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Author Topic: Diablo Mining Company  (Read 87258 times)
DiabloD3
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April 20, 2012, 09:37:28 PM
 #1

Final Notice
https://bitcointalk.org/index.php?topic=77469.msg3304465#msg3304465

Financial Reports
September 2013 https://bitcointalk.org/index.php?topic=77469.msg3289371#msg3289371
August 2013 https://bitcointalk.org/index.php?topic=77469.msg3089234#msg3089234
July 2013 https://bitcointalk.org/index.php?topic=77469.msg2863287#msg2863287
June 2013 https://bitcointalk.org/index.php?topic=77469.msg2634034#msg2634034
May 2013 https://bitcointalk.org/index.php?topic=77469.msg2355025#msg2355025
April 2013 https://bitcointalk.org/index.php?topic=77469.msg2016480#msg2016480
March 2013 https://bitcointalk.org/index.php?topic=77469.msg1711100#msg1711100
January and February 2013 https://bitcointalk.org/index.php?topic=77469.msg1573941#msg1573941
September 2012 through December 2012: https://bitcointalk.org/index.php?topic=77469.msg1444216#msg1444216
August 2012: https://bitcointalk.org/index.php?topic=77469.msg1153179#msg1153179
July 2012: https://bitcointalk.org/index.php?topic=77469.msg1070848#msg1070848
June 2012: https://bitcointalk.org/index.php?topic=77469.msg1001489#msg1001489
May 2012: https://bitcointalk.org/index.php?topic=77469.msg934452#msg934452

Notice
Diablo Mining Company has closed and liquidated.

Original Post
The Plan
Diablo Mining Company is setting out to be the first $1m USD Bitcoin Startup.

DMC will focus on mining and secondary revenue streams by not only owning the largest mining farm in existence, but also by owning its own dedicated facility and generating green power by solar and/or wind. Extra space in the facility can be rented out to other mining operations or non-mining customers.

The funding will be used to focus on three areas: a dedicated facility that can not only house our hardware but also have spare room to be leased out, purchasing high efficiency mining equipment, and purchasing enough green power generation to eliminate the operational overhead of electricity prices to allow the mining company to continue operating in profit-adverse situations (such as Bitcoin difficulty rapidly increasing, or Bitcoin prices rapidly dropping).

The Facility
A dedicated facility will be purchased or built on un-/under-developed land located in Maine due to our cold 6 months out of the year environment and lack of natural disasters. $150k will be set aside for this purpose as a soft estimate.

The Hardware
DMC will pursue any technology that gives the best performance per dollar and the best returns to our investors. We will never purchase Butterfly Labs hardware.

Post-Spartan 6 large scale mining hardware will be around for $16,000 for 50 ghash each, using 1200 watts each. Assuming we buy 40 units (or approximately whats left of the $1m after the purchase or construction of the facility with enough margin to maintain the construction of a green power generation system):

Hardware cost: $640,000
Mining power: 2000 ghash
Power usage: 50,000 watts, or about 438,000 kwh a year.
Operating cost: about $43,800 a year at 0.10 kwh maximum cost.

At approximately 1.5m Bitcoin difficulty and Bitcoin prices north of $5, 40 units should produce about 1344 BTC a day or about $6,720 a day or about $2,452,800 a year.

The Part Where We Kill Operating Costs
Up here in Maine, each 1kw of solar panels costs about $700 and produces about 1200 kwh a year (with weather patterns and nighttime factored in). Large scale wind is about $1000 per kw, but takes up less room and also generates at night, and many communities in Maine are putting up wind turbines due to excellent wind conditions.

To offset 438,000 kwh of usage a year, I'd need 365 kw of solar, or $255,500.

Hardware cost with solar: $895500.

Thats $895500 for a mining company that can operate in the most adverse conditions (ones that would bankrupt any other mining company) that can make $2.4 million a year.

What does the investor get out of this?
The contract will revolve around splitting revenue in half: one half goes to dividends, one half goes to covering operating costs and a growth fund.

Given that, I am asking for 200k shares at 1 BTC each. Each share will pay approximately 0.05 BTC a month (calculated using 1.5m Bitcoin diff), which will drop to 0.025 BTC sometime in December due to the block reward cut.

Using this math and calculating on the 0.025 BTC per share dividend alone, investors should be making a profit in less than 2 years, factoring in a doubling of difficulty as worst case.

Share Contract
The revenue will be split in two parts:
    
1) 50% of all mining revenue will be distributed to shareholders in the form of dividends (henceforth referred to as "dividends"). These dividends will be paid monthly, split evenly among all shares regardless of class or issuing date.
    
