Diablo Mining Company

[Newar]

20% is the steepest I've seen across my GLBSE holdings for management fees etc., whatever you want to call them.

How is this warranted?

[1713267709]

1713267709

[1713267709]

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[Deprived]

In a suprising turn of events, Diablo-D3 has agreed to hire me, usagi, as his representative in this issue.

I will speak on behalf of Diablo-D3 and represent him in this issue. My fee is 5 btc. Diablo has expressly authorized me to field all questions on behalf of the GLBSE, investors, and the public on this issue.

We are issuing a statement: Things have gotten blown out of proportion. Everyone wants what is best for DMC and for investors. Therefore we are prepared to make an offer. The DMC contract will be modified as follows:

1. Diablo-D3 will modify his contract to state his business plan:
a) Buying shares of mining issues on GLBSE.
b) Buying hardware (when appropriate) for the datacenter.
c) Buying solar power (possibly before mining hardware) and possibly reselling solar power into the grid should surplus exist.
d) Selling dedicated hosting/web hosting if there is spare datacenter capacity
e) Other sources of income, from time to time, to be passed through shareholder approval via binding motion.

2. Seeing as how if the business he runs can't exist if it can't pay him a reasonable amount, the dividend structure will be changed as follows:
a) Out of all the money DMC recieves as income (excluding sale of shares), Diablo will recieve 20%.
b) The remaining 80% will be used to cover operational expenses.
c) Of the money remaining after operating expenses, half will be paid as dividend each month, and
d) the remainder will be used to expand and grow the company.

3. Diablo-D3 will hire smickles of S2 capital management to do accounting for DMC (effective immediately).

This simple 3-step plan shows that Diablo-D3 is competent enough to manage DMC and is the best person for the job.

I will be speaking with Nefario immediately to vet this and see if we can't turn this situation around.

Let's start with your conclusion first:

Your plan says absolutely NOTHING about Diablo's competence.  It's a forum post by you - and hasn't magically transformed him into an investment genius.  If you want to demonstrate Diablo's competence then the way to do it is to explain the previous decisions he made - not in general terms, but in specifics.

Rewarding loss of 95% of nav/share by adding a salary in to the contract?  Would you be proposing a 30% salary if he'd managed to lose 98%?  

I have a fundamental disagreement with you on dividends (not just here, but in your own companies).  You seem to believe dividends are paid based on revenue, I believe they should be paid based on profit (there are exceptions to this - but not ones applicable here).  The amount to be split between remuneration to Diablo (if any at all), dividends and growth should come from profits - which should include gain/loss on the value of holdings.  Dividending out income whilst your capital drops is great for the business owner (if they take their cut based on dividends issued) but is terrible for investors.

Not just that but even if I accepted the princple, in your proposal it's all horribly wrong.  You're giving him his 20% cut BEFORE expenses (which come out of the other 80%).  So if there's 100 BTC revenue he gets 20 - and tough luck shareholders if expenses are 80 or more.  Double tough luck investors if the value of investments also dropped (which is pretty inevitable long-term on mining shares/bonds).

You may only be getting paid 5 BTC to represent Diablo, but you also received a large chunk of shares (far more than you already held) at a huge discount to nav.  Am I correct that in your proposal you'd get to keep those?

Share-holders shouldn't be voting anyway until the audit has been done - and Diablo has responded to whatever questions arise from it.  Not only does that protect shareholders, it also ensures that if he DOES remain in charge there's no cloud hanging over his head where people can claim it was all covered up.

Explaining what he did in the past is what's important - not your spin.

My commiserations to shareholders - as it's likely usagi's legitimate holdings + the ones she was given dirt cheap may well be enough to get a majority in motions (unless whoever else was gifted the other 10k shares vote the other way).

Oh - and if you're REALLY confident in DIablo's competence usagi then how about you make an offer which includes buying out any existing shareholders who want out at NAV (or close to it)?  That's assuming the audit doesn't show up stuff so totally incompetent (or worse) that even you can't try to spin your way out it.

[Deprived]

20% is the steepest I've seen across my GLBSE holdings for management fees etc., whatever you want to call them.

How is this warranted?

If he designs, builds, and manages a million dollar data center, I think paying him $200k is fine. Plus, 40% of net to shareholders is a lot. Most companies in the real world pay 1 to 5% in dividends per year. This way, shareholders still get 3 or 4% a month. I think it's a good deal.

