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Author Topic: Now seeking investors for BitCorp Mining Company [Now pushing 40 GH/s!]  (Read 15967 times)
yochdog
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September 26, 2011, 07:09:34 PM
 #61

JohnJ brings up some good points.

A 15% return is not an acceptable risk to reward ratio for an investment with this level of risk.

Average return on an angel investor or venture capital deal is usually >200% over 3-4 year incubation period.  No VC don't achieve those kinds of returns because ... most deals fail.  The few deals which are highly profitable offset the majority of deals which are a total loss.

A 15% return simply doesn't justify the risk of capital especially for a first round offering from an unknown entity.

You are assuming no capital appreciation.  VC's hit their home runs with wildly successful IPO's, not steady dividends.

Also, please (this aimed to everyone), be fair in your presentation.  It is priced for a 15% return PER YEAR.  Not total return.  I love how you cite a 1 year dividend yield and compare it to a 4 year total return for a VC investor.  Not really an apples to apple comparison. 


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September 26, 2011, 07:20:48 PM
 #62

You are assuming no capital appreciation.  VC's hit their home runs with wildly successful IPO's, not steady dividends.

Wildly successful IPOs happen when there's a market-changing product/service. Google took over the world of search. Groupon started a new trend in advertising.

I don't see how mining bitcoins is going to become wildly successful. You might make some small profit here and there, but there's not much that will be able to change your output massively, at least not in a positive way. Sure, you can buy more rigs, but it's still going to be very slow and steady. There is no critical mass, unless you're going for the 51% or writing your own mining code. Small potential for appreciation, high risk, low return.

ETA: risk/appreciation/return etc
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September 26, 2011, 07:33:45 PM
 #63

You are assuming no capital appreciation.  VC's hit their home runs with wildly successful IPO's, not steady dividends.

Wildly successful IPOs happen when there's a market-changing product/service. Google took over the world of search. Groupon started a new trend in advertising.

I don't see how mining bitcoins is going to become wildly successful. You might make some small profit here and there, but there's not much that will be able to change your output massively, at least not in a positive way. Sure, you can buy more rigs, but it's still going to be very slow and steady. There is no critical mass, unless you're going for the 51% or writing your own mining code. Small potential for appreciation, high risk, low return.

ETA: risk/appreciation/return etc

I was not claiming to be the next Google....I was pointing out that comparing a VC funded company that pays no dividend to one like BitCO that pays a 15% divi is a bad comparison.  Two totally different things. 

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September 26, 2011, 07:36:51 PM
 #64

It is priced for a 15% return PER YEAR.  


I wasn't confused about that.  Just to be clear A 15% annual return is insufficient for the risk of the deal.  Paying out dividends in the short term doesn't materially mitigate risk.  If the company/deal folded after a say a year 85% (instead of 100%) of capital would still be lost.    No doubt you will get some people to sign up but they are being under-compensated for the risk they are taking.  

My comparison to Angel investor of VC is accurate.  I mean you aren't a "blue chip" mining corporation with a lock of low cost way of mining and paying a solid low risk dividend.  It is a startup in the venture capital phase.  Adding a dividend doesn't reduce the risk.  Total return adjusted for risk is all that matters.   Nobody investing in something this high risk needs the cashflow that a regular dividend provides but they do want to be compensated for the risk of losing their investment.   15% is simply insufficient even for a "normal" company startup.    Combine that with the anonymous & irreversible nature of bitcoin and the inability for anyone to do any true Due Diligence you are just behing dishonest with yourself if you can't see the VC comparison as valid.

I like what you are trying to do but a good idea at the wrong price is still a bad deal.

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September 26, 2011, 07:48:54 PM
 #65

It is priced for a 15% return PER YEAR.  


I wasn't confused about that.  Just to be clear A 15% annual return is insufficient for the risk of the deal.  Paying out dividends in the short term doesn't materially mitigate risk.  If the company/deal folded after a say a year 85% (instead of 100%) of capital would still be lost.    No doubt you will get some people to sign up but they are being under-compensated for the risk they are taking.  

