[ANN] A public company will build a huge Bitcoin Mining Operation (ASIC).

[asdf]

Ok, but as a reason for this leading to more miners, Vlad is entrepreneurial, has created a unique position at this point, and there's a long term and elastic source of reward money. why would he stop there ?

Let's say you invested in inventing a new spade that you could use to dig up $100 of precious metals. There's plenty of precious metals around, but no-one else's spade is any good. Do you make more money by :
A) making a spade and digging
B) selling spades for $99 each ?

ans: B

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[P4man]

You guys are all arguing as if you know what he is doing. I for one, dont. So can someone enlighten me?

Is he (co?)developing his own chip and systems, if so, have they even taped out yet? If not, what makes you so sure they will secure the funds needed to get this to working silicon? We are likely talking about >$1M here, depending on process node, possibly substantially more.

Or does he know of a third party ASIC chip we dont know about yet? If so, what makes you think he will not be just one fish among many when their product hits the market?

Or he is going to buy LargeCoins appliances?

Or something else?

[ribuck]

By definition corporations are REQUIRED to maximize profits for shareholders.

That's not quite how it is. Directors are required to act in the interests of shareholders, but those interests are not necessarily the maximization of profits.

Here's a specific example. In Google's IPO they stated that Google would do lots of "cool stuff" that would not necessarily make money. Therefore, Google's Board is free to do that without fear of a shareholder lawsuit. Google also stated that the share price may go down, "even over the long term", so Google's Board has no legal pressure to keep the share price high. They also stated in the IPO that they would not focus on quarterly earnings, so again there is no legal pressure.

If you don't want to read the lengthy prospectus from Google's 2004 IPO, you can get a taste of what's in it by reading Google's IPO letter from their S-1 IPO Registration Statement:
http://investor.google.com/corporate/2004/ipo-founders-letter.html

[dropt]

public to invest either into management company or into mining operations

The company I am talking about itself is focusing not on ASIC manufacturing (we have subcontractors for that) but on mining

we can discuss this in details only with professional investors and investment companies

Which is it: Management Company, or Mining? Public or not?

does not seem feasible that we will have a monopoly on Bitcoin Mining ... we do aim to become a major player maybe even the biggest

Our target is to build multi Thps (X 000 000 Mhps)

So wait, it's not feasible that you'll have a monopoly, but you might be the biggest player on the network and you intend to have at least 1 digit of TH/s of power?

2-3 orders of magnitude more power efficient and dense comparing to GPU based Bitcoin Miners

You're intending for what now?  700MH/s for 250W (5970) is 2.8MH/W * 10^3 = 2.8 TH/W?

We have a long term strategic partnership with a private subcontractor that is building mining hardware for us

continuously buy ASIC hardware from leading manufacturers over time, long term, and will employ our scale and bargaining power to secure the best possible deal for our shareholders

First we use custom chips, then eventually when other manufacturers join...[we can buy] the best possible hardware from the best possible supplier

we will have significant bargaining power and will be able to get preferential treatment and pricing from our suppliers

So you have "concluded" a long-term contract with a manufacturer, yet you intend to purchase from various other suppliers over the long-term?  What about the supposed long-term contract you've already drawn up?  How much do you plan to buy? I thought you weren't aiming for a Monopoly.

housing the mining hardware in one of the most secure datacentres in Europe

Why?  What is the monthly colocation fee for "the vault"?

have no plans to engage into manufacturing and sales of bitcoin mining hardware

The leverage we have is of a contractual...what general public or our competitors may or may not get access to eventually.

Wait, so you are or you are not going to allow your IP to be sold to the public?  I say *your* IP because you specifically said subcontractor.  But you've dodged any definitive answer on this.

We are in advanced stages of design testing and manufacturing process

We still will have to take some risks associated [f]with final stages[/f] of design/manufacturing ASIC chips and building mining rigs based on those

Are the masks done or not?  If they are, why do you need capital.  If they aren't, why are you spreading fallacies regarding your current project progress?  Or are you trying to cover your ass in case your first run fails?



Not trying to be an ass, just trying to patch up some of your inconsistencies and holes so I can make sense of this.

Also, feel free to use this template and your responses for your FAQ post at the beginning of the thread.