Another way of looking at it, is that this is incentive for Diablo to do a good job. If he does it right, he gets paid. Management incentive was something missing from the previous contract. Now that it's in, I feel confident we can move forward. A little accountability and transparency goes a long way.

Cool - so don't pay him the $200k until he HAS the million dollar data centre.  That way he has incentive to actually get it - rather than to draw 20% of turnover whislt losing share-holder's capital.

Totally agree accountability and transparency go a long way - so where are they in your plan?  Your plan removes accountability (by rewarding him irrespective of results) and says nothing about transparency.

[EskimoBob]

Sorry, this "contract" is unacceptable.
 

[Newar]

20% is the steepest I've seen across my GLBSE holdings for management fees etc., whatever you want to call them.

How is this warranted?

If he designs, builds, and manages a million dollar data center, I think paying him $200k is fine. Plus, 40% of net to shareholders is a lot. Most companies in the real world pay 1 to 5% in dividends per year. This way, shareholders still get 3 or 4% a month. I think it's a good deal.

Another way of looking at it, is that this is incentive for Diablo to do a good job. If he does it right, he gets paid. Management incentive was something missing from the previous contract. Now that it's in, I feel confident we can move forward. A little accountability and transparency goes a long way.

Yes, if... It has been the plan to build *something* since the IPO, no? Where are we now?

In that respect get rid of point 1a. I think we had enough of that.

I agree that we should wait for the audit until we decide on this proposition.

[Puppet]

Im going out on a limb here, and suggest usagi and diablo agreed to split the 20%.  I cant see why anyone sane would otherwise defend the indefensible.

[Deprived]

Let's start with your conclusion first:

Your plan says absolutely NOTHING about Diablo's competence.  

Diablo's competence is not the subject of the motion. This isn't a popularity contest, sir. As for competence, Smickles will be hired to prepare full, transparent accounting statements. Secondly, diablo will be responsible to shareholders via motions. If he does not keep his contract then he will be removed. Additionally, there are now well-defined limits on DMC that Diablo feels comfortable operating within.

I was responding to you saying:

"This simple 3-step plan shows that Diablo-D3 is competent enough to manage DMC and is the best person for the job."

It does NOT show anything about his competence.  His basic ability to competently trade securities and manage investors funds has not changed as a result of you making that post.  IF he explained what he'd done wrong/badly in the past -and how he'd avoid making the same mistakes - then that MAY be evidence that he's now more competent than he was.

Why would we believe your claim that "If he does not keep his contract then he will be removed."?  Are you saying you believe he hasn't already broken his contract?

[Deprived]

I have a fundamental disagreement with you on dividends (not just here, but in your own companies).  You seem to believe dividends are paid based on revenue, I believe they should be paid based on profit (there are exceptions to this - but not ones applicable here).

My companies have nothing to do with DMC other than some of them hold DMC shares. But for the record, you have (in the past) demonstrated a clear misunderstanding of how I run my companies. As I told you many times before, we only take management fees from profits. You seem to think we don't do this (but we do), which is at the root of your misunderstanding. If BMF, for example, doesn't turn a profit, I don't make any money. That is very fair. Now please focus on the issue at hand, DMC.

I did then focus on DMC - but you failed to quote or address my points about your proposed contract paying his salary even if a loss was made.  Yes - that's what a salary IS - but rewarding someone for massive failure by then giving them 20% of future revenue irrespective of whether any proft is made?

And yes - I've misunderstood some aspects of how your companies operate in the past.  So whenever you've responded to me you've only addressed the bits I was wrong on then pointed to my post count and laughed: totally ignoring the other issues raised.  True to form you've done the same here.

Still no response to me asking:

"You may only be getting paid 5 BTC to represent Diablo, but you also received a large chunk of shares (far more than you already held) at a huge discount to nav.  Am I correct that in your proposal you'd get to keep those?"

I'll rephrase it as simple yes/no questions that you can (hopefully) answer without needing to discuss my post-count:

1.  Did you obtain a significant number of DMC shares (4200 from memory - could be slightly more/less) in return for assets with under a qurter of their value (both from GLBSE valuation of DMC sahres AND valuing DMC shares at nav/share)?
2.  Do you agree that Diablo trading you those shares lowered the current value (nav/share) for all existing shareholders in DMC?
3.  Do you believe you SHOULD be allowed to keep those shares?
4.  Would you end up keeping those shares if what you propose happens?

