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Author Topic: Cloud Mining Fund  (Read 1134 times)
TheFund (OP)
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October 08, 2014, 09:23:37 PM
Last edit: October 09, 2014, 03:56:42 PM by TheFund
 #1

Overview
I'm making this topic to gauge interest on buying shares of a diversified Bitcoin investment portfolio.  The portfolio will initially consist of hashpower from different cloud mining companies.  LTC Gear and GAW are the 2 companies that would have the largest positions.  I'm hoping to eventually introduce different risk level packages.  This will allow a hands off approach from investors who will not need to worry about reinvesting their mined Bitcoin since everything will be done for them.

Dividends
Dividends will be paid out weekly with 37% of the weekly profits.  5% of the profits will be kept for managing the portfolio with the remaining 58% being reinvested.  The interesting part of this is the reinvesting which will be done on a much larger scale than if you were buying individually.  An individual who invests $50 by him/herself will have to wait awhile until s/he can reinvest with profits.  It also causes the value of the share to increase from the initial share price of $50/share (share price in dollars due to cloud mining companies selling in dollars).  The share values will be calculated weekly at the same time as the payouts.  The value of the share is 20x the payout/share.  This means you have a floating weekly payout of 5%.  

Share Splits and Buyback Program
I will also offer share splits whenever the value of the share doubles as well as a share buyback plan.  If you no longer wish to hold your share, you can sell back the share at 80% of its current value.  All buybacks will take place at the end of the week.  The weekly profit will be used to buyback the share(s) which will increase all shareholders stakes in the fund.  I'm still trying to figure out a way to stop this from lowering payouts for that week but it will definitely raise payouts for the following weeks.  New shares will be allowed to be purchased in order to grow the overall size of the fund.  New share offerings will be introduced in 20 share blocks which is necessary to maintain a balanced portfolio as well as a low ROI.

ROI
At current rates, the share buyback program will allow you to ROI in approximately 3 weeks (this assumes BTC price and difficulty remains constant, worst case scenario could be closer to 5 weeks).  Depending on the construction of the portfolio, you will earn 100% of your investment between 70 and 90 days.

Liquidation
If the fund needs to be liquidated at any time, 80% of the revenue from resale will be paid to shareholders based on their stake in the fund.

Current Fund
There are currently 40 shares purchased which puts the fund value at $2,000.  They have not been invested yet.  My goal is to add shares to the fund every Sunday and payout every Saturday.  I will update this section anytime new shares are purchased.

Any feedback is greatly appreciated!

Edit:
Contact Information: TheBTCFundManager@gmail.com
lyth0s
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October 09, 2014, 06:44:21 AM
 #2

Whats the benefit of people using you as a middle man compared to them just making their own purchases through the cloud mining hosts? Are you going to escrow any funds so that you can't run with the money?

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Vortex20000
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October 09, 2014, 06:48:38 AM
Last edit: October 09, 2014, 11:35:46 AM by Vortex20000
 #3

Overview
I'm making this topic to gauge interest on buying shares of a diversified Bitcoin investment portfolio.  The portfolio will initially consist of hashpower from different cloud mining companies.  LTC Gear and GAW are the 2 companies that would have the largest positions.  I'm hoping to eventually introduce different risk level packages.  This will allow a hands off approach from investors who will not need to worry about reinvesting their mined Bitcoin since everything will be done for them.

Dividends
Dividends will be paid out weekly with 37% of the weekly profits.  5% of the profits will be kept for managing the portfolio with the remaining 58% being reinvested.  The interesting part of this is the reinvesting which will be done on a much larger scale than if you were buying individually.  An individual who invests $50 by him/herself will have to wait awhile until s/he can reinvest with profits.  It also causes the value of the share to increase from the initial share price of $50/share (share price in dollars due to cloud mining companies selling in dollars).  The share values will be calculated weekly at the same time as the payouts.  The value of the share is 20x the payout/share.  This means you have a floating weekly payout of 5%.  