[Vladimir]

dropt, thank you for your effort.

Most things that you consider as inconsistencies I do not consider as such. Other quotes are taken out of context and I will not respond on those. Some facts are not disclosed intentionally, some statements are made intentionally vague.

One thing that you have completely missed is that whatever I say in this thread or elsewhere publicly is not an investment prospectus. I am not addressing or informing any shareholders or investors here. I am not inviting anyone to buy any shares (those shares are not even issued yet). This is not an annual return or pre IPO documents either.

Just informing public about our intentions, no more, no less. Treat it accordingly.

[disclaimer201]

dropt, thank you for your effort.

Most things that you consider as inconsistencies I do not consider as such. Other quotes are taken out of context and I will not respond on those. Some facts are not disclosed intentionally, some statements are made intentionally vague.

One thing that you have completely missed is that whatever I say in this thread or elsewhere publicly is not an investment prospectus. I am not addressing or informing any shareholders or investors here. I am not inviting anyone to buy any shares (those shares are not even issued yet). This is not an annual return or pre IPO documents either.

Just informing public about our intentions, no more, no less. Treat it accordingly.

Yes, sell sell sell!!!

[Raoul Duke]

Just informing public about our intentions, no more, no less. Treat it accordingly.

You should change the phrase under your pic from "building a huge ASIC mining farm for investors" to "intending to build a huge ASIC mining farm for investors"

FUD spreading much, hein?

[DeathAndTaxes]

Because he knows that if he acquires too much of the hashing power, people will lose trust in Bitcoins and the price will drop, reducing profitability.  It's not as simple as just extrapolating the profits all the way out to 100%.

So if he builds 3TH/s (30% of current network) and through higher difficulty and lower block rewards difficulty falls to say 6TH/s he is going to idle some % of his multi-million hashing farm to keep himself below the 30% cap?  Really?

Given how variable network hashing power is (min of 3GH/s, max of 15GH/s, avg of 8GH/s just in last year) do you really think a <30% of total network cap is realistic?

The stupidest part is that once designed the per unit cost of an ASIC is negligible.  So he pays the massive upfront cost, takes all the risk and then intentionally limits the # of chips he produces ensuring he has a high cost per chip, lower profit and more risk?  Combine all that higher cost and risk with the need to idle some % of farm based on what other people (he has no control over) do with their hashing power?

Some people will believe anything.  IF one wanted to maximize the # of units, the amount of hashing power, and profits they would simply produce 10TH/s of chips and sell them on the open market at a 300%+ markup.  The network would be more secure, more efficient and no player would have more than a couple % of network hashing power.

The only limits Vlad would be facing would be market demand.  So the question is why isn't he doing that?  To take more risk for less profits?

[SgtSpike]

Because he knows that if he acquires too much of the hashing power, people will lose trust in Bitcoins and the price will drop, reducing profitability.  It's not as simple as just extrapolating the profits all the way out to 100%.

So if he builds 3TH/s (30% of current network) and through higher difficulty and lower block rewards difficulty falls to say 6TH/s he is going to idle some % of his multi-million hashing farm to keep himself below the 30% cap?  Really?

Given how variable network hashing power is (min of 3GH/s, max of 15GH/s, avg of 8GH/s just in last year) do you really think a <30% of total network cap is realistic?

The stupidest part is that once designed the per unit cost of an ASIC is negligible.  So he pays the massive upfront cost, takes all the risk and then intentionally limits the # of chips he produces ensuring he has a high cost per chip, lower profit and more risk?  Combine all that higher cost and risk with the need to idle some % of farm based on what other people (he has no control over) do with their hashing power?

Some people will believe anything.  IF one wanted to maximize the # of units, the amount of hashing power, and profits they would simply produce 10TH/s of chips and sell them on the open market at a 300%+ markup.  The network would be more secure, more efficient and no player would have more than a couple % of network hashing power.

The only limits Vlad would be facing would be market demand.  So the question is why isn't he doing that?  To take more risk for less profits?

To answer your first question, yes, he absolutely WOULD idle some % of his hashing farm to keep himself below the 30% cap (or 40%, or whatever % below 50% he chooses).  The reason being, all faith in Bitcoin would be lost if a single person owned and controlled more than 50% of the hashing power of the network, causing a price crash.