2) 50% will be used to invest in additional hardware, decrease the cost of mining, and/or pay for long term operating costs of the company (henceforth referred to as the "growth fund").

Operating costs (electricity, repair work, unplanned maintenance, employee related costs, taxes) will taken out of the growth fund. Any operating costs that exceed the ability of the growth fund to cover will be borrowed from the dividends until covered. Dividends borrowed in this manner will be paid during future payment period(s) using the growth fund until repaid in full.
    
Each share represents 0% of the ownership in the company assets. In the event of liquidation, 100% of the revenue from sales of the assets and 100% of the growth fund, minus any expenses incurred from the operation or liquidation of the company will be paid to shareholders.
    
The operator of the company retains two special rights, regardless of the number of shares held by the operator: 1) the right to raise a motion, 2) the right to end operations and liquidate assets without motion. Any motions raised by shareholders will be considered non-binding advisory votes.

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Sukrim
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April 20, 2012, 09:44:25 PM
 #2

How many GH/s does your mining operation currently have and how much should 1 share (out of how many) cost?

As a benchmark: 1 MH/s 100% PPS "forever" bonds currently are traded between 30 and 40 Bitcents.

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DiabloD3
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April 20, 2012, 09:54:08 PM
 #3

How many GH/s does your mining operation currently have and how much should 1 share (out of how many) cost?

As a benchmark: 1 MH/s 100% PPS "forever" bonds currently are traded between 30 and 40 Bitcents.

Currently, less than 1 GH/sec. I'm obviously building this from the ground up.

There will be 1 million shares forever (I will not seek to ever create more), but I would like to get 1BTC each for them. Yes, I'm aware thats about 1/8th of currently circulating Bitcoins.

BinaryMage
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April 20, 2012, 11:46:00 PM
 #4

How many GH/s does your mining operation currently have and how much should 1 share (out of how many) cost?

As a benchmark: 1 MH/s 100% PPS "forever" bonds currently are traded between 30 and 40 Bitcents.

Currently, less than 1 GH/sec. I'm obviously building this from the ground up.

There will be 1 million shares forever (I will not seek to ever create more), but I would like to get 1BTC each for them. Yes, I'm aware thats about 1/8th of currently circulating Bitcoins.

With all due respect, how on earth do you expect to raise this much?

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silverbox
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April 20, 2012, 11:57:33 PM
 #5

How many GH/s does your mining operation currently have and how much should 1 share (out of how many) cost?

As a benchmark: 1 MH/s 100% PPS "forever" bonds currently are traded between 30 and 40 Bitcents.

Currently, less than 1 GH/sec. I'm obviously building this from the ground up.

There will be 1 million shares forever (I will not seek to ever create more), but I would like to get 1BTC each for them. Yes, I'm aware thats about 1/8th of currently circulating Bitcoins.

With all due respect, how on earth do you expect to raise this much?

His plan seems to be IPO forever.. Wink
Sukrim
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April 21, 2012, 12:00:14 AM
 #6

To compete with current payouts from bonds he needs to build a 6 TH/s farm quite fast from 0... Roll Eyes

I personally see this going nowhere.

https://bitfinex.com <-- leveraged trading of BTCUSD, LTCUSD and LTCBTC (long and short) - 10% discount on fees for the first 30 days with this refcode: x5K9YtL3Zb
Mail me at Bitmessage: BM-BbiHiVv5qh858ULsyRDtpRrG9WjXN3xf
RaggedMonk
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April 21, 2012, 12:00:38 AM
 #7

How many GH/s does your mining operation currently have and how much should 1 share (out of how many) cost?

As a benchmark: 1 MH/s 100% PPS "forever" bonds currently are traded between 30 and 40 Bitcents.

Currently, less than 1 GH/sec. I'm obviously building this from the ground up.

There will be 1 million shares forever (I will not seek to ever create more), but I would like to get 1BTC each for them. Yes, I'm aware thats about 1/8th of currently circulating Bitcoins.

So, everyone has to invest into it at a $5,400,000 valuation, before it has grown above 1Gh/s...  You need to rethink your model.

Also, why do shares represent 0% of company assets.  This is odd.  You have outlined what happens during a liquidation event, what about an acquisition event?  The way you have written your offering, seems you may be able to legally sell all company assets to a third party, pocket the cash yourself (you are the only shareholder who owns assets), and leave other investors holding shares in an empty company with no assets or operations.