Share Splits and Buyback Program
I will also offer share splits whenever the value of the share doubles as well as a share buyback plan.  If you no longer wish to hold your share, you can sell back the share at 80% of its current value.  All buybacks will take place at the end of the week.  The weekly profit will be used to buyback the share(s) which will increase all shareholders stakes in the fund.  I'm still trying to figure out a way to stop this from lowering payouts for that week but it will definitely raise payouts for the following weeks.  New shares will be allowed to be purchased in order to grow the overall size of the fund.  New share offerings will be introduced in 20 share blocks which is necessary to maintain a balanced portfolio as well as a low ROI.

ROI
At current rates, the share buyback program will allow you to ROI in approximately 3 weeks (this assumes BTC price and difficulty remains constant, worst case scenario could be closer to 5 weeks).  Depending on the construction of the portfolio, you will earn 100% of your investment between 70 and 90 days.

Liquidation
If the fund needs to be liquidated at any time, 80% of the revenue from resale will be paid to shareholders based on their stake in the fund.

Current Fund
There are currently 40 shares purchased which puts the fund value at $2,000.  They have not been invested yet.  My goal is to add shares to the fund every Sunday and payout every Saturday.  I will update this section anytime new shares are purchased.

Any feedback is greatly appreciated!
TheFund
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Ugh.

Edit:

May be ill-deserved. See below posts.

TheFund (OP)
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October 09, 2014, 11:03:49 AM
 #4

Whats the benefit of people using you as a middle man compared to them just making their own purchases through the cloud mining hosts? Are you going to escrow any funds so that you can't run with the money?

I listed the benefits in the original post. Purchasing through cloud miners with small amounts of money means zero diversification and zero reinvestment for a long time. I have spreadsheets that show how huge the spread actually is which I can post later today. I'm not sure how escrowing would work since 58% will need to get immediately reinvested and 37% will be paid out. I can try to work out a deal with the companies to freeze the assets and allow them to be resold by a third party if that makes you feel safer. I'm also willing to go through any identity verification processes necessary.
TheFund (OP)
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October 09, 2014, 11:10:06 AM
 #5

@vortex20000 It is my first post. Good observation. It's an idea that I just came up with while playing with some numbers. I'm well known in the hashtalk community but have never made a profile here. Just observed.
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October 09, 2014, 11:35:24 AM
 #6

@vortex20000 It is my first post. Good observation. It's an idea that I just came up with while playing with some numbers. I'm well known in the hashtalk community but have never made a profile here. Just observed.
If you provide your hashtalk username I'll take that back Roll Eyes

TheFund (OP)
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October 09, 2014, 01:27:36 PM
 #7

If you provide your hashtalk username I'll take that back Roll Eyes

My username there is jgabby. 41 reputation with zero downvotes. I'm not too talkative, just mainly help out users who don't understand certain things.
TheFund (OP)
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October 09, 2014, 02:01:54 PM
 #8

Shares of The Fund vs. Individual investing (40 shares total) (Current Fund)

http://i58.tinypic.com/2vb9zth.png

Shares of The Fund vs. Individual investing (200 shares total)

http://i57.tinypic.com/13zvjeq.png
TheFund (OP)
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October 09, 2014, 03:56:13 PM
 #9

As you can see from the spreadsheet projections, the total return being in a diversified fund with the ability to reinvest is greatly amplified. A lot of this has to do with the current anniversary deal at LTC Gear which is $860. That can be a lot of money for small time investors. Feel free to pm me or e-mail me at TheBTCFundManager@gmail.com if you have any questions or are interested in purchasing shares.
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October 09, 2014, 06:57:15 PM
 #10

First, I highly suggest you avoid GAW. I got ripped off by them... it's only a matter of time before they get raided like BFL did.

