Gigamining / Teramining

[odolvlobo]

Those posts went on and on, and there were too many to read, so I'll make it short and sweet...

The statement that the value of a mining bond will drop as the difficulty rises is not necessarily true. Any analysis is flawed if this is a premise.

The value of a "perpetual" bond is a function of only 2 things and nothing else: the risk, and the ratio of the return and the discount rate. Any evaluation of a perpetual bond must state what discount rate is used. Otherwise, it is not very useful.

An important factor in evaluating bonds is choosing the discount rate. In the bitcoin world, the discount rate could be the average return on a bitcoin investment. With pirate's 7% out of the picture, the discount rate is effectively the average return of a mining bond. The important point here is that the returns of all mining bonds fall as the difficulty rises, so the ratio remains constant -- in this case, the value of the bond is independent of the difficulty. If you disagree with my choice of discount rate, please adjust accordingly.

Source: http://en.wikipedia.org/wiki/Perpetual_bond and others

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[jamesg]

Have any of the facts I recapped in the previous post materially changed, like Teramining terms?

Yes.

(1) 160Gh/s mining on GPUMax at 114% PPS (Pirate's related pool which appears to have some problems).

Gigamining will soon be at 200Gh.

I did not see you recapping any of the proposed Teramining offering.

[odolvlobo]

I believe that the drop in the prices of mining bonds is simply due to the increase in supply of the bonds, without an increase in the demand for the bonds. There are a lot of new bonds on the market (especially bonds anticipating the new ASIC hardware). Investors are selling their current mining bonds to buy these new bonds, so the prices are dropping.

I believe the winners will be the bonds of the miners that get the ASICs first, and those will be the bonds like gigamining, bitbond, and hydrobond because they were the first to order them. The new miners may have to wait months for their ASICs and their bonds are going to suffer horribly while they wait.

The biggest losers will be the bonds that are not upgrading, such as yamc and puremining. These bonds will tank once the ASICs come out. The reason they have maintained their value is that there is the possibility that the ASICs will not arrive as expected.

I believe that gigamining is undervalued for those reasons.

[boonies4u]

I don't see why fixed Mhash/s bonds get so much shit. You get dividends on a regular basis. You get the choice of what to do with your dividends. If you don't realize that you need to reinvest, just as miners have to reinvest, to stay competitive, you're going to make less and less each difficulty adjustment.

The bonds themselves might be worth less by the time you wish to sell, but the dividends you've received over time (and hopefully reinvested in something) need to go in the calculation of how much value has been created/lost.

This makes sense to me, this is exactly what I thought. But the price of Gigamining is dropping far too fast to make it profitable if this rate of price drop continues.

Gigamining wasn't giving the best dividends earlier, prices probably dropped down due to demand shifting to the bonds with better returns.

There's a lot of choices to make in terms of mining bonds.

[jamesg]

To all Gigaminers:

Coupon payments for the week have been paid.

Enjoy,
gigavps

[jamesg]

To all Gigaminers:

I mentioned a couple days ago that I would be proposing some changes to the Teramining upgrade.

• I would like to propose that the Teramining offering would be at 90% PPS. I have done a lot of thinking about this and I believe that Teramining would be unsustainable over the long term without it.
• I would like to change the fee structure. The new fee structure would be tiered.
  
  • 1-100 bonds = .40 BTC per bond
  • 100-999 bonds = .35 BTC per bond
  • >= 1000 bonds = .30 BTC per bond

Post your constructive questions or comments in the thread and I'll make sure to answer them in a timely fashion.

Best,
gigavps

[Factory]

To all Gigaminers:

I mentioned a couple days ago that I would be proposing some changes to the Teramining upgrade.

• I would like to propose that the Teramining offering would be at 90% PPS. I have done a lot of thinking about this and I believe that Teramining would be unsustainable over the long term without it.
• I would like to change the fee structure. The new fee structure would be tiered.
  
  • 1-100 bonds = .40 BTC per bond
  • 100-999 bonds = .35 BTC per bond
  • >= 1000 bonds = .30 BTC per bond

Post your constructive questions or comments in the thread and I'll make sure to answer them in a timely fashion.

