Ok, so it's been a long haul. But I've finally got the pieces in place (minus one, which I'll mention below) to get our plans of action to carry forward.
First a brief summary after the theft:
The police responded, I worked with the investigator, to explore all the leads I had dug up, and any other potential options he could think of. He was surprisingly knowledgeable about bitcoin, and aware of the situation quite well. Unfortunately because the money is still sitting in one wallet, it's un-traceable at this time. IF further useful evidence presents itself, and he'll consider acting at that time. The case is now essentially in their cold-case files, and will be re-opened if we call them with further evidence.
I'll be getting a hard copy of the full police report and posting it up for everyone to see shortly. (right now I'm very strapped for time, and so I don't have time to go down to the police station and wait around for paperwork to get done, as I have to go down in person, fill out a formal information request form, and pay a fee for it). But that will happen soon.
In addition, I've re-deposited the bitcoins that I had (rather the Canadian Dollars I had, converted back to bitcoins minus exchange fees and such). So that explains the random transaction for like 55BTC you saw. (I withheld enough CAD$ to pay the fee to the police for the hard copy of the police report).
So basically nothing at MTGox has turned up any real leads, the police are no longer investigating, and the money is basically non-recoverable (unless we get lucky in the future and they move it in a traceable way).
Also to touch on current hashrates, we're doing our best. Several of the founders rigs are experiencing hardware problems now, and I have not had time to tackle it. I expect we will be able to resolve this soon. Until then we've been doing our best to maintain as much hashing power as possible.
Now, onto the plan(s) of action:
I propose the following options going forward, I've put a lot of thought into these, and hope that collectively this presents good options with the interests of the shareholders in mind, and a wide spectrum of available actions to choose from.
Option 1 (Rebuild FPGA):I've been doing much work with Enterpoint (I'm essentially the lead developer on their bitstreams for their boards right now). As such they are willing to do 2 things for us:
- Still give us a discounted price from the now full retail price (current retail on their boards is 600GBP, we get them for 400GBP)
- Give us 4 boards on a "Mining Lease". Which means that 80% of those boards hash power goes in to paying off their purchase price (at 400GBP). (after electricity/overhead costs)
- Once the boards have been paid off, we own them in full.
Currently the Enterpoint Cairnsmore1 board is pulling about 800-820Mhash on average. I expect the bitstream to advance in the next little bit to boost that as high as 1Ghash - 1.2Ghash.
If we redirect 100% of our current funds (which is what I'm proposing here) into the boards, that gives us approximately 1650GBP (at current exchange) which should be enough to cover 4 boards purchased, plus shipping, and any supporting parts needed. This combined with the 4 leased boards means an instant jump of 6.4Ghash in mining power (note the icarus boards we sold off were rated for a max of 6.6Ghash). Of which for the first little bit we're paying off 4 of the boards. But consider there is a high chance that hashrate will increase "for free" to be 8Ghash - 9.6Ghash in the near future.
Overall this gets us back to where we were in hashing power. But we lost about 3 months of FPGA hashing during that time. So the net effect of the theft was basically 3 months of FPGA hashing. Which isn't bad all things considered. On the other hand the Opportunity Loss was still high, considering where bitcoin value went, and how many enterpoint boards we could have had, but we have no control over that now, so this I think is one of the best options. Also to consider is Enterpoint are highly experienced and have shown good business practices. They already have a Gen2 FPGA product on the horizon, and a likely ASIC product. Aligning ourselves with them now, gives us the ability to take advantage of this relationship going forward. With this option we would resume normal dividend payments at an 80/20 split as before, after the initial "rebuild" purchase of hardware has completed.
Option 2 (Rebuild ASIC):It has been suggested (by mila) that we buy into ASIC boards from BFL at this time. This idea can't be discounted fully. BFL has a REALLY bad track record, they don't deliver on time, and rarely meet their projected performance goals. Their business practices are questionable and best, and so on. We dealt with them once, and they nearly screwed us out of our money. But that said, they did EVENTUALLY deliver on the singles, and the mini-rigs. And the mini-rigs are much closer to their advertised specs than the singles were. They might have been very late, but they did in fact deliver. So now we're posed with the dilemma, they announced their ASIC products. Which are FAR faster hashrate per dollar than the current FPGA offering. And better power efficiency. IF they deliver as promised, and on-time, these are going to be a game changer for mining. I don't think they will destroy the profitability of FPGA mining for quite some time, but GPU mining will become un-profitable overnight. So that said, we have the option of taking all our current money and investing it into ASIC boards from BFL.
The risk here, is that we invest, and they take months to deliver like last time, and we're still left "out in the cold" for some time. Or that their hardware doesn't live up to the offered specs. Also another big risk, is that with the major surge in hash power, there is a risk that the bitcoin mining protocol could change (even slightly) to protect from possible attacks (with easily available cheap hash power). If that happens, the ASICs on the market get invalidated. If this change is going to happen, it would need to happen before ASICs take over the network, as very few running ASIC miners would invalidate their own hardware, so the whole ASIC movement COULD fail within months of it's takeoff... That's another risk we need to consider here. But the potential hashrate gains are high if it all works out well.
