Question to buyers, want shares in an operation, or individual rounds?

[drmadison]

So I started my first round a couple of weeks ago, and as I'm about to make the first payout to shareholders and launch a second round I began to wonder...what is it share-buyers actually want?

I have 3 options I'm thinking about moving forward with...

Option 1
Start a 2nd round that's completely separate from round 1.
This means there'd be new hardware setup and running just for this new group. It also means each round ends when that 1 piece (or set) of hardware is obsoleted. Hosting fees for 1 round are what they are and generally won't change (unless I renegotiate total hosting costs) and in general, what you buy when the round launches is what you get, and if the hardware for your round happens to be down for repairs then your earnings drops sharply.

Option 2
What if instead of making round 2 a real separate round, we just add more power to the pool, and add more shares to compensate. Currently with round 1 each share is 10GH/s. We could either keep that going, or convert 1 share to be 1GH/s for easy math (converting all existing buyers) and then selling more shares whenever new hardware is brought online.

When we double the hash rate (and double the shares sold) people can expect the same payouts, BUT it means that as new hardware is added on people get an extension on the life of their shares. If by the time I add round 6, round 1's hardware is now obsoleted (no longer able to cover it's hosting cost) then the people in round 1 don't lose out, they still have shares. While total earnings goes down, everyone who's bought in still earns their percentage. It also provides protection against hardware failure as if any 1 machine dies, the rest keep earning for everyone.

Option 3
Similar to option 2, you're buying a share in the mining operation. But instead of the full earnings paid out to everyone every payout date, a percentage (to be determined) is set aside and used to purchase more hardware. In this case, month-over-month the operation's total mining power increases, further extending the life of each share already sold.

Option 1 would be the short term investment.
Option 2 would be a longer-term move.
Option 3 is I suppose the longest-term investment option here.

Options 2 and 3 would also allow re-selling of shares should you choose to get out in the future and have someone lined up.

In any case, when hardware is no longer able to pay for itself it would be sold off and either used to purchase new hardware (option 3) or paid out to shareholders (options 1 or 2).

I realize this is a bit of a wall of text, but I'm curious what it is people here want before I start up this next round (which will be launching most likely next week, after round 1 buyers can verify they've been paid).

[clanie]

If I had shares in round 1 I'd love option 2 or 3. But I'd never buy into later rounds.
So my vote is clearly on option 1.

[spazzcat]

I like the idea of keep the hardware going, but I'm in a few other reinvestment GBs that seem to be a headache waiting to happen, like PETA. With Option 2, it is up to me if I want to reinvest or not. With option 2, I would also allow people to sell their shares, so if they want out they can get out at anytime.

[drmadison]

Appreciate the feedback so far - I just figure if I'm going to try to provide a service here I should find out what it is people really want!

With options 2 and 3 you'd definitely be able to re-sell shares to others.

And in regards to buying in after round 1 with those options remember that shares will be getting cheaper over time, because the value of 1 GH/a this week is less than it was last week...

[hostmaster]

Total operation, but I want every btc paid out!

[albon]

I much prefer option 3.

20% retained for upgradeing means your hash rate will be protected and may even grow. All old/outdated equipment could be sold and the BTC used together with the upgrade fund to by biger and better.

Option 3 also alweys for new shares to be sold to help fund new equipment but the new shares would not have a payout until the new equipment starts hashing. Once it has started hashing the new shares sold would act just like shares bought at the start

[tripppn]

Would more shares be sold for option 3?  If so what percent of the new machines would be reinvestment from current owners and what percent would be new shares?

Option 3 seems to make the most sense to me but the math could potentially become very complex.

IE: If new hardware would be 50/50 would current holders of 1 share now own 1.5 shares and new share buyers have 1?  By round 6 your going to have spreadsheet a mile long.

[albon]

Would more shares be sold for option 3?  If so what percent of the new machines would be reinvestment from current owners and what percent would be new shares?

Option 3 seems to make the most sense to me but the math could potentially become very complex.

IE: If new hardware would be 50/50 would current holders of 1 share now own 1.5 shares and new share buyers have 1?  By round 6 your going to have spreadsheet a mile long.

True but you could do it the easy way.