Best,
gigavps

1. I believe tiered pricing is not beneficial to your shareholders on a whole, and puts all of your small investors (likely the majority of the community looking to invest in Teramining) at a disadvantage.

2. I am all for 90% PPS; so long as the contract clearly illustrates what the other 10% would be utilized for to keep Teramining sustainable.

• Would the 10% PPS go toward growing the mining operation further in attempt to off-set the growth of the total network hashrate?
• Would the 10% PPS be a management fee?
• Would it be a combination of growth/fee, or something else entirely?

[Factory]

If you have to give a discount, give a small discount to funds or people you know are not just trying to flip shares.

A discounted offering for specific parties would been seen as discriminatory. This is why in traditional markets such offerings are normally done with a different share class entirely or specific contracts that lock the shares for specific durations. If gigavps hand selected specific entities to give discounts to, there is little he can do to prevent them from selling their shares on the open market. For that reason, it seems to me, the best solution is to not have any 'discount' or form of tiered pricing.

[asw0210]

If you have to give a discount, give a small discount to funds or people you know are not just trying to flip shares.

A discounted offering for specific parties would been seen as discriminatory. This is why in traditional markets such offerings are normally done with a different share class entirely or specific contracts that lock the shares for specific durations. If gigavps hand selected specific entities to give discounts to, there is little he can do to prevent them from selling their shares on the open market. For that reason, it seems to me, the best solution is to not have any 'discount' or form of tiered pricing.

It is discriminatory but it's at the discretion of the issuer. Traditional markets don't typically use a different share class entirely in private placements, I don't believe specific contracts are used either. http://en.wikipedia.org/wiki/Private_placement

[LoweryCBS]

To all Gigaminers:

[paraphrasing]

"Hey, you know that one thing that made holding on to your bonds worthwhile? That thing where I was going to upgrade your bonds to Tera at .25BTC per bond?

"Well, thanks for riding my bonds down roughly 66%, but now Ima gonna screw you on that by raising the price of the conversion"

[/paraphrasing]

Best,
gigavps

Looking at the current bids on these turds now, I wonder if you could have tanked the price a bit more dramatically by just simply setting fire to your miners and publishing the carnage on Youtube.

[Factory]

If you have to give a discount, give a small discount to funds or people you know are not just trying to flip shares.

A discounted offering for specific parties would been seen as discriminatory. This is why in traditional markets such offerings are normally done with a different share class entirely or specific contracts that lock the shares for specific durations. If gigavps hand selected specific entities to give discounts to, there is little he can do to prevent them from selling their shares on the open market. For that reason, it seems to me, the best solution is to not have any 'discount' or form of tiered pricing.

It is discriminatory but it's at the discretion of the issuer. Traditional markets don't typically use a different share class entirely in private placements, I don't believe specific contracts are used either. http://en.wikipedia.org/wiki/Private_placement

Yes, it is in fact at the discretion of the issuer. They can and have used different share classes and specific contracts in the past, but are not obligated to do so.

Private placement is not completely applicable to this situation (yet), in accordance to what gigavps has suggested. Private placement is an offering done in private (by definition.) Gigavps is clearly making the discounted offering public, and stated it would be based on not who the buyers are, but the size of their purchase. Of course, he simply made a quick mention of the idea, and when he makes a final decision he could go many ways with it.

We may be getting a bit ahead of ourselves.

[jamesg]

1. I believe tiered pricing is not beneficial to your shareholders on a whole, and puts all of your small investors (likely the majority of the community looking to invest in Teramining) at a disadvantage.

2. I am all for 90% PPS; so long as the contract clearly illustrates what the other 10% would be utilized for to keep Teramining sustainable.

• Would the 10% PPS go toward growing the mining operation further in attempt to off-set the growth of the total network hashrate?
• Would the 10% PPS be a management fee?
• Would it be a combination of growth/fee, or something else entirely?

Hi Factory,

Thanks again for your calm and rational comments. I wish everyone in the community would learn from your excellent posts.