- We take out 250BTC we have now and put it towards ASICs from BFL.
- The "Jalapeno" works out to be 23.5Mhash/$
- The "SC Single" works out to be 30.8Mhash/$
- Our current funds at approximate exchange rate of $10/BTC is $2,500 USD
- for this money, including shipping, we can get one "SC Single" and approximately 7 of the "Jalapeno" models.
- This equates to a total (advertised) hash rate of 64.5GHash/s
This option works for me too, it has a much higher potential gain, but with a higher risk profile. The question is, do we want to support BFL? And do we want to accept the potential wait until sometime in the newyear to get the product? And the risk it may not pan out as expected for one reason or another?
With this option we would resume normal dividend payments at an 80/20 split as before, after the initial "rebuild" purchase of hardware has completed.
Option 3 (Rebuild Hedge Our Bets)A Combo of option 1/2 I won't go into full detail, but basically we buy 2 enterpoint boards, do the hardware lease, and throw whatever funds we have left at "Jalapeno" boards from BFL. With this option we would resume normal dividend payments at an 80/20 split as before, after the initial "rebuild" purchase of hardware has completed.
Option 4 (Wait it out, with Lease & 50/50 split)Due to the upcoming "ASIC Revolution" for bitcoin mining, combined with the reward drop in December. There is a lot of uncertainty ahead. And we are still recovering from a major blow. It may be wise in our position to simply wait, gather assets, and see how things unfold. Then we can decide what to do once the dust settles. There is risk in this option too, if bitcoin value crashes hard, we loose most of our value. But in general I think bitcoin itself will be fine, and not having invested in any particular solution means once the dust settles we can make an informed decision (which may be to simple close up shop at that time if the business is no longer viable in the new "state" of things). If we hold onto our liquid assets until the new-year, we can see the outcome of the ASIC revolution and the reward drop, and decide what to do then. But since the hardware lease from Enterpoint is essentially "Free" we can still take advantage of that at this point, and get that 20% boost in mining power from those 4 boards, with the boards paying themselves off. Once paid off this gives us another 3.6Ghash - 4.8Ghash of mining power until we decide what to do with our gathered assets. If this option is chosen we would continue with a 50/50 split, 50% of income paid to dividends, 50% to savings until the newyear. At our current hashrate I expect we would gain another 200BTC by the end of the year approximately (depending on how the difficulty goes, and how fast we pay off the leased boards). So at the "decision point" (accounting for dividends) we would have around 200BTC to decide what to do with (estimated).
Option 5 (Wait it out 50/50 split)This one is just pure wait. Don't do the lease, minimize all risk, and just sit on what we have until Jan 1 2013. Then decide what to do at that time. Same 50/50 split as proposed in Option3
Option 6 (Close up shop)This last option isn't the one I want to take personally, but I have to present it for the shareholders to consider.
Basically we just cut our losses, pay out 100% of the current liquid assets to dividends, and cease operations.
With the current assets this would mean 0.02BTC roughly per share in dividends. Nowhere near the amount invested, but considering the previous dividends, that does put us in a position to be better than the current share price at least, and not a 100% loss. I don't personally like this option, but if that's what the shareholders decide I'll support it.
Ok, so those are the options I'd like to present. My plan is this:
Put up 6 different motions all at once. All with 7 day timeframes.
I will be withholding my votes. I will not vote on these motions. I will hold my vote back as a swing vote.
Anyone can vote for/against one or more option you wish to pass/fail.
If more than one pass, then provided one of them has a lead over all other of at least 10% measured using the pass margin, that one is the winning option
If no such option presents itself, I will use my remaining share's voting power to make a final decision between all the passed motions.
When I say the 10% is measured by pass margin, I mean if 20% vote no on option1 and 30% vote yes (of total volume of shares) that gives a pass margin of 10% of total share volume. If option 2 gets 30% no, and 60% yes of total share volume, then it has 30% pass margin of total share volume, meaning it has a lead over option 1 of 20%.
Once this vote is concluded, I will ask Nefario to unlock all trading on GLBSE so that trades can commence, and we can then see what happens to our share price. (based on people making informed trades knowing our actual business plan going forward). And from that point forward, we would resume operation and paying dividends as per the chosen option.
The motions for these are going live in the next couple hours. I'll post back with confirmation and motion IDs in the Motions thread once they are up.
There are a few other options/actions we can take as well, but they will be more applicable once we have resumed operation in one form or another (ie extending further investment opportunities and so on). We can explore those options once one of the above choices is chosen, and we have gotten things rolling again. (or not if option 6 is chosen).
Thanks for all your patience and support during this trying time, Based on the outcome of this next decision, we will move forward, and past this difficult incident in our history.
Please see the original post on our internal forums:
http://forum.btcsyn.com/viewtopic.php?f=6&t=106
