The Coin Foundry

[blunthammer]

I am trying to help The Coin Foundry raise $10M in convertible notes to fund a place where cowboys and suits can mine crypto profitably.

The pitch is this -

Power is 5 cents, metered
Megawatt scale only
Immersion 2 and traditional rack cooling options
Rent is $50/kw-$100/kw
50MW in the first phase

Container friendly
Design help available

First leases commence November 1, 2014
Terms are first 12 months rent paid up front as deposit term length 24-60 months
First 3 months of power, true up after first 3 months

Locations confidential - US Midwest and US Northeast

[rarkenin]

How would we know that you're actually funding this as opposed to collecting BTC and running off?

[blunthammer]

Convertible notes are actual physical financial instruments simpler and less expensive to execute than equity with preferred shares and other nuances of a more complex financial structure.

I have raised $152M in real life, my reputation is quite intact and easily verifiable

Investors would have actual paper and documentation

Perkins and Coie will legally structure the deal

[rarkenin]

Can we invest Bitcoin? Is there a specific contact within the company that will be handling crypto investments?

[neha]

You are saying that 1st phase is 50MW, so your first phase terahash target is around 60000 TH minimum, thus I am not sure about your calculation, but 10 million US$ wont cut it for sure. Please check your numbers and confirm.

[blunthammer]

There is a site up to capture further requests for information - http://www.thecoinfoundry.com

As for the terahash calculations... That is up to the miner. The building is what is being set up and conditioned for mining. The output is dependent upon hardware, power stability, heat mitigation, and other variables unique to each mining operation and how they operate and perform.

The practical logistics side of 50MW is complex. I know of 100+MW being sourced right now, but I will tell you from experience that even moving 1MW (400 racks in a traditional data center) takes 1-2 months, even with an army and rock solid facility logistics like at Facebook. So to say that 50MW is is too small is not the case in my perspective. That is 3 months minimum of set up, move in, and optimize from what I have seen in real life. This does not account for production delays, dependencies with contractors to get things ready to operate, or any other variables that lead to setbacks.

There is also the practical financial side of all of this which is that if a mining company signs a lease for 3 years then the financial commitment is $90M USD for rent. Power at 5 cents at capacity is ~$55M for 3 years so to finance a deal at a 50MW scale there needs to be assurances that the $150M nut for the term can be covered. To de-risk that deal then you are talking about a ~$50M deposit. If there is a building owner who will take the risk and not require a massive deposit then the miner will be at risk for losing all of their rigs and physical property if their bills aren't paid. In the world of finance they see this business as having a lot of risk.

[neha]

So what you are saying that you are trying to fund only the building and the miners get to colocate/rent machines in your datacenter?

[blunthammer]

neha

It is for the building and basic infrastructure and at higher rents they can include racks, tanks, and the cooling infrastructure. In essence the next level of infrastructure could be financed. What they will stay away from is the rigs and going after that piece of the market. I have modeled out what an integrated stack looks like where the rigs, the building, the rent, the power, (everything but headcount) looks like too and that is an option that would require a larger and different capital raise to deliver an integrated mining stack and company. I personally think that ultimately it ishow cryptos will be mined - a fully integrated stack like Apple vs a piecemeal approach like Microsoft/Dell/Cisco/3rd party data center.

There is a product gap that exists. I suspect that century link's deal with CoinTerra was in facilities that Century link owns but has not built out yet or they priced a Tier III facility at a Tier I price. In any case CoinTerra paid 30-48% above market for whatever they got.