For point #2, there will be costs associated with running the equipment including rack space, internet and power. There are also costs associated with running on pools because in the future i suspect that most pools with not be free. The 10% would go towards all of these costs.

As for tiered pricing, I hope that I am giving plenty of notice for those that would like to have lower pricing on upgrading. There is still the free upgrade path which has not changed.

Best,
gigavps

[jamesg]

90% PPS is fine and I would expect you to take a nice, safe management fee of around 10% anyway. So yea to 90% PPS.

Hi usagi,

Thanks for the vote on the fee.

But please do NOT introduce a sale structure where some people can buy shares at .40 and others at .30. That is what sunk mining bonds earlier; People were getting large orders of mining bonds at up to 20% off, and then flipping them. All it does is take money out of your pocket and give it to other people because THEIR shares have to sell FIRST, before you see new money coming into the company. So this does not make sense.

it is vastly different if you are giving 5% off to a fund like BMF that is willing to buy in with 1000, 2000, 3000 shares vs. someone who does not run a fund, because the people like me who run funds tend to hold the stocks for a very long time. For example when we bought our core 100 shares of Gigamining back in the day, we kept them for literally forever. Now we have 250. So please don't do a deal like this where some people get 25 and 30% off list price. Just have a flat fee of .30 or .35 for the cost of the equipment only (if you're taking 10% please don't take too much on the bond issue, some bond issuers try to sell for 2x what the hardware costs and I don't think that's a good thing to do). Consider going non-deterministic. If you have to give a discount, give a small discount to funds or people you know are not just trying to flip shares.

I will take your comments into consideration.

Best,
gigavps

[vendor]

To all Gigaminers:

I mentioned a couple days ago that I would be proposing some changes to the Teramining upgrade.

• I would like to propose that the Teramining offering would be at 90% PPS. I have done a lot of thinking about this and I believe that Teramining would be unsustainable over the long term without it.
• I would like to change the fee structure. The new fee structure would be tiered.
  
  • 1-100 bonds = .40 BTC per bond
  • 100-999 bonds = .35 BTC per bond
  • >= 1000 bonds = .30 BTC per bond

Post your constructive questions or comments in the thread and I'll make sure to answer them in a timely fashion.

Best,
gigavps

I do not think many people willing to spend 0.4 BTC for an upgrade. Now GIGAMINING 5 day average price is 0.67 And it will keep dropping if you will not change that. BITBOND will do for 0.25 BTC the same thing if you want a large competitor. But for those who not willing to invest much I would suggest HYDRO.BONDS. They will do exactly the same thing for free, and not charge you 0.4 BTC neither 0.25.  

I agree with the statement that as the difficulty grows perpetual mining bond price will sink, so I only hold FPGAMINING and JTME apart from HYDRO.BONDS which has a promising upgrade path.

[Namworld]

To all Gigaminers:

I mentioned a couple days ago that I would be proposing some changes to the Teramining upgrade.

• I would like to propose that the Teramining offering would be at 90% PPS. I have done a lot of thinking about this and I believe that Teramining would be unsustainable over the long term without it.
• I would like to change the fee structure. The new fee structure would be tiered.
  
  • 1-100 bonds = .40 BTC per bond
  • 100-999 bonds = .35 BTC per bond
  • >= 1000 bonds = .30 BTC per bond

Post your constructive questions or comments in the thread and I'll make sure to answer them in a timely fashion.

Best,
gigavps

Wait! 90% PPS? Are you telling me you are reducing to 90 mhash per upgrade instead of 100 mhash?

I'm not sure you realize, but 1 BTC equals 350 mhash on the current ASIC specs/price for BFL. 0.40 for 90 mhash upgrade? Really? 0.40 BTC buys 140 mhash. That's already a 35 % cut for you.

you already have 3 rigs. 1 rigs converts to 50% free on an ASIC rig. Or 500 Ghash free on each upgrade (1500 Ghash total). That's basically 15000 x 100 mhash FREE (or 15000 upgrades to 4 x 25 mhash TERAMINING BONDS). Only the other half of those rigs need to be paid. (That's 37.5% of the upgrade for all bonds free)

Almost HALF of the 40 000 upgrades FREE to top the fact the upgrade price has a 35% cut included of what it could directly buy.