My comparison to Angel investor of VC is accurate.  I mean you aren't a "blue chip" mining corporation with a lock of low cost way of mining and paying a solid low risk dividend.  It is a startup in the venture capital phase.  Adding a dividend doesn't reduce the risk.  Total return adjusted for risk is all that matters.   Nobody investing in something this high risk needs the cashflow that a regular dividend provides but they do want to be compensated for the risk of losing their investment.   15% is simply insufficient even for a "normal" company startup.    Combine that with the anonymous & irreversible nature of bitcoin and the inability for anyone to do any true Due Diligence you are just behing dishonest with yourself if you can't see the VC comparison as valid.

I like what you are trying to do but a good idea at the wrong price is still a bad deal.



What would be the right price in your mind?

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Gerald Davis


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September 26, 2011, 08:31:29 PM
 #66

What would be the right price in your mind?

This is going to sound like a copout but I don't know.  Smiley  The issue may be that for me any return high enough to warrant the risk makes the business plan nonviable.  I believe this is currently freezing up a lot of capital in bitcoin economy. 

Still if I had to guess lets compare it to me buying another mininig rig.

If I were to build a new miner.  Say 4x 5970s, 1500W powersupply, cheap MB, CPU, RAM usb drive running linuxcoin, open frame rig ... ballpark.  2.8GH costing $2800.   After electrical costs ($0.10 per kWh) I would net at current difficulty & price 30BTC or $150 a month giving me a monthly return of 5%.

So I could buy shares from you returning 1.25% per month or buy my own rig returning 5% a month.  Now obviously difficult may increase and/or price may drop but if it does it will affect my profitability equally if I own a rig or own shares so for now lets just assume the difficult/price relationship remains solid.

Now there are some difference between me owning/running my own rig and owning shares.
1) w/ shares I don't need to do anything. 
2) w/ shares I don't need to devote space/heat/noise to the venture.
3) w/ owning a rig I have material ownership of the assets (I can sell parts on ebay for partial return if things go south)
4) w/ owning a rig I have no risk of fraud.

Honestly I don't think the pros of shares outweigh risk of shares but lets say an investor considers them equivalent that would put fair return @ 60% annually.  The company wouldn't need to pay all of that as a dividend as long as it has a plan to build out capacity but I would want to see at least half that as a dividend.   

So 30% would be the minimum for me (personally) to consider it.  Given the higher risk I think it would take a return of 40%-50% before I would consider it. 
yochdog
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September 26, 2011, 08:41:40 PM
 #67

What would be the right price in your mind?

This is going to sound like a copout but I don't know.  Smiley  The issue may be that for me any return high enough to warrant the risk makes the business plan nonviable.  I believe this is currently freezing up a lot of capital in bitcoin economy.  

Still if I had to guess lets compare it to me buying another mininig rig.

If I were to build a new miner.  Say 4x 5970s, 1500W powersupply, cheap MB, CPU, RAM usb drive running linuxcoin, open frame rig ... ballpark.  2.8GH costing $2800.   After electrical costs ($0.10 per kWh) I would net at current difficulty & price 30BTC or $150 a month giving me a monthly return of 5%.

So I could buy shares from you returning 1.25% per month or buy my own rig returning 5% a month.  Now obviously difficult may increase and/or price may drop but if it does it will affect my profitability equally if I own a rig or own shares so for now lets just assume the difficult/price relationship remains solid.

Now there are some difference between me owning/running my own rig and owning shares.
1) w/ shares I don't need to do anything.  
2) w/ shares I don't need to devote space/heat/noise to the venture.
3) w/ owning a rig I have material ownership of the assets (I can sell parts on ebay for partial return if things go south)
4) w/ owning a rig I have no risk of fraud.

Honestly I don't think the pros of shares outweigh risk of shares but lets say an investor considers them equivalent that would put fair return @ 60% annually.  The company wouldn't need to pay all of that as a dividend as long as it has a plan to build out capacity but I would want to see at least half that as a dividend.  

So 30% would be the minimum for me (personally) to consider it.  Given the higher risk I think it would take a return of 40%-50% before I would consider it.  


Not a copout at all....you made a great case for how you would personally value the shares.  I really appreciate you taking the time to lay it out.  

I am going to go read it again, and then think it over some more.  

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September 27, 2011, 12:16:40 AM
 #68

Bitcoin is supposed to be a "revolutionary" new form of currency yet so many people are caught up in very narrow forms of thought.