Before new equipment every share has 10GB and 1000 shares have been sold = 1TH

new equipment is ordered adding say 1000GB to the gb. 50% goes to the old shares makeing them worth 15GB each.

500GB/15GB= 33 new shares worth 15GB but these shares will not get a dividend untill the new hardware is hashing.
The new shares are sold at a resonabule price even being offered to existing share holders.

rinse and repete

[tripppn]

Would more shares be sold for option 3?  If so what percent of the new machines would be reinvestment from current owners and what percent would be new shares?

Option 3 seems to make the most sense to me but the math could potentially become very complex.

IE: If new hardware would be 50/50 would current holders of 1 share now own 1.5 shares and new share buyers have 1?  By round 6 your going to have spreadsheet a mile long.

True but you could do it the easy way.

Before new equipment every share has 10GB and 1000 shares have been sold = 1TH

new equipment is ordered adding say 1000GB to the gb. 50% goes to the old shares makeing them worth 15GB each.

500GB/15GB= 33 new shares worth 15GB but these shares will not get a dividend untill the new hardware is hashing.
The new shares are sold at a resonabule price even being offered to existing share holders.

rinse and repete

LOL!!! Well that's one way to do it... personally I like complicated as hell   

[AlexeyKV]

1st option. There are many hidden traps, when you go with securities of total operation. Most people only interested in GHs/$ rate. And if you are going to compensate hardware failures/obsolete from total operation, then you will need either: 1) sell new shares at high GHs/$ rate (that nobody will buy) or 2) sell shares that include both new and obsolete hardware. This will again decrease value of your sells due to (for example) increased power consumption. And nobody will be interested in buying obsolete hardware, when enough good offers will be around. There are plenty of these kind of companies and most of them are going to dead end.

In other words, problem of option 2 and 3 is: you can't sell shares, that have infinite lifetime. (only exception: if you are selling overpriced shares and somebody still buying them. Then they will live as long as you could find investors).

[tripppn]

1st option. There are many hidden traps, when you go with securities of total operation. Most people only interested in GHs/$ rate. And if you are going to compensate hardware failures/obsolete from total operation, then you will need either: 1) sell new shares at high GHs/$ rate (that nobody will buy) or 2) sell shares that include both new and obsolete hardware. This will again decrease value of your sells due to (for example) increased power consumption. And nobody will be interested in buying obsolete hardware, when enough good offers will be around. There are plenty of these kind of companies and most of them are going to dead end.

In other words, problem of option 2 and 3 is: you can't sell shares, that have infinite lifetime. (only exception: if you are selling overprices shares and somebody still buying them. Then they will life as long as you could find investors).

I'm not sure why you would have to sell shares at higher rates.  The rate would depend on how much that hardware costs.  

Let's say R1 was a batch 2 Neptune and sold 300 shares at $33/share.  3000 Ghs for 10,000 so $3.33 per ghs (10Ghs/share).  The coop runs it for 2 months paying out dividends of 50% to the shareholders.  Now the coop has let's say 5k worth of btc in a reinvestment fund.  

R2: The KNC X comes out around that time and it's 10Ths for $10,000 so this new hardware costs $1 per ghs.  so the coop takes their 5k and 150 more shares are sold at $33 each.  

Now the pool is up to 13Ths with 450 shares and now everyone who owns a share is running at about 29Ghs.

R3: A couple months later the neptune is obsolete so we sell it on ebay for $2000 and KnC puts out the X2 which is now 50Ths for $10k.  So there's 5k in the reinvestment fund plus 2k from the sale so now we need to raise 3k.  100 shares at $30 ought to do the trick now we have 60Ths divided by 550 shares so 110Ghs per shares.

I see no reason why this model would die as long as BTC is alive and well.

Obviously I'm throwing out arbitrary numbers but I think it makes the point I'm trying to get across.

FYI:  By R3, R1 has made their roi collecting 50% and they are now just sitting back collecting dividends.

[drmadison]

@tripppn:

That's the closest example to what I was thinking...
Right now these buys have shares sold with the idea that let's face it, most hardware is obsolete in a few months. So I began wondering how can we enable better investments  that aren't quick money grabs that either do or don't profit based on simple shipping delays.

