SkepsiDyne Integrated Node - The Bitcoin Mining Company

[Tawsix]

Update: Machines are scheduled to arrive tomorrow!

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[Sukrim]

Quite a lot of shares sold after that dividend, gratulations!
http://charts.glbse.com/markets/SIN_trades.html

[Tawsix]

Quite a lot of shares sold after that dividend, gratulations!
http://charts.glbse.com/markets/SIN_trades.html

Thank you, and thanks for the charts, I didn't know that feature was in place!

Update: Coins keep rolling in, rigs will be arriving tomorrow.  I will give another update once the new rigs are up. 

On another note, I find myself in an unfortunate position: using the current language of the shares I've sold, I'll probably end up paying massive fines at best and in federal prison at worst when SkepsiDyne takes off and makes it big.  There is a pretty easy solution to this, and that is to change the language of the shares so that they are portions of the companies computing power, rather than actual shares in the company.  These shares of company hashing power would still come with the voting rights stipulated in the original contract, etc.  I am open to other suggestions that would help keep me out of the SEC's hair, but this is my proposed solution.  After some serious discussion on the matter, we'll have a vote on the matter.  I have already spoken with Nefario and he has said that this is possible to do, so we're alright on that front.  I would just like some input from everyone before we move ahead with this.

[eturnerx]

Anyway that we can include shares can represent some interest in the underlying hardware and not just the hashing power?

[Tawsix]

Anyway that we can include shares can represent some interest in the underlying hardware and not just the hashing power?

I would be interested in discussing how exactly this would work.

[Nefario]

Anyway that we can include shares can represent some interest in the underlying hardware and not just the hashing power?

I would be interested in discussing how exactly this would work.

Simple, each machine is divided by the total number of shares, then each share owns that portion of all machines and therefor the machines output (less costs).

So lets say 5 machines and then 1000 shares, then one share is worth 1/1000th of each machine (for 5*1/1000ths per share).

Because when the original shares were bough they were to fund the company, which was used to purchase the hardware, if it was just for the hashing conract then the price should have been much lower.

Unless you're willing to give a big refund to all current shareholders.

You could also have two classes of contract available on the exchange
One is the ownership of the hardware, and then the second are shares of hashing contracts.
Every time you sell the hashing contracts you just pay the total amount (less costs) to the hardware owner shares.

Nefario.
 

[Ben Walsh (beamer)]

100% agree with Nefario on this.

The shareholders own the company - this includes the "computing power" and much much more.

Anyway that we can include shares can represent some interest in the underlying hardware and not just the hashing power?

I would be interested in discussing how exactly this would work.

Simple, each machine is divided by the total number of shares, then each share owns that portion of all machines and therefor the machines output (less costs).

So lets say 5 machines and then 1000 shares, then one share is worth 1/1000th of each machine (for 5*1/1000ths per share).

Because when the original shares were bough they were to fund the company, which was used to purchase the hardware, if it was just for the hashing conract then the price should have been much lower.

Unless you're willing to give a big refund to all current shareholders.

You could also have two classes of contract available on the exchange
One is the ownership of the hardware, and then the second are shares of hashing contracts.
Every time you sell the hashing contracts you just pay the total amount (less costs) to the hardware owner shares.

Nefario.
 

[Gui_0]

On another note, I find myself in an unfortunate position: using the current language of the shares I've sold, I'll probably end up paying massive fines at best and in federal prison at worst when SkepsiDyne takes off and makes it big.  There is a pretty easy solution to this

I don't understand what the issue is, mind explaining?

[Nefario]

On another note, I find myself in an unfortunate position: using the current language of the shares I've sold, I'll probably end up paying massive fines at best and in federal prison at worst when SkepsiDyne takes off and makes it big.  There is a pretty easy solution to this

I don't understand what the issue is, mind explaining?

Selling shares of a company to the general public without the approval of the SEC is illegal (in the US). However this is only an issue if you don't remain anonymous. i.e. you tell them who you are.

[Tawsix]

On another note, I find myself in an unfortunate position: using the current language of the shares I've sold, I'll probably end up paying massive fines at best and in federal prison at worst when SkepsiDyne takes off and makes it big.  There is a pretty easy solution to this

I don't understand what the issue is, mind explaining?