Second, I'm not exactly sure what the value of your service is. Most of the cloud hashing companies lowered the barrier of entry for those who want to invest with them anyway. You have a couple challenges ahead of you, trust is the main one, second is what value you can add on top of it.  The mining gold-rush is pretty much over, so you might want to look at other avenues to explore as well.
TheFund (OP)
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October 09, 2014, 08:14:49 PM
 #11

First, I highly suggest you avoid GAW. I got ripped off by them... it's only a matter of time before they get raided like BFL did.

Second, I'm not exactly sure what the value of your service is. Most of the cloud hashing companies lowered the barrier of entry for those who want to invest with them anyway. You have a couple challenges ahead of you, trust is the main one, second is what value you can add on top of it.  The mining gold-rush is pretty much over, so you might want to look at other avenues to explore as well.

I believe GAW has done a great job to prove their legitimacy. It has been slowing down lately but I still have faith in the company. The majority of the portfolio will be invested in LTC Gear since it has the best returns at the moment. I'm also looking into other cloud mining companies to spread out the risk as well as any other venture that looks promising.

Cloud mining companies have been doing a great job of lowering prices in order to allow entry for new investors. The payout is roughly the same percentage (slightly worse since you can't get deals buying a single MH) so it makes it near impossible to stay ahead of the difficulty curve with reinvesting. In my example provided for only 40 shares (current size of the fund), the investment in GAW will have increased 529% in 7 weeks while the investment of $50 will have only increased 66%. I will spread that 529% increase across other investments but I'm using GAW as an example. The more shares invested, the higher weighted the fund can be in LTC Gear.

The value added on top of it is simply the reinvestment aspect as well as completely managing everything within the portfolio. The amount the return increases as buying power increases is unreal. You won't need to manage multiple accounts. This consolidates everything into a single payment made weekly. Very similar to investing in a high risk hedge fund. You can keep your money in if you think it will continue to earn a return or you can pull your money out. Hedge fund managers typically receive a performance fee of 20%. My performance fee is only 5%. This is to pay for the time spent managing the accounts, researching new investment opportunities, making purchases, making weekly payouts, selling shares, and buying back shares. The value provided is the same value provided with any hedge fund or mutual fund. At 40 shares I'm making a killing at $10 a week, which is less than half of my hourly rate at my job, so clearly I'm doing this as a hobby as well as investing my own money in the fund.

I mentioned eventually having multiple packages. This is nowhere near close to happening. I think a portfolio mixed with cloud mining companies and regular securities could provide a very nice return with limited risk. Many BTC investors expect to ROI in a short amount of time which is what the current makeup of the portfolio will accomplish. New packages with less risk will have returns more closely related to hedge/venture funds which is where investing in BTC will eventually shift towards. A return of 20% on the year is a great year in the stock market whereas BTC investors would be going nuts that they haven't ROI'd yet. The idea of new packages with less risk is still very much a work in progress.

I'm still trying to figure out a way to build trust. I'm aware that this has been an issue with many startups. Customers are afraid they will just cash the check and run. I will provide weekly reports with snapshots of our holdings and payouts as well as any interesting news with our investments and BTC in general (possibly daily but that might annoy some customers). This is a way to ensure I'm actually investing the shares. I can provide identification and any other necessary documents to prove I am who I say I am.

I truly believe this could grow into a large, well-diversified portfolio.
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October 13, 2014, 01:26:27 PM
 #12

It appears that ipoMiner is doing something similar with their new product HashX at a 60% markup (https://ipominer.com/hashx). Their shares have no resale value at this time. They are 100% tied to LTC Gear so there is a lot more risk involved. They do have a lower entry price ($7.99). Would a lower entry price get more interest for The Fund? I can lower the price to $10 / share will all current shares being multiplied by 5 ($50 / share). Keep in mind that this is only a 5% markup for the work I put into paying out, diversifying, and dealing with any problems that arise. These shares can also be bought back.
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