I think many people in this thread are not getting how this works or what is being presented.

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Brian DeLoach
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September 27, 2011, 01:21:53 AM
 #69

Bitcoin is supposed to be a "revolutionary" new form of currency yet so many people are caught up in very narrow forms of thought.

I think many people in this thread are not getting how this works or what is being presented.

 Roll Eyes

I'm glad you backed up all your points and counter-arguments. yochdog, I can see where SOME of your frustration comes form.

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September 27, 2011, 01:26:24 AM
 #70

tbh i didnt read

LOL....well see, there ya go! 

didnt read your replys i meant. goes on and on and on... but seriously learn about shares


ROFLMAO.  Once again, your initial post shows you have no clue what you are talking about.  Move on loser. 

lol.. geek

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September 27, 2011, 03:48:48 AM
 #71

Pardon my french, but this has got to be one of the stupidest investments I've seen. An investor ponies up 8 BTC for the chance (and I'd say a very low chance) of getting 1.2 BTC back in a years time? Idiotic. I'd be happy to offer double that return to anyone with BTC they want to get rid of invest.

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September 27, 2011, 04:04:14 AM
 #72

If you buy 1 share of BitCO for 8 BTC, you will be entitled to .1 BTC per month in dividends, or 1.2 BTC per year.  That is a 15% yield per annum.  Any serious investor will tell you that type of yield is very high.  However, since this is a brand new concept, we are comfortable pricing the shares at 8 and offering such an attractive yield.  We feel it will be beneficial to the Bitcoin community.  

No, it is too low. SERIOUSLY too low.

This is a high risk investment with a high risk of loosing the value after half or one year of return. THis is not a guaranteed bond by someone with a balance sheet. This i not an investment into a significantly growing business. I wont touch that with my investment side, sorry. Not for a yearly 15% yield. Make that 150% and w can talk - then after half a year I recouped most of my investment.

Why would we give away the company like that?  If we are going to pay a 150% yield, we will keep the shares to ourselves. 

Strange people who come out to comment indeed. 

Why should I invest into that then? If you can not make back most of my money before the next risk cfactors hit (which are the 7xxx series and the drop in payout) then why should I invest? Wink

Seriously, 15% isa good yield for a B style bond or a viable long term business perspectiv, but this is missing here - you will run into significant depreciations left and right and your mid termfinancial credibility is bad to start with. This is not a gold mine where gold will still guaranteed to bein demand in 20 years. I would expect the hardware cost to be recouped in a year or... the risk is too high.
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September 27, 2011, 02:01:49 PM
 #73

Pardon my french, but this has got to be one of the stupidest investments I've seen. An investor ponies up 8 BTC for the chance (and I'd say a very low chance) of getting 1.2 BTC back in a years time? Idiotic. I'd be happy to offer double that return to anyone with BTC they want to get rid of invest.

What an amazingly well thought, well argued post. 

Thank you for giving me more reason to doubt the future of the human race. 

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September 27, 2011, 02:14:10 PM
 #74

Pardon my french, but this has got to be one of the stupidest investments I've seen. An investor ponies up 8 BTC for the chance (and I'd say a very low chance) of getting 1.2 BTC back in a years time? Idiotic. I'd be happy to offer double that return to anyone with BTC they want to get rid of invest.

Clearly someone who does NOT get what is being offered here.

It goes like this, for those who may have missed it...

There are risks, but like with ANY investment, there are risks. Even Fortune 500 companies with long track records manage to screw people over, so putting the risk and trust elements as equal, here's the rest:

You are not spending the Bitcoins. Everyone is talking like the 8BTC is gone and now you have to wait for your monthly dividends to make it back.
When you buy shares in a public company is your money gone or can you sell the shares? Is the dividend on top of the share value or is that now your only source of value in the purchase you have made? This is pretty basic stuff.

- You put in 8BTC for a share
- As long as you have a share you get a % of the mining production every month
- Should you decide to sell your share, any amount you sell it for above 8BTC is a profit and any amount below is a loss, minus dividends paid out

It's not that complex and it's pretty fundamental in terms of structure. The risk level is obvious.

OP's attitude towards some of the "brilliant" posts in this thread are certainly just.