I don't think you are trying to be deceptive, but with shareholder agreements, you should very explicit and describe every possible case, so there are no misunderstandings.
rjk
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April 21, 2012, 12:03:18 AM
 #8

At first, I was going to say obvious troll thread is obvious, but then I see that the company is actually listed on GLBSE. Now all I have to say is lol.

Mining Rig Extraordinaire - the Trenton BPX6806 18-slot PCIe backplane [PICS] Dead project is dead, all hail the coming of the mighty ASIC!
BinaryMage
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April 21, 2012, 12:04:05 AM
 #9

To compete with current payouts from bonds he needs to build a 6 TH/s farm quite fast from 0... Roll Eyes

I personally see this going nowhere.

From 1 GH. His farm needs to increase by a factor of 6000. I agree with you on the second part.

At first, I was going to say obvious troll thread is obvious, but then I see that the company is actually listed on GLBSE. Now all I have to say is lol.

20 BTC for some elaborate trolling isn't necessarily too high a price to pay.

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Sukrim
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April 21, 2012, 12:08:57 AM
 #10

To compete with current payouts from bonds he needs to build a 6 TH/s farm quite fast from 0... Roll Eyes

I personally see this going nowhere.

From 1 GH. His farm needs to increase by a factor of 6000. I agree with you on the second part.

Oh wow, that changes everything of course! Roll Eyes

Does staff around here get some discounts on silkroad or something?! Tongue
Anyways, this sounds like the facebook of mining companies!

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BinaryMage
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April 21, 2012, 12:14:09 AM
 #11

To compete with current payouts from bonds he needs to build a 6 TH/s farm quite fast from 0... Roll Eyes

I personally see this going nowhere.

From 1 GH. His farm needs to increase by a factor of 6000. I agree with you on the second part.

Oh wow, that changes everything of course! Roll Eyes

No, but it seemed necessary to correct. I want Diablo to address this.

Does staff around here get some discounts on silkroad or something?! Tongue

ROFL. You be trolling.

Anyways, this sounds like the facebook of mining companies!

I don't approve of Facebook, but it seems to be doing alright. Wink How are these two similar?

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April 21, 2012, 12:16:31 AM
 #12

At first, I was going to say obvious troll thread is obvious, but then I see that the company is actually listed on GLBSE. Now all I have to say is lol.

20 BTC for some elaborate trolling isn't necessarily too high a price to pay.

glbse registration fee is 8BTC

marked
BinaryMage
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April 21, 2012, 12:19:26 AM
 #13

At first, I was going to say obvious troll thread is obvious, but then I see that the company is actually listed on GLBSE. Now all I have to say is lol.

20 BTC for some elaborate trolling isn't necessarily too high a price to pay.

glbse registration fee is 8BTC

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Used be 20BTC, my error. Thanks for pointing it out. Even more likely to be trolling then.

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Sukrim
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April 21, 2012, 12:20:54 AM
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I don't approve of Facebook, but it seems to be doing alright. Wink How are these two similar?
Overblown IPO. If Facebook manages to pull a 100 billion IPO off (and it looks like it) they could pay every one of their users more than 100 USD(!).

The difference is, however, that facebook will sell out quickly. 1 million shares @1BTC each probably won't, especially not with these terms. I might risk 8 coins too however and also start a trolling IPO and then (as I'm allowed in my contract) "sell" everything, take the money and laugh. Cool

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BinaryMage
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April 21, 2012, 12:24:47 AM
 #15

I don't approve of Facebook, but it seems to be doing alright. Wink How are these two similar?
Overblown IPO. If Facebook manages to pull a 100 billion IPO off (and it looks like it) they could pay every one of their users more than 100 USD(!).

The difference is, however, that facebook will sell out quickly. 1 million shares @1BTC each probably won't, especially not with these terms. I might risk 8 coins too however and also start a trolling IPO and then (as I'm allowed in my contract) "sell" everything, take the money and laugh. Cool

You probably could do it without spending anything. Offer the bonds at a lower price to pre-IPO investors.

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DiabloD3
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April 21, 2012, 12:37:56 AM
 #16

How many GH/s does your mining operation currently have and how much should 1 share (out of how many) cost?

As a benchmark: 1 MH/s 100% PPS "forever" bonds currently are traded between 30 and 40 Bitcents.

Currently, less than 1 GH/sec. I'm obviously building this from the ground up.

There will be 1 million shares forever (I will not seek to ever create more), but I would like to get 1BTC each for them. Yes, I'm aware thats about 1/8th of currently circulating Bitcoins.

