GIGAMINING INSURANCE BY PATRICKHARNETT?The piece that I was missing was related to the dual questions of:
Borrower: "why should I get a Starfish rating?" and
Lender: "why should I trust a Starfish rating?"
My answer to that is to back the ratings with cash.
If I rate someone and they default on a loan, I offer to take over the loan at the percentages given in the table below. The offer is only good for one-time per rated person, and excludes interest. That is a sensible thing to do to prevent various games being played. Also, loans need to be reasonably well documented, because successful loans can be used by borrowers to improve their Starfish rating, and if a lender wishes to cash-in the guarantee, they need to have documentation as well.
| 1 Starfish | Bad Risk | up to 10BTC paying 50% for first claim |
| 2 Starfish | - | up to 25BTC paying 60% for first claim |
| 3 Starfish | - | up to 100BTC paying 70% for first claim |
| 4 Starfish | - | up to 250BTC paying 80% for first claim |
| 5 Starfish | Trusted | up to 1000BTC paying 90% for first claim |
Are we to understand that the GIGAMINING bond is insured by PatrickHarnett to the amount of 1,000BTC paying 90%? Or would any other outstanding debt from Gigavps take precedent position in a credit event?
Is there any particular reason this insurance contract is not mentioned in the original post for the GIGAMINING contract? I think it is a material term that could positively affect the GIGAMINING price.
Is there any other outstanding insurance on GIGAMINING like CPA?
PIRATE INDUCED CREDIT CONTRACTIONThe main value of the bonds is, of course, the dividend/payment stream. Obtaining additional information on the balance sheet and cash-flow statement would provide some additional information, but I expect Giga has more than just mining underpinning the payments he makes.
As a borrower, I have provided a number of loans/financing to Giga and have no particular concerns about his liquidity or ability to repay. For his mining bonds (inclusive of a very good upgrade path) there are different ways to support such a business, and from my discussions with him he accounts for things pretty sensibly. As for the size of the balance sheet, income, mining hardware/assets, that is not required to be public, but I can understand the desire to have some third party look at it and express an opinion.
You do realise, of course, that if a credit rating for Gigamining comes out looking good, it is likely to affect the price.
I understand credit contractions with their attendant loss of confidence, and Pirate has started a credit contraction, are no fun but this is money we are talking about and we are not having tea. As Warren Buffett has said we do not know who is swimming naked until the tide goes out. The mark-to-market value of the GIGAMINING contract is about $400,000.
When it comes to making capital allocation decisions I do not really care about people's opinions; I care about opinions people are willing to back with their money.
Thus, I noticed a few weasle words which I bolded so perhaps you can answer more directly the following questions.
PatrickHarnett, have you personally inspected the financial statements and assessed Pirate exposure and how that would affect the ability to service the mining bonds? If Pirate partially or completely defaults then does the 5 starfish credit rating and insurance still stand for either Gigavps, GIGAMINING, or both? For how long does the rating and insurance stand before it can be changed based on changing information?
CONFLICTS OF INTEREST...
This was beneath you. I respect you very much (which I can say to about seven people on this forum) and you shouldn't be stumping in someone else's project thread without disclosing your interest in a competing project.
Not really sure what difference it makes as ideas stand on their own merit but I could see a possible suspicion of bias.
For what it matters I am
long both GIGAMINING and BITBOND (a comparably sized mining bond with 210Ghs issued) and am probably one of GIGAMINING's top 5 investors and therefore I have
more of a financial interest in positive movement of GIGAMINING's price than Gigavps.
Aside from a private contract which would be difficult to execute quietly, and I am unaware of any that exist, therefore I think it is safe to assume that the only person who could have a
material financial interest in a
short position on GIGAMINING is Gigavps.
It really makes no sense for the short to call the long a short and is a complete distraction from the material issues.
GIGAMINING'S LIQUIDITY?Obviously, if the 160Ghs produces only 100%PPS and you have only 1,000 BTC in your possession then you will negative cash-flow about 125 bitcoins per week at current difficulty. Assuming a rise in difficulty this would leave about 8-10 weeks until a partial default. However, if you have 10,000 BTC in your possession then credit worthiness would be a lot higher.
First, the 160Gh produces greater than 100% PPS results as it is run on gpumax.com. On average, this month, I have been running about 114% PPS which makes up quite a bit of the short fall. Second, I have spare coins to cover any short falls in the foreseeable future.
Thank you Gigavps for professionally answering the first question regarding income capacity.
Is there any particular reason you are being so evasive on the second question related to liquidity and how many bitcoins you have in your personal possession that can meet GIGAMINING debt service? How long is this nebulous 'foreseeable future'?
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