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Author Topic: Non-profit mining organization  (Read 1269 times)
D.H.
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March 08, 2012, 12:59:45 PM
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I had this idea of a non-profit organization with the sole purpose of helping secure the Bitcoin network. It would accept donations, buy mining equipment and use all of its profit to pay off electricity and to buy more mining equipment. With some donations I think it could eventually grow to be a rather big player in the mining business.

People who want to contribute to the Bitcoin network but don't have the time or technical skill to mine or run their own client could instead make donations to the organization. Mining farms could be spread out over the world and run by members of the organization that want to contribute.

I just came up with the idea so I don't have any details regarding anything, just thought I'd throw the idea out there to see if there is any interest or opinions.

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March 08, 2012, 01:24:16 PM
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What's the incentive for making it non-profit?

Why not just make a for-profit business?  If you could actually get investors, there's a pretty easy business case that this could have a great ROI. 

The problem is that there are not enough people willing to do this (I'm assuming).  However, why would making the company "non-profit" make it more attractive to investors/donators?

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March 08, 2012, 02:03:15 PM
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For profit entities help protect the Bitcoin network too.  Sometimes greed is good.  The profit motive can be a powerful one.

Someone who has sunk $10K, $50K, $100K into a hashing farm has a very vested interest to protect & promote Bitcoin.

Still I think many marginal miners are "non-profit" when you include all the costs (equipment, electricity, replacement parts, cooling/AC, maintenance, hourly "wage' spent tweaking and upgrading).  Smiley
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March 08, 2012, 02:10:06 PM
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OP may I suggest an alternative - try capitalism, it really works great!

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March 08, 2012, 03:19:49 PM
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OP may I suggest an alternative - try capitalism, it really works great!

Capitalism is good. Non-profits are good. I don't see a contradiction.

One example of a very successful non-profit would be the Wikimedia foundation, I don't think Wikipedia would have been as successful if it had been run as a for-profit organization. The development of Bitcoin is very much non-profit too.

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March 08, 2012, 04:03:58 PM
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For profit entities help protect the Bitcoin network too.  Sometimes greed is good.  The profit motive can be a powerful one.

Someone who has sunk $10K, $50K, $100K into a hashing farm has a very vested interest to protect & promote Bitcoin.

I agree.

Quote
Still I think many marginal miners are "non-profit" when you include all the costs (equipment, electricity, replacement parts, cooling/AC, maintenance, hourly "wage' spent tweaking and upgrading).  Smiley

Agree again. Some people even say that would continue mining at a loss - because they love Bitcoin - and I think that the presence of such people is a good thing. It spreads the feeling that Bitcoin will continue to function no matter what.

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March 08, 2012, 08:36:51 PM
 #7

I've thought about this quite often over the past few months. I think it's a fantastic idea.

How would you handle decisions such as the P2SH debate? Would it be up to you, or perhaps some kind of vote from regular donors?

I believe that technical decisions such as P2SH should be made by those who understand it so I would probably suggest that whatever consensus is reached by the developers is followed.

Also, I wouldn't want anything in an organization like this to be "up to me". I was thinking that it could be set up as a foundation with a specific purpose. In Sweden (where I'm from) it works like this:

Quote from: Wikipedia
A foundation in Sweden (Stiftelse) is a legal entity without an owner. It is formed by a letter of donation from a founder donating funds or assets to be administered for a specific purpose. When the purpose is for the public benefit, a foundation may enjoy favourable tax treatment. A foundation may have diverse purposes, including but not limited to public benefit, humanitarian or cultural purposes, religious, collective, familiar, or the simple passive administration of funds

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D.H.
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March 08, 2012, 08:43:21 PM
 #8

What's the incentive for making it non-profit?

Why not just make a for-profit business?  If you could actually get investors, there's a pretty easy business case that this could have a great ROI.  

The problem is that there are not enough people willing to do this (I'm assuming).  However, why would making the company "non-profit" make it more attractive to investors/donators?

There's a big difference between setting something up that is supposed to return revenue to investors and setting up a non-profit with a specific purpose. In the first case I would be looking for people who want to make money and try to convince them that this is the best way to make money. In my case I would be looking for people who are willing to donate some money to help keep Bitcoin secure.

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March 08, 2012, 08:48:27 PM
 #9

If you create a non-profit mining organization, what should it do?

  • you could invest some BTC for development bounties to improve the code/protocol of Bitcoin
  • and some BTC to buy more equipment

Donators should be allowed to vote for or against things like P2SH.
Also: It makes sense to me to use sth. like P2Pool to reduce the risk of 51% attacks.
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March 08, 2012, 08:54:37 PM
 #10

I think the difference is in trust.  A for-profit can only be trusted to do what is in the best interest of making money.  A non-profit can be trusted to do whatever goals are stated in the beginning.

It's hard to imagine much of a practical benefit, but I suppose a for-profit might be more apt to accept bribes in order to point hashing power at a particular pool, etc.  A non-profit wouldn't be so much focused on where it was mining so much as making sure that it was helping to keep things decentralized and fair.  Maybe a non-profit wouldn't care about variance, so would be willing to solo-mine, whereas a for-profit wants to see a steady return on investment, so mines at a pool.  Etc, etc.

I like the idea of donators having a say in how the entity votes on public issues, such as P2SH.
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March 08, 2012, 09:54:00 PM
 #11

If you create a non-profit mining organization, what should it do?

  • you could invest some BTC for development bounties to improve the code/protocol of Bitcoin
  • and some BTC to buy more equipment

The simplest rule would be to use all funds for mining (electricity + new equipment). I obviously have no idea where that eventually would put an organization like this in terms of hash power. If created as a foundation I guess its purpose could be specified somewhat vague (to allow for some later decisions on how to use the funds) but not too vague. Perhaps something along the lines of "contributing to the security of the Bitcoin network".

Quote
Also: It makes sense to me to use sth. like P2Pool to reduce the risk of 51% attacks.

I think that solo mining would be fine since variance doesn't really matter that much.

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