[Deprived]

Let's start with your conclusion first:

Your plan says absolutely NOTHING about Diablo's competence.  

Diablo's competence is not the subject of the motion. This isn't a popularity contest, sir. As for competence, Smickles will be hired to prepare full, transparent accounting statements. Secondly, diablo will be responsible to shareholders via motions. If he does not keep his contract then he will be removed. Additionally, there are now well-defined limits on DMC that Diablo feels comfortable operating within.

I was responding to you saying:

"This simple 3-step plan shows that Diablo-D3 is competent enough to manage DMC and is the best person for the job."

It does NOT show anything about his competence.  His basic ability to competently trade securities and manage investors funds has not changed as a result of you making that post.  IF he explained what he'd done wrong/badly in the past -and how he'd avoid making the same mistakes - then that MAY be evidence that he's now more competent than he was.

Why would we believe your claim that "If he does not keep his contract then he will be removed."?  Are you saying you believe he hasn't already broken his contract?

I think by this point it has become obvious you should take this to PM. It's not about your post count, it's about you failing to understand what is going on here.

I think by this point it has become obvious you were intending to spin your way around any questions asked, rather than address the actual issues.  Not everyone wants things to be resolved behind closed doors, on irc or in PMs between people whose motives may not fully align with those of the other share-holders.

[Deprived]

I think by this point it has become obvious you should take this to PM. It's not about your post count, it's about you failing to understand what is going on here.

I think by this point it has become obvious you were intending to spin your way around any questions asked, rather than address the actual issues.  Not everyone wants things to be resolved behind closed doors, on irc or in PMs between people whose motives may not fully align with those of the other share-holders.

Just take it to PM unless you have something of value to add.

I believe answering my earlier questions would add value for shareholders in assessing your proposal.

To repeat:

1.  Did you obtain a significant number of DMC shares (4200 from memory - could be slightly more/less) in return for assets with under a qurter of their value (both from GLBSE valuation of DMC sahres AND valuing DMC shares at nav/share)?
2.  Do you agree that Diablo trading you those shares lowered the current value (nav/share) for all existing shareholders in DMC?
3.  Do you believe you SHOULD be allowed to keep those shares?
4.  Would you end up keeping those shares if what you propose happens?

Four yes/no answers is all that's needed.  If the answer to #1 is "No" then no need to answer the others.

[Deprived]

1.  Did you obtain a significant number of DMC shares (4200 from memory - could be slightly more/less) in return for assets with under a qurter of their value (both from GLBSE valuation of DMC sahres AND valuing DMC shares at nav/share)?

As I told you this situation has been outlined to you several times. Please see the NYAN letters to shareholders, and my post to this thread detailing the situation leading up to DMC being frozen. But since you obviously have trouble reading or following simple directions I'll answer your question yet again, with the stipulation that if you ask me again I'll report you for trolling/spamming these forums. Seriously, you're annoying.

The answer to #1 is: no.
The explanation is: We did a trade for mHash/share value. I was 60% majority shareholder at the time. I explained the trade to nefario and coldhardmetal at the time. Nothing underhaded or sneaky was done. You simply don't understand, and think you're some kind of news reporter. You're not, and you're getting really annoying. This is the fourth time this has been explained to you.

I'm only going to address this one - as you KIND OF answered my question, without actually really answering it.  I didn't ask you to justify the trade I asked whether the trade was for assets worth under a quarter of the value of the DMC shares you obtained.

You traded 500 shares of ASIC for 4200 shares of DMC.

500 shares of ASIC was worth approximately 50 BTC (that's the value you said you paid for the DMC in your letter to shareholders).

So you gave DIablo the equivalent of 50/4200 BTC per share = approx 0.012 BTC per share.

In Diablo's last report here (AFTER the dilution of NAV by those 4.2k shares AND all the others) nav for DMC was still over 0.05 per share.

So I'm really not seeing how yo ucan claim the answer is "No" to whether or not you obtained those DMC shares at well under nav/share.  You can obfuscate that by talking about mHash/share - but that was not the question I asked.