So, everyone has to invest into it at a $5,400,000 valuation, before it has grown above 1Gh/s...  You need to rethink your model.

Also, why do shares represent 0% of company assets.  This is odd.  You have outlined what happens during a liquidation event, what about an acquisition event?  The way you have written your offering, seems you may be able to legally sell all company assets to a third party, pocket the cash yourself (you are the only shareholder who owns assets), and leave other investors holding shares in an empty company with no assets or operations.

I don't think you are trying to be deceptive, but with shareholder agreements, you should very explicit and describe every possible case, so there are no misunderstandings.

There is nothing in the contract to actually allow acquisitions, nor am I willing to entertain offers to do so either.

The only reason I have shares represent 0% of company assets as the assets, until the event of liquidation, are owned by the growth fund. Assets can be sold, replaced, decommissioned, or otherwise removed from the asset pool for any reason I deem necessary to continue profiting (such as upgrading, the hardware actually dying, switching from FPGA to ASIC, etc).

And yes, that includes selling not-quite-dead hardware on eBay and putting the proceeds back into the growth fund. The contract fully lets me do that, nothing in it lets me leaking asset value out through any method under than the depreciation of the assets themselves (ie, plugging them in and turning them on).

Now, you do bring up a good point, this agreement DOES allows me to purchase other mining companies and hold them as assets; but as I said, I would never entertain BEING purchased. I would rather liquidate the company than let it be purchased.

tl;dr: Shares only entitle you to dividends.

BinaryMage
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April 21, 2012, 01:51:48 AM
 #17

There is nothing in the contract to actually allow acquisitions, nor am I willing to entertain offers to do so either.

The only reason I have shares represent 0% of company assets as the assets, until the event of liquidation, are owned by the growth fund. Assets can be sold, replaced, decommissioned, or otherwise removed from the asset pool for any reason I deem necessary to continue profiting (such as upgrading, the hardware actually dying, switching from FPGA to ASIC, etc).

And yes, that includes selling not-quite-dead hardware on eBay and putting the proceeds back into the growth fund. The contract fully lets me do that, nothing in it lets me leaking asset value out through any method under than the depreciation of the assets themselves (ie, plugging them in and turning them on).

Now, you do bring up a good point, this agreement DOES allows me to purchase other mining companies and hold them as assets; but as I said, I would never entertain BEING purchased. I would rather liquidate the company than let it be purchased.

tl;dr: Shares only entitle you to dividends.

So, if you aren't trolling, can you explain (in all honesty) how you realistically plan to raise 1 million Bitcoins?

-- BinaryMage -- | OTC | PGP
theymos
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April 21, 2012, 02:07:20 AM
 #18

It sounds like you intend to build a long-term mining operation, which interests me. What's your plan for staying competitive in 4-8 years -- what'll give you an advantage over other miners? What hardware are you going to buy? Are you going to mine solo, use a pool (which one?), or use p2pool?

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DiabloD3
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April 21, 2012, 10:50:57 AM
 #19

There is nothing in the contract to actually allow acquisitions, nor am I willing to entertain offers to do so either.

The only reason I have shares represent 0% of company assets as the assets, until the event of liquidation, are owned by the growth fund. Assets can be sold, replaced, decommissioned, or otherwise removed from the asset pool for any reason I deem necessary to continue profiting (such as upgrading, the hardware actually dying, switching from FPGA to ASIC, etc).

And yes, that includes selling not-quite-dead hardware on eBay and putting the proceeds back into the growth fund. The contract fully lets me do that, nothing in it lets me leaking asset value out through any method under than the depreciation of the assets themselves (ie, plugging them in and turning them on).

Now, you do bring up a good point, this agreement DOES allows me to purchase other mining companies and hold them as assets; but as I said, I would never entertain BEING purchased. I would rather liquidate the company than let it be purchased.

tl;dr: Shares only entitle you to dividends.

So, if you aren't trolling, can you explain (in all honesty) how you realistically plan to raise 1 million Bitcoins?

Well, I imagine 1m BTC worth of people want to continue profitably mining when no one else can. If I'm wrong, this is going to be a waste of 8BTC.

DiabloD3
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April 21, 2012, 10:52:18 AM
 #20

It sounds like you intend to build a long-term mining operation, which interests me. What's your plan for staying competitive in 4-8 years -- what'll give you an advantage over other miners? What hardware are you going to buy? Are you going to mine solo, use a pool (which one?), or use p2pool?

Probably solo if the farm gets as big as I want it to.

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