[AlexeyKV]

1st option. There are many hidden traps, when you go with securities of total operation. Most people only interested in GHs/$ rate. And if you are going to compensate hardware failures/obsolete from total operation, then you will need either: 1) sell new shares at high GHs/$ rate (that nobody will buy) or 2) sell shares that include both new and obsolete hardware. This will again decrease value of your sells due to (for example) increased power consumption. And nobody will be interested in buying obsolete hardware, when enough good offers will be around. There are plenty of these kind of companies and most of them are going to dead end.

In other words, problem of option 2 and 3 is: you can't sell shares, that have infinite lifetime. (only exception: if you are selling overprices shares and somebody still buying them. Then they will life as long as you could find investors).

I'm not sure why you would have to sell shares at higher rates.  The rate would depend on how much that hardware costs.  

Let's say R1 was a batch 2 Neptune and sold 300 shares at $33/share.  3000 Ghs for 10,000 so $3.33 per ghs (10Ghs/share).  The coop runs it for 2 months paying out dividends of 50% to the shareholders.  Now the coop has let's say 5k worth of btc in a reinvestment fund.  

R2: The KNC X comes out around that time and it's 10Ths for $10,000 so this new hardware costs $1 per ghs.  so the coop takes their 5k and 150 more shares are sold at $33 each.  

Now the pool is up to 13Ths with 450 shares and now everyone who owns a share is running at about 29Ghs.

R3: A couple months later the neptune is obsolete so we sell it on ebay for $2000 and KnC puts out the X2 which is now 50Ths for $10k.  So there's 5k in the reinvestment fund plus 2k from the sale so now we need to raise 3k.  100 shares at $30 ought to do the trick now we have 60Ths divided by 550 shares so 110Ghs per shares.

I see no reason why this model would die as long as BTC is alive and well.

Obviously I'm throwing out arbitrary numbers but I think it makes the point I'm trying to get across.

FYI:  By R3, R1 has made their roi collecting 50% and they are now just sitting back collecting dividends.

In your example, at R3 you can't sell 3000GH for 2000$ (0.67$ per GH), when 50k for 10k$ (0.2$ per GH) comes out.
And even then you are going to sell R3 shares at 0.27$/GH rate, that normal ppl won't buy.

Yea, you can play with arbitraty numbers.. but in the end, you will either sell overpriced shares or steal from old shareholders (option #3 + some tricks with numbers).

It happens because of: you are selling infinite lifetime shares for hardware, that has limited lifetime.

Edit: you can make reinvestment in Round. And it will work good. But, when you merge and add new rounds, somebody will always pay more. And it will bring fundamental problems for operation earlier or later.

[tripppn]

I don't think 2k for 3Th in 4 months is out of the realm of possibility.  People are buying jallys on there for $200 all day and 200 Gh miners are selling for over 2k right now.  I don't consider ebay buyers to be "normal people"... I think there's another word for it....   

[drmadison]

In your example, at R3 you can't sell 3000GH for 2000$ (0.67$ per GH), when 50k for 10k$ (0.2$ per GH) comes out.
And even then you are going to sell R3 shares at 0.27$/GH rate, that normal ppl won't buy.

Yea, you can play with arbitraty numbers.. but in the end, you will either sell overpriced shares or steal from old shareholders (option #3 + some tricks with numbers).

It happens because of: you are selling infinite lifetime shares for hardware, that has limited lifetime.

Edit: you can make reinvestment in Round. And it will work good. But, when you merge and add new rounds, somebody will always pay more. And it will bring fundamental problems for operation earlier or later.

ASICMiner sells shares in their total revenue (which is basically what this option 2/3 would be)
Is that selling shares in limited lifetime hardware? No.
And are they overpriced? Last I checked their shares sold for .5 BTC each and the dividend payments were something like 0.02

You'd be buying shares in a mining entity. Granted in this case I wouldn't be manufacturing hardware but rather acquiring whatever hardware is available with the potential for positive returns, and without the insane overhead of R&D costs

[AlexeyKV]

In your example, at R3 you can't sell 3000GH for 2000$ (0.67$ per GH), when 50k for 10k$ (0.2$ per GH) comes out.
And even then you are going to sell R3 shares at 0.27$/GH rate, that normal ppl won't buy.

