

[tysat]

Interesting....  I think I need a private placement.  Just find 10-20 investors who want in without dealing with a 3rd party. 

That's probably an easier way to do it, I'd be interested in it.

[Ben Walsh (beamer)]

If you produce a professional quality business plan for this, such as I would expect from a "real world" investment opportunity, which demonstrates to me you are serious and competent, I pledge to match whatever Peter L initially invests in you up to the BTC equivalent of £250.

If you deliver ~10% annual return over the first 6 months of operation, I'll double my investment. If you deliver ~10% annual return over the next 6 months, I'll double my investment again.

I want Bitcoin to succeed and I will put my hard earned money where my mouth is.

If you can offer me three verifiable examples of your solid reputation via sites such as Ebay etc ... I will double the investment pledges made above.

Feel free to PM me.

[Ben Walsh (beamer)]

I consider you one of the best bellweathers on here.

No pressure ;0)

If you produce a professional quality business plan for this, such as I would expect from a "real world" investment opportunity, which demonstrates to me you are serious and competent, I pledge to match whatever Peter L initially invests in you up to the BTC equivalent of £250.

Umm, why are you basing your investment on my investment? (I didn't actually say I would invest yet ...) It is nice to see people trust my judgement though

jjimm: The 1 Ghs calculation I did was just something I pulled off the top of my head. :/

yochdog: Knowing you are already mining does make it a much more attractive investment than what I first pictured when I read the OP, that you wanted to raise the money and then start the mining. 

You say you want 10-20 investors (are you still looking for about 500 btc?), would you want everybody to contribute the same, or still have 100 shares to distribute? That means you are looking for each investor to contribute 25-50 bitcoins? Am I getting the math right here?

[yochdog]

If you produce a professional quality business plan for this, such as I would expect from a "real world" investment opportunity, which demonstrates to me you are serious and competent, I pledge to match whatever Peter L initially invests in you up to the BTC equivalent of £250.

If you deliver ~10% annual return over the first 6 months of operation, I'll double my investment. If you deliver ~10% annual return over the next 6 months, I'll double my investment again.

I want Bitcoin to succeed and I will put my hard earned money where my mouth is.

If you can offer me three verifiable examples of your solid reputation via sites such as Ebay etc ... I will double the investment pledges made above.

Feel free to PM me.

Ben,

I really appreciate the feedback.  I will be looking into writing a business plan.....if and when it is completed, I will be reaching out to you.

As for examples of my reputation, I can offer 2 for now:  My Ebay profile can be found under Yochdog, and my Bitcoin rep can be verified on this thread:  https://bitcointalk.org/index.php?topic=41888.0


Thanks!

[yochdog]

If you produce a professional quality business plan for this, such as I would expect from a "real world" investment opportunity, which demonstrates to me you are serious and competent, I pledge to match whatever Peter L initially invests in you up to the BTC equivalent of £250.

Umm, why are you basing your investment on my investment? (I didn't actually say I would invest yet ...) It is nice to see people trust my judgement though

jjimm: The 1 Ghs calculation I did was just something I pulled off the top of my head. :/

yochdog: Knowing you are already mining does make it a much more attractive investment than what I first pictured when I read the OP, that you wanted to raise the money and then start the mining. 

You say you want 10-20 investors (are you still looking for about 500 btc?), would you want everybody to contribute the same, or still have 100 shares to distribute? That means you are looking for each investor to contribute 25-50 bitcoins? Am I getting the math right here?

Peter,

I am trying to apply a rough Dividend Discount Model approach to pricing the shares.  If the gross earnings are 150 BTC per month (it is), they should probably be priced higher than 500 BTC in total. I think the best way to approach the IPO would be to do a Dutch Auction on 50 shares, and retain 50 shares for myself.  I would set the dividend at 1 BTC per share, per month with the retained earnings earmarked for maintenence and modest expansion.

make sense?