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yochdog
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September 27, 2011, 02:22:07 PM
 #75

If you buy 1 share of BitCO for 8 BTC, you will be entitled to .1 BTC per month in dividends, or 1.2 BTC per year.  That is a 15% yield per annum.  Any serious investor will tell you that type of yield is very high.  However, since this is a brand new concept, we are comfortable pricing the shares at 8 and offering such an attractive yield.  We feel it will be beneficial to the Bitcoin community.  

No, it is too low. SERIOUSLY too low.

This is a high risk investment with a high risk of loosing the value after half or one year of return. THis is not a guaranteed bond by someone with a balance sheet. This i not an investment into a significantly growing business. I wont touch that with my investment side, sorry. Not for a yearly 15% yield. Make that 150% and w can talk - then after half a year I recouped most of my investment.

Why would we give away the company like that?  If we are going to pay a 150% yield, we will keep the shares to ourselves.  

Strange people who come out to comment indeed.  

Why should I invest into that then? If you can not make back most of my money before the next risk cfactors hit (which are the 7xxx series and the drop in payout) then why should I invest? Wink

Seriously, 15% isa good yield for a B style bond or a viable long term business perspectiv, but this is missing here - you will run into significant depreciations left and right and your mid termfinancial credibility is bad to start with. This is not a gold mine where gold will still guaranteed to bein demand in 20 years. I would expect the hardware cost to be recouped in a year or... the risk is too high.

Why should you invest?  Let me answer with another question:  What are your alternatives if you are looking to invest BTC?  

Could you go set up your own mining farm and start hashing away?  Sure, but that takes time, resources, and the payback period is getting longer by the day.  Assuming you can build a 2,500 MH/s farm for $2,500, you would earn just about 522 BTC in a year.  At the current exchange rate, that would just about equal the cost of your farm.  But half of that (or more) is going to go to electricity!  So now you are looking at closer to two years (or more) for a break-even.  

Long story short, perhaps a 15% yield is not sufficient, but don't compare it to non-existent alternatives.  

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September 27, 2011, 06:53:39 PM
 #76


So how can I give my money to a guy running a "mature" business who has a Will Ferrell avatar and get's hilariously defensive when people dare ask questions about his "share sale" he spent two hours coming up with?  Never change FlipPro/Vegetta! Cheesy 
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September 28, 2011, 05:56:34 AM
 #77

- Should you decide to sell your share, any amount you sell it for above 8BTC is a profit and any amount below is a loss, minus dividends paid out
And when this anonymous unofficial pseudo-business crashes, no one will buy those shares, and those 8BTC will be gone.

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September 28, 2011, 09:42:13 PM
 #78

And when this anonymous unofficial pseudo-business crashes, no one will buy those shares, and those 8BTC will be gone.

Yes, I covered that when I posted:

Quote from: xxxcoin
... any amount below is a loss, minus dividends paid out

Generally a crash = zero.
So that would be the worst case loss scenario from what I said.

and

Quote from: xxxcoin
There are risks, but like with ANY investment, there are risks. Even Fortune 500 companies with long track records manage to screw people over, so putting the risk and trust elements as equal

At least the level of understanding in this thread is consistent.  Grin

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September 29, 2011, 07:36:39 PM
 #79

Just an update:

As a way for forum members to verify our stated capacity, here is a link to the Deepbit mining team page:  https://deepbit.net/teams/

We are team "BitcorpMiningCO".  We are generally in the top 30 of all mining teams.

Also, we have lined up our first investors, and are going to encourage them to report back to the forum on our conduct and results. 

We will be updating out financials to reflect September production numbers after we close out the month tomorrow.  The numbers look great. 

-BitCorp




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September 30, 2011, 03:39:28 AM
 #80

Why would anyone invest in someone who replies so veraciously to direct questions?

People are asking you direct questions and questioning aspects of your business for a reason. This is what investors do prior to investing. When people are gambling their own money they have a right to know what the stakes are.

FFS.

Seriously, learn about shares. Learn about valuations. Maybe attend a business course or something, or even read a book about business. Maybe consider taking a course on communication skills too while you are at it.

You've had a lot of good advice in this thread. I suggest you might consider taking some of it.

You might not be a scammer, but you have a terrible approach to business.

Good luck.
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