Not surprising you didn't even bother answering #2 - as even you'd struggle to keep a straight face and say "No" to it.  Instead you gave your stock response of "you don't understand" - but then backed it up with absolutely zero facts about what it is I "don't understand".

5 BTC was a cheap price for you to reverse your opinion from "Diablo is totally incompetent" (paraphrase - not gonna look up exact quote) to him being competent.  Don't suppose you got a promise from him to buy insurance as part of the deal?

I'm done in this thread now btw - so don't feel any need to reply to me: if the shareholders aren't interested in an explanation then I agree there's no point me flogging a dead horse.

I'm far more disappointed in the way the shareholders allow you to pull wool over their eyes than I am that you exploited DMC's incompetence/ignorance/desperation to get ASIC shares for the benefit of yourself and/or your shareholders in other companies you run.  And yes - the other 14k DMC shares handed out (or whatever happened with them) are probably even worse (for DMC shareholders) than the trade you did.  Shame you now appear to have no interest in finding out what happened and (possibly) reversing it and would rather sweep it all under the carpet.

[Red Emerald]

20% is the steepest I've seen across my GLBSE holdings for management fees etc., whatever you want to call them.

How is this warranted?

If he designs, builds, and manages a million dollar data center, I think paying him $200k is fine. Plus, 40% of net to shareholders is a lot. Most companies in the real world pay 1 to 5% in dividends per year. This way, shareholders still get 3 or 4% a month. I think it's a good deal.

Another way of looking at it, is that this is incentive for Diablo to do a good job. If he does it right, he gets paid. Management incentive was something missing from the previous contract. Now that it's in, I feel confident we can move forward. A little accountability and transparency goes a long way.

I don't like this 20% plan.

What if Diablo were given shares instead? It's not uncommon for people to be paid in options at start-ups.

I'm glad to see that people are working to resolve this.  After that drop from 0.6BTC/share to 0.04BTC/share, something definitely needed a change.

Also, I still don't like this trade between usagi and diablo.  You can talk about it in terms of MH/share, but that doesn't get around that fact that usagi essentially bought shares available to anyone else at ~.6BTC for only .012BTC

[Red Emerald]

I don't like this 20% plan.

The simple truth is that DMC is only about 1600 or 2000 bitcoins in size. If it makes, say, 20 BTC in a week, that means Diablo gets 4 bitcoins. That's $40. Do you know how much time and effort he is putting into this? A lot. A lot more than $40 a week. When this gets big, even when it gets up to $100k US in size, he will only be making $100 or $200 a week after the block reward cut and ASICs. That's at 20%.

The simple fact is, this is a major undertaking, and the 20% rate is quite fair. Again, considering real-world companies that only pay out 3 or 4% a year, DMC paying out 40% of it's profit each month is a really good deal.

The basic question is: Can this company afford to pay Diablo-D3 what a datacenter manager SHOULD be paid? 20% sounds about right, actually, considering his level of involvement in the project.

What if Diablo were given shares instead? It's not uncommon for people to be paid in options at start-ups.

That is true. Either way there will be value coming out of the company. I'll talk to Diablo and see what he thinks of the idea.

I'm glad to see that people are working to resolve this.  After that drop from 0.6BTC/share to 0.04BTC/share, something definitely needed a change.

Also, I still don't like this trade between usagi and diablo.  You can talk about it in terms of MH/share, but that doesn't get around that fact that usagi essentially bought shares available to anyone else at ~.6BTC for only .012BTC

I'm not against him being given value from the company (hence my suggestion to give him shares). I'm against him being paid a fixed % of revenue ahead of shareholders.  DMC is a long term investment, and I believe any salary should be thought of later and not paid now while the company's profitability is still in question.

Why does everyone keep talking about the trade between usagi and diablo? Sorry, but I partook in just 20% of the total shares traded in the ASICMINER deal. I traded 4200 out of 18700.  Thats 22%. I'm a minor player regarding that trade. I even lost my standing as majority shareholder. I simply approved the idea as the 60% shareholder at the time. Seriously, if it went to motion, it would have passed. I discussed this with nefario and coldhardmetal at the time. Diablo is NOT ON TRIAL HERE for the Asicminer trade. he announced what he was doing and did the trade with several people over the course of a week. That is not and never was what this was about, despite a great number of very vocal non-shareholders that shouldn't be commenting here...