1800 BTC/day @ $5/BTC is a heck of a lot more valuable than 7200 BTC/day @ $0.05/BTC.

I agree that it could be more profitable to sell ASIC miners, as it wouldn't reduce confidence in the network/cause a price drop, and he could continue selling them until the market is completely saturated, but that choice is certainly his.  If he wants to be the only one with ASIC miners to increase his own BTC take, then I can kind of see that as well.  Also, there's something to be said for being able to generate mostly passive income.

[Raize]

SgtSpike here is correct. You'll notice that in my criticisms of what Vlad is doing I'm not criticizing on the 51% attack route, because even Tycho, and before him ArtForz, understood the risk of being at 51%. It's actually *not* in a Bitcoiner's best interest to hit that point, because the value of Bitcoin as a currency itself drops considerably when a threat is actually present.

When ArtForz first brought his GPU operation online, he offered free transactions and downplayed the essential dominance he had once the difficulty reset to something less in his favor. It did, however, upset a number of CPU miners who had invested quite heavily into their own operations. Artforz could have brought enough GPUs online to have achieved 51%, but appears to have chose not to in order to preserve his best interest of keeping the value of his already mined coin high enough to continue to compete in the future. Over the next three months, as more GPU miners cut into his profits, the price of BTC rose.

When Tycho -- with his mining pool "Deepbit" -- cornered the Russian and Eastern markets of GPU miners, it upset a lot of the smaller pools that had relied on friends and family all mining to get a set amount of Bitcoin per day. He actually became such a present threat that someone actively started using their botnet to try to punish him and the other larger pools for not letting them mine on their networks. In other words, BTCGuild, Deepbit, and slush's mining pools *could* have achieved 51% with the help of the botnet, but chose not to in order to preserve their actual best interests, which was to keep Bitcoin prices viable. Over the next three months, more and more pools began operating in more languages in order to cut into Deepbit's advantage, and some pools outright allowed pool hopping that I'm sure at least one botnet operator took advantage of. The price of BTC rose.

We've been without a major innovation since. Now I understand FPGAs and the more Bitcoin-targed BFL Singles are innovation, but unlike CPUs and FPGAs they don't have any dual-use purpose which means they are less and less viable outside of Bitcoin, itself. This has cause major trepidation on the part of some of the more serious Bitcoiners, who want to have a reason to throw a few thousand USD into something they would call an "investment" with an easily-measurable liquidation fee once they are out-of-market viability. This is especially true for European and US coast miners, who would operate FPGAs at a higher cost-per-watt than those in the US Midwest, or other remote country with a significantly cheaper electricity cost.

All in all, I think the biggest problem with Vladamir's operation (presently) is that he didn't bring enough technical details on the mining equipment itself, and instead jumped into how easily he'd be willing to spend funding trying to secure it in the most secure data center he could find. That's something that someone with a good sense of security would do, but without technical details, specifically what kinds of Megahash/joule, we'd be investing in something that is more of an idea than certain to be a reality. That said, if someone does come up with a major innovation that gives just one person an advantage, the price of coin with significant rise, just as it has in the past due to Bitcoin scarcity.

[disclaimer201]

These are all valid points about Bitcoin evolving and how it'd be actually good for the price. But if it's just a matter of good will/ rationality if somone takes over 50% of the hashing power I'm no longer convinced Bitcoin's design was such a great idea. You say it could have happened before when the switch from CPUs to GPUs happened. But we were lucky. So are you saying future or past, the system is only as secure as the benevolence of some of its users?

[SgtSpike]

These are all valid points about Bitcoin evolving and how it'd be actually good for the price. But if it's just a matter of good will/ rationality if somone takes over 50% of the hashing power I'm no longer convinced Bitcoin's design was such a great idea. You say it could have happened before when the switch from CPUs to GPUs happened. But we were lucky. So are you saying future or past, the system is only as secure as the benevolence of some of its users?

ASIC's are really the last major advancement that can be made.  As long as we survive the transition to ASICs, there's no reason that we'll have to rely on a single person/company to keep things legit.

[Wekkel]

Went through 11 pages.

