About to IPO but have a few questions..

[fourhundredapm]

We are planning on launching a project that (hopefully) will have enough hashing power to bring in over $1m per month. We're in the final stages but are running low on cash, we are considering an IPO. My questions are the following:

1) What would a "fair" valuation of a company that is pulling in $1m/mo. One of the problems I have with finding value is the volatility of the coin prices. Our mining will be strictly alt-coin, which is considerably more unstable than bitcoin.

2) What is a fair ROI for investors?

3) Considering the lack of trust in the securities exchanges, would a direct-share offering deter investors from buying shares?

Any and all feedback would be very appreciative.

P.S. I am moderating this thread because it seems some people troll particularly HARD on this forum.

[DeadwoodDan]

your problem is that you're not actually pulling in a million a month yet, you're scheming and planning and hoping to pull that much sometime in the future, and you need to convince people to give you tons and tons of money and trust so you can do that.

A self-moderated thread where you whine about trolls certainly won't help.

[rethink-your-strategy]

Mining IPOs are historically hard to run. You're not only chasing break-even, but you're also trying to set money aside to prepare for the next lot of equipment you have to purchase. It's not really something the institutional investor looks at due to the near impossibility of being really profitable.

It's particularly so because ASICs are dead assets - after a year of mining they're so unprofitable that their resale value is negligible if anything. This means that the investors need to know and understand that there is no recourse to seize assets if you're an outright scam or if you're merely incapable and make huge mistakes, as those assets will be effectively worthless.

Based on the historical price and difficulty movements (which I assume you've familiarized yourself with) break-even on an ASIC is 10-18 months. Since you haven't even ordered any equipment, the delay in waiting for ordered equipment to arrive will push you into the higher bracket. Assuming 18 months before ROI you are asking for ~$20 million worth of capex, at a guess. You're an unknown, you're not in the OTC Web of Trust, and you've not demonstrated that you have any ability to run a $20 million+ mining operation.

The suggestion of having investors purchase shares directly with no option to sell them on the open market (if they choose to go short on an investment, very likely considering the high probability that this ends up being a scam) is one that belies any hope of your appearing capable. I would go back to the drawing board; start small, get on the WoT, build up confidence, and then ask for an investment because you've proven yourself.

[NotLambchop]

We are planning on launching a project that (hopefully) will have enough hashing power to bring in over $1m per month. We're in the final stages but are running low on cash, we are considering an IPO. My questions are the following:

1) What would a "fair" valuation of a company that is pulling in $1m/mo. One of the problems I have with finding value is the volatility of the coin prices. Our mining will be strictly alt-coin, which is considerably more unstable than bitcoin.

The volatility of bitcoin price is largely irrelevant for your scenario.  You, as a mining concern, are not making $1m per month -- you're mining ~2200 BTC per month. <==is that correct?  What's your current hashrate?
You are also attempting to raise funds in BTC.  Only expenses requiring fiat are affected by BTC price.  You're running a multimillion mining concern, so this should be self-evident.
 

2) What is a fair ROI for investors?

I'm not sure I understand your question.  Are you issuing shares or bonds?

3) Considering the lack of trust in the securities exchanges, would a direct-share offering deter investors from buying shares?

I'd have to know who you are to answer that question.

Any and all feedback would be very appreciative.

P.S. I am moderating this thread because it seems some people troll particularly HARD on this forum.

Self-moderation is the hallmark of scammers here.  Avoid.

[fluffypony]

We are planning on launching a project that (hopefully) will have enough hashing power to bring in over $1m per month. We're in the final stages but are running low on cash, we are considering an IPO. My questions are the following:

1) What would a "fair" valuation of a company that is pulling in $1m/mo. One of the problems I have with finding value is the volatility of the coin prices. Our mining will be strictly alt-coin, which is considerably more unstable than bitcoin.

2) What is a fair ROI for investors?

3) Considering the lack of trust in the securities exchanges, would a direct-share offering deter investors from buying shares?

Any and all feedback would be very appreciative.

P.S. I am moderating this thread because it seems some people troll particularly HARD on this forum.

Just to clarify - do you mean you're in the final stages of getting the farm running, or in the final stages of preparing a 25 page PDF?

The reason I ask is that I have a fairly large scope of experience and knowledge when it comes to altcoin mining. I have mined altcoins "professionally", if such a term could be applied, since the beginning of 2012, and I have a LOT of historical data (earnings, exchange data from now-defunct exchanges, difficulty changes, pump-and-dumps, etc.)

Based on that I can tell you that $10k worth of equipment will net $600 - $2000 in a month before electricity if you are particularly clever at guessing which altcoins to preemptively mine and have written the tools to segment and route portions of your farm. Electricity on that is a pretty static $400 if you aren't in the US (or if you are in the US and have negotiated with your power company). Overheads (replacements, salaries, rent, etc.) are about $100 on top of that. That means that a GPU mining operation can make, pretty statically, $100 - $1500. The good months are few and far between, so we can average that out to $700 profit a month over a year (again, assuming you're particularly good at tooling up by writing your own python or whatever to switch segments over to profitable coins, bearing in mind that profit is a product of trade value more than a product of difficulty and available hashrate) and a gross revenue of ~$1300 a month.