Remember. He was NOT REPORTED for the ASICMINER trade. he was reported because he had not bought hardware and had repeatedly refused to buy hardware in violation of his contract, while at the same time announcing other plans like building a solar farm. THAT is what this is about.

Everyone is talking about it because whenever anyone reads that shares worth .6BTC were sold for .012BTC, they can't believe that this agreement is actually in the best interest of the DMC shareholders.  This thread is about DMC in general, not just his alleged violation of the contract or being marked as a scammer.  That is why I put "Also" at the beginning of my sentence; it was a separate idea that I had not yet voiced my (shareholding) opinion on.  However, I am sorry that I only mentioned your name rather than all of the parties involved with the ASICMINER trade.

[Puppet]

Do you know how much time and effort he is putting into this? A lot.

Far too much. Had he done diddly squat, his investors would have been ~20x better off. And they still would be better off now if the company was simply liquidated, rather than letting Diablo pocket 20% and ruin what little is left of the rest.

When this gets big

How on earth do you expect this to become big? No sane investor is going to pump new money in to this and In 3 months you wont be arguing over 2000BTC anymore, but 500.

The simple fact is, this is a major undertaking,

Dreaming is such a hard job..

and the 20% rate is quite fair. Again, considering real-world companies that only pay out 3 or 4% a year, DMC paying out 40% of it's profit each month is a really good deal.

You are an idiot. There is no profit, there is only massive losses. And no company pays its CEO 20% of its REVENUE. Particularly not when 99% that "revenue" is insufficient compensation for the eroding value of the company assets. Its like putting $10K in a fund and drawing $1K from it each month and calling it "revenue". Its hilarious.

Why does everyone keep talking about the trade between usagi and diablo? Sorry, but I partook in just 20% of the total shares traded in the ASICMINER deal. I traded 4200 out of 18700.

Yeah and you got them for 50 BTC while early investors would have invested 4200BTC for it. How would you feel if Diablo traded his remaining 100,000 shares for 10 BTC?

[nebulus]

God, everybody ganged up on poor Diablo... This guy helped me out a lot to get my 4x7670s setup when there was nothing on them on the net. He also runs a DC for living. He's a mod and probably the best coder I've seen. Stop throwing accusations, I don't know how this helps your case.

[nebulus]

he massively destroyed shareholder value.

As far as I gather he has made investments that take time to mature rather then let money sit. I think it's rational... I don't know maybe I am missing something. The part where investors are trying to stamp him into ground rather than try to get what is going on with his vision is what kills me.

Isn't it in their interest for him to succeed?
How the hell replacing him as CEO is going to solve anything?

[nebulus]

it destroys capital only half as fast as my current investment, therefore i buy

I thought ASICMINER was a decent investment considering they are "revving up."

How do you suppose you pay dividends if it just sits?
Buying nothing is stupid. Serenity? I am sorry but serenity is for rocks.

I think he might have misjudged on the dividend part.

[Bitcoin Oz]

So what did DMC get for those extra 14 000 shares ?

[nebulus]

Only mining revenue will pay dividends.

I guess he should get dividends returned.

Stakeholders are the ones who are greedy... Always...

[Bitcoin Oz]

he massively destroyed shareholder value.

As far as I gather he has made investments that take time to mature rather then let money sit. I think it's rational... I don't know maybe I am missing something. The part where investors are trying to stamp him into ground rather than try to get what is going on with his vision is what kills me.

Isn't it in their interest for him to succeed?
How the hell replacing him as CEO is going to solve anything?

DMC has achieved a 95% capital destruction by letting it not sit.
When there is no good option to buy, you don't have to buy the least worst option (like "it destroys capital only half as fast as my current investment, therefore i buy")
Just buy nothing.
But that requires serenity.

Edit:
Yes he has this visions, but IMHO he has not the capability to turn them into reality, and more severe he doesn't realize that he is not capable.
It could work if he gathers the right people around him.
I think it would even work better, if he would just do the executing part and not the supervising and calculations.
He has proved excellent excecuting skills (programming) with his mining Software, for the rest, well look what has happend to DMC.
He turned it into a financial institution, completely leaving his skills dormant and his weak spots open.

The real problem is fixed mh/s mining bonds. They are the worst wealth destroyers Ive ever seen. Youd be better off investing your money in hookers and blow at least you would get something out of getting "screwed"