Yea, you can play with arbitraty numbers.. but in the end, you will either sell overpriced shares or steal from old shareholders (option #3 + some tricks with numbers).

It happens because of: you are selling infinite lifetime shares for hardware, that has limited lifetime.

Edit: you can make reinvestment in Round. And it will work good. But, when you merge and add new rounds, somebody will always pay more. And it will bring fundamental problems for operation earlier or later.

ASICMiner sells shares in their total revenue (which is basically what this option 2/3 would be)
Is that selling shares in limited lifetime hardware? No.
And are they overpriced? Last I checked their shares sold for .5 BTC each and the dividend payments were something like 0.02

You'd be buying shares in a mining entity. Granted in this case I wouldn't be manufacturing hardware but rather acquiring whatever hardware is available with the potential for positive returns, and without the insane overhead of R&D costs

This is overpriced shares. You can find much higher dividends hardware/GB for 0.5 BTC today. This model will live as long, as you could find investors, who will buy overpriced shares.

[drmadison]

This is overpriced shares. You can find much higher dividends hardware/GB for 0.5 BTC today. This model will live as long, as you could find investors, who will buy overpriced shares.

You're not taking into account the value of the share itself, its inherent ability to be resold, and the fact that unlike group-buys where you're strictly concerned with $/GH/s, this isn't a one-time, 3-months-and-it's-over sort of deal

[AlexeyKV]

This is overpriced shares. You can find much higher dividends hardware/GB for 0.5 BTC today. This model will live as long, as you could find investors, who will buy overpriced shares.

You're not taking into account the value of the share itself, its inherent ability to be resold, and the fact that unlike group-buys where you're strictly concerned with $/GH/s, this isn't a one-time, 3-months-and-it's-over sort of deal

Somebody (Asicminerr #2) could pop up today and say: "Hey! I'm selling 0.5 BTC shares with 0.04 dividends." Can he? Yes, hardware allows. Do shares have ability to be resold? Yes. Do Asicminer shares overpriced? Yes. Do his shares overpriced? At the moment no.

But when he will try to open new rounds, he will end up with fundamental problems earlier or later (overpriced new shares or "steal from reinvestment funds"* to avoid it), that I was trying to explain in last posts. Again, due to obsolete of hardware.

If there will be no new rounds. Everything will work fine.

PS *steal - means (for example) take 10 BTC from reinvestment funds to buy 5 BTC hardware.

[tripppn]

This is overpriced shares. You can find much higher dividends hardware/GB for 0.5 BTC today. This model will live as long, as you could find investors, who will buy overpriced shares.

You're not taking into account the value of the share itself, its inherent ability to be resold, and the fact that unlike group-buys where you're strictly concerned with $/GH/s, this isn't a one-time, 3-months-and-it's-over sort of deal

Somebody (Asicminerr #2) could pop up today and say: "Hey! I'm selling 0.5 BTC shares with 0.04 dividends." Can he? Yes, hardware allows. Do shares have ability to be resold? Yes. Do Asicminer shares overpriced? Yes. Do his shares overpriced? At the moment no.

But when he will try to open new rounds, he will end up with fundamental problems earlier or later (overpriced new shares or "steal from reinvestment funds"* to avoid it), that I was trying to explain in last posts. Again, due to obsolete of hardware.

If there will be no new rounds. Everything will work fine.

PS *steal - means (for example) take 10 BTC from reinvestment funds to buy 5 BTC hardware.

I think the flaw with your reasoning that "obsolete" means completely worthless in your opinion.  Block Erupters were obsolete months ago yet they still sell.  Hell I consider Cubes to be obsolete but they still sell for 300-400 bucks and don't get me started on stupid jallys.  Just because it's useless as a hosted piece of equipment doesn't mean it's worthless to someone who lives somewhere with cheap energy that can host it in their house.  There is no reason you would have to steal from the reinvestment fund or overcharge for new shares.

[AlexeyKV]

@tripppn, In your example both R2 and R3 have overpriced shares. Can you make another example, where shares won't be overpriced (and hardware will be sold at market GH/$ rate)?