Those amounts are all averaged out for auto-switching between different altcoins, holding and trading on necessity only, and for rapidly changing difficulty / block rewards.

Thus on a proposed gross revenue of $1 million monthly your electricity cost will be ~$308 000, which is the amount of electricity a factory uses. Your capex to meet that revenue will be around $7.7 million. If your claimed amount of "$1 million a month" is net profit...well...then the capex you're looking to spend is $14.3 million.

You should not be asking about fair value, it's the wrong question. You should be proving yourself to investors first, and then saying "this is how we want to raise funds" to get input from them.

[fluffypony]

Mining IPOs are historically hard to run. You're not only chasing break-even, but you're also trying to set money aside to prepare for the next lot of equipment you have to purchase. It's not really something the institutional investor looks at due to the near impossibility of being really profitable.

It's particularly so because ASICs are dead assets - after a year of mining they're so unprofitable that their resale value is negligible if anything. This means that the investors need to know and understand that there is no recourse to seize assets if you're an outright scam or if you're merely incapable and make huge mistakes, as those assets will be effectively worthless.

Based on the historical price and difficulty movements (which I assume you've familiarized yourself with) break-even on an ASIC is 10-18 months. Since you haven't even ordered any equipment, the delay in waiting for ordered equipment to arrive will push you into the higher bracket. Assuming 18 months before ROI you are asking for ~$20 million worth of capex, at a guess. You're an unknown, you're not in the OTC Web of Trust, and you've not demonstrated that you have any ability to run a $20 million+ mining operation.

The suggestion of having investors purchase shares directly with no option to sell them on the open market (if they choose to go short on an investment, very likely considering the high probability that this ends up being a scam) is one that belies any hope of your appearing capable. I would go back to the drawing board; start small, get on the WoT, build up confidence, and then ask for an investment because you've proven yourself.

He's talking about altcoins, so I'm guessing GPU mining. The rest of your points stand 100%, no WoT profile and by my calculations he's looking for $7.7 million - $14.3 million.

[binderclip]

1) Why don't you do some research into this? There are many operating mining companies you can research both on exchanges and on the forum.

2) Why don't you do some research into this? There are many operating mining companies you can research both on exchanges and on the forum.

3) Why don't you do some research into this? There are many operating mining companies you can research both on exchanges and on the forum.

P.S. If you can't deal with trolling DON'T post here.

[fluffypony]

1) Why don't you do some research into this? There are many operating mining companies you can research both on exchanges and on the forum.

2) Why don't you do some research into this? There are many operating mining companies you can research both on exchanges and on the forum.

3) Why don't you do some research into this? There are many operating mining companies you can research both on exchanges and on the forum.

P.S. If you can't deal with trolling DON'T post here.

10/10 great answers. OP, this guy speaks truth, read what he says and follow his recommendation.

[fourhundredapm]

Thanks for answering my questions! You guys are were incredibly helpful.

/s

[Justin00]

just to save you making a thread and getting disappointed... your going to need pics of current h/w and stats etc etc before most people invest.
Saying that, you will no doubt get alot of tards who see "$1m/month" and go "zomg i want a piece of that.. how much do u want!!"

Thanks for answering my questions! You guys are were incredibly helpful.

/s

[fluffypony]

Thanks for answering my questions! You guys are were incredibly helpful.

/s

You have not replied to my wall of text analysis or the question I raised. You aren't really setting yourself up for success with an attitude like that.

[fourhundredapm]

Thanks for answering my questions! You guys are were incredibly helpful.

/s

You have not replied to my wall of text analysis or the question I raised. You aren't really setting yourself up for success with an attitude like that.

Your analysis was not warranted. My questions are basic.

[fluffypony]

Thanks for answering my questions! You guys are were incredibly helpful.

/s

You have not replied to my wall of text analysis or the question I raised. You aren't really setting yourself up for success with an attitude like that.

Your analysis was not warranted. My questions are basic.

Fine, here you go:

1) What would a "fair" valuation of a company that is pulling in $1m/mo. One of the problems I have with finding value is the volatility of the coin prices. Our mining will be strictly alt-coin, which is considerably more unstable than bitcoin.

If that company were already pulling in $1m/month in net profit (not EBIT or EBITDA, and I assume you're not retarded and quoting a gross revenue figure for valuation) would be in the same region as companies such as a mid-sized bank. Given proper information and long-term confidence I would value the company using a discounted cash-flow analysis. Given the information scarcity in this post, it's probably just easier to find a profitable, publicly listed company and use them for a thumb suck. By my calculations a company showing long-term growth and that is that profitable would be worth around $115 million. Given the short-term profitability normally associated within mining, however, you probably won't feasibly be able to price the company beyond $20 million.

If you don't currently net $1m/month in profit then you can ignore the entire paragraph above. Ideas are worthless, execution is everything.

2) What is a fair ROI for investors?

Because most of the companies seeking funding here are startups, investors would be looking for rapid profitability and ~40% or greater annualised ROI.

3) Considering the lack of trust in the securities exchanges, would a direct-share offering deter investors from buying shares?

Yes, it would very much deter them. Many investors go short on obvious scams investment opportunities that involve mining because of the very great difficulty involved in running it profitably. By hampering their ability to trade their stock you're just making it an unattractive investment.