Not a single clue on:
*the investment required
*time frame
*prospects on mining capacity
*view on development of Bitcoin prices the next few years
*prospects on ROI for investors, their position etc
*etc

I appreciate that it's not a prospectus, but you aren't giving any clues whatsoever. I wish you good luck with your enterprise.

[Vladimir]

Went through 11 pages.

Not a single clue on:
*the investment required
*time frame
*prospects on mining capacity
*view on development of Bitcoin prices the next few years
*prospects on ROI for investors, their position etc
*etc

I appreciate that it's not a prospectus, but you aren't giving any clues whatsoever. I wish you good luck with your enterprise.

lack of clues explanation: http://www.legislation.gov.uk/uksi/2005/1529/contents/made

[Tomatocage]

Will there be an opportunity for small time investors to get in on this?

[Vladimir]

Will there be an opportunity for small time investors to get in on this?

We are talking with legal bods about this. This is our goal to allow "small time investors" in. At this stage it is not possible. We are in talks with a number of "funds" some of which are considering using GLBSE. We will do what we can to allow small investors to participate, but it is neither simple nor quick process.

[dropt]

dropt, thank you for your effort.

Most things that you consider as inconsistencies I do not consider as such. Other quotes are taken out of context and I will not respond on those. Some facts are not disclosed intentionally, some statements are made intentionally vague.

One thing that you have completely missed is that whatever I say in this thread or elsewhere publicly is not an investment prospectus. I am not addressing or informing any shareholders or investors here. I am not inviting anyone to buy any shares (those shares are not even issued yet). This is not an annual return or pre IPO documents either.

Just informing public about our intentions, no more, no less. Treat it accordingly.

Thanks for taking the time to respond Vladimir.  I appreciate it.  I understand your comments about context, I did my best to try and maintain some linearity in your statements.  I respect your inabilities and dis-interest in out right answering a lot of questions that people are having.

However, this thread *is* soliciting investors, you have it listed right on the first post.  I can only assume with confidence there are people who are watching this who are, or have ties to professional investors and IMO this thread is doing nothing but harming your potential with them (the ones present here, in this thread).  So it is my understanding that despite your non-intention of addressing investors, by posting this thread you are.

If you're serious about all of this, I would consider having your lawyer peruse this thread and make sure you haven't done anything you really shouldn't have such as indicating to the investors you're soliciting to that you have a long-term production contract which you've publicly announced (albeit indirectly) that you intend to renege on.  If this is a fallacy in its entirety, then I suppose it doesn't matter.

But I digress, if you're successful in your ventures please tread lightly.  I have the feeling this has the propensity to end quite tragically for those involved.

[gamer4156]

One point that I have not seen mentioned is the fact that bitcoin failing would destroy his company. He has no incentive to harm this economy. The better it does, the more he makes. So I am assuming that he will be spending money to further bitcoin in the world. He might plan on doing this through advertising or other methods, but either way I look it this will bring more people to bitcoin.

[cunicula]

One point that I have not seen mentioned is the fact that bitcoin failing would destroy his company. He has no incentive to harm this economy. The better it does, the more he makes. So I am assuming that he will be spending money to further bitcoin in the world. He might plan on doing this through advertising or other methods, but either way I look it this will bring more people to bitcoin.

Yes, this is why I responded so enthusiastically to the project initially. I am just disappointed that Vlad doesn't have anything more ambitious than 10-30% of mining power planned.

[disclaimer201]

One point that I have not seen mentioned is the fact that bitcoin failing would destroy his company. He has no incentive to harm this economy. The better it does, the more he makes. So I am assuming that he will be spending money to further bitcoin in the world. He might plan on doing this through advertising or other methods, but either way I look it this will bring more people to bitcoin.

You say he has no incentive to harm his business. This is obviously wrong if one can believe his words. He claimed he'd become one of the biggest if not the biggest player in the game again and clearly said he didn't want to sell his future SuperAsic to the competition, but which he wants "public" investors to pay for. This makes me think he didn't think it through at all before opening this thread. If you think about it, the idea is pretty failsafe for him if it works out, but only if those investors are willing to take the risk though. This alone is bold, but what I find appalling is he makes an attempt to intimidate people in telling them if they aren't investing with him, they'll be out of the game. Oh hold it, I'm sure it was meant as a joke. ;-)