And the cherry on top of that, that leaves a large GPU farm for you to sell!

I would really like to see how you arrived to the conclusion that you need to charge that much to give so little.

1. You take 35% cut of what the upgrade cost can buy directly.
2. BUT, you actually get 37.5% reduction on the upgrade costs to top it.
3. You're left with your GPU farm you can sell to further reduce the upgrade cost.

Now, I wouldn't mind the 35% even if it's high, but that seems to completely make abstraction the fact that #2 and #3 are already paid for by investors. If we consider that's a 50% reduction total worth on upgrade price, asking for 0.20 BTC per upgrade would be a 35% cut, but 0.40 BTC seems damn high.

Can you give any explanation as to what your actual cut is in this, and why it seems you're taking a seemingly insane cut, barring there has been some major issues along the way you forgot to tell us? BFL rigs will require MUCH less maintenance, space, extra equipment and power usage per performance than your old farm, but you're jacking up the price and your % cut? At least give us numbers to back such a decision.

[jamesg]

Wait! 90% PPS? Are you telling me you are reducing to 90 mhash per upgrade instead of 100 mhash?

This is correct. It costs real $$$ to run this equipment both on the hosting side of things and on the pool side of things. I would like to setup Teramining to last a long time. If I do not take a cut from the PPS, it would take a very high $$$ value up front to continue operations indefinitely.

Can you give any explanation as to what your actual cut is in this, and why it seems you're taking a seemingly insane cut, barring there has been some major issues along the way you forgot to tell us?

I'm an running this bond to make money. I'm not sure where you got the idea that this was a charitable venture. Every bond sale thus far has netted 100% initial capital outlays. I would expect nothing less from the release of the Teramining bond otherwise there is no reason to do it.

0.40 BTC seems damn high

It may be. I might lower it. That's what we are discussing. Some have suggested that having a tiered pricing structure is not the best approach. I have been thinking about it and could be persuaded to agree. Maybe we'll change it to .30 BTC for everyone but I would like to hear others opinions first.

[DeaDTerra]

Wait! 90% PPS? Are you telling me you are reducing to 90 mhash per upgrade instead of 100 mhash?

This is correct. It costs real $$$ to run this equipment both on the hosting side of things and on the pool side of things. I would like to setup Teramining to last a long time. If I do not take a cut from the PPS, it would take a very high $$$ value up front to continue operations indefinitely.

Can you give any explanation as to what your actual cut is in this, and why it seems you're taking a seemingly insane cut, barring there has been some major issues along the way you forgot to tell us?

I'm an running this bond to make money. I'm not sure where you got the idea that this was a charitable venture. Every bond sale thus far has netted 100% initial capital outlays. I would expect nothing less from the release of the Teramining bond otherwise there is no reason to do it.

0.40 BTC seems damn high

It may be. I might lower it. That's what we are discussing.

I understand that you are in this for profit, aint we all. But then it's in your best interest to be able to compete with BitBonds offering, I feel that 0.4 might be a bit high in comparison to the other options that exist on the market right now.
//DeaDTerra

[jamesg]

I understand that you are in this for profit, aint we all. But then it's in your best interest to be able to compete with BitBonds offering, I feel that 0.4 might be a bit high in comparison to the other options that exist on the market right now.
//DeaDTerra

Hi DeaDTerra,

Thanks for your feedback. I will take it into consideration.

Best,
gigavps

[sp0rus]

Just wanted to throw in my say.  I'm going to have to agree that a tiered fee does seem like a bad idea, for the same reasons already stated.  I also feel that .40BTC is too high a price for the upgrade given the way the market looks currently.

[jamesg]

Just wanted to throw in my say.  I'm going to have to agree that a tiered fee does seem like a bad idea, for the same reasons already stated.  I also feel that .40BTC is too high a price for the upgrade given the way the market looks currently.

So if we got rid of the tiered pricing and moved to price to .30 BTC, would this be an acceptable change along with the 90% PPS?