Selling shares of a company to the general public without the approval of the SEC is illegal (in the US). However this is only an issue if you don't remain anonymous. i.e. you tell them who you are.

That's all and well, but I have to file taxes, and I will most likely get audited.  They'll be wondering how I pulled 8+ grand out of thin air.

[REF]

8 grand is not that much and wont stick out. The US gov only starts to care and notice over 10k+ which seems like it will happen soon if shares keep being sold the way they are. You could buy the parts under someone elses name to go unnoticed (EX. use a family or friends CC to purchase the parts). When you sell the bitcoins move them directly into there PP or Dwolla or LR at an amount equal to what they purchase for you.

[Adam]

I'm a tax professional so I can offer some advice.  Like people said 8 grand is nothing, so there is an almost 0 percent chance of you actually getting audited, depending on what else you do.  But, you can file your taxes in the proper way pretty easily without owing anything except on what you kept for yourself.  It just takes a little record keeping and turbo tax.

First, ignore the whole share issuance.  You are not a legal corporation in the eyes of the law.  You would need to file articles of incorporation with the Secretary of State for that to be the case.  So for legal and tax purposes just call it a sole proprietorship and file schedule C with your taxes.  Just say that all the money from the bitcoins people invested was sales. 

For expenses, try to keep records of every expense made for mining and keep them separate from your personal expenses.  You can deduct things like electricity and internet, although if they are not 100% for the mining you will need to come up with a allocation between personal use and business use.  If you own your house you can take all kinds of other deductions too.  The biggest expense will be the equipment, but you can write off up to $500,000 worth of equipment for tax purposes, so you can effectively treat it like any other expense.

In the end you should be able to show total sales (bitcoin investments sold for $) - total expenses = your cut.  Your cut is what you owe tax on.

[Tawsix]

On a happier note, we now have 9 rigs up and running!  Soon we'll be ordering another round of rigs, once the next round of dividends get paid out!

[eturnerx]

Great news. I pledge to reinvest my next round of dividends.

[Tawsix]

Update: Things are running smoothly, we're fast approaching another dividend payout!  We've raised almost 70 BTC from investments since the last dividend payout, which is very exciting!  I am confident we will be able to afford at least one more rig for next week with the addition of my dividends being reinvested.  We're getting closer to the double digit Ghash/sec mark.

I have initiated a vote to pay sharp for making those wonderful graphs for us.  Using the time invested from the page (http://www.shrp.me/sin) and a rate of $13 USD/hour (which has been approved of by sharp), the total amount would be $19.07 USD worth of Bitcoins (determined by the rate on MtGox at the time of the end of the motion.)  Motion text is found here, it seemed to bug out again (not my fault this time, it's perfect json!):

Code:

{"motion": {"motion start":"Sunday, June 19, 2011","motion end":"Tuesday, June 21, 2011","vote num":"000003","vote issue":"Payment for sharp for services rendered","vote text":"This vote is being held to determine the shareholders' opinions on the matter of paying bitcoin.org forum user sharp for the creation, publication, and continued hosting of several graphs relaying various aspects of SkepsiDyne's output (located at http://shrp.me/sin).  A rate of $13 USD/hour was agreed to by sharp, which would amount to a total of $19.07 USD to be paid out.  The method of payment will be in Bitcoins, at the exchange rate listed on MtGox.com at the end of the vote.  The payment will be sent to the address listed on the page the graphs are hosted on: 1QBJzkYVz2c8K1fvCAsKn2gpqjV2uXPgv1.  There have been no binding contracts made between SIN and sharp, nor does this vote establish or imply any such contracts.  A vote in favor (yes) will support paying sharp $19.07 USD worth of Bitcoins for services rendered.  A vote against (no) will be against paying sharp $19.07 USD worth of Bitcoins."}}

I appreciate the insight about the legal issues surrounding the company, and I will be further investigating them with legal experts in the coming days.  Once again, it isn't something that needs to be done right this very second, but it is something that needs to be thought about.

Thanks again to everyone who has invested and reinvested!

[Tawsix]

Update: still running at full capacity.  We'll be getting the second round of dividends out sometime tomorrow, as well as ordering the next round of rigs.  Having issues connecting to GLBSE right now so I can't give an update on the current motion, but from the last time I checked there seems to be strongly favoring passing.  We also have gotten some more investment as well!

[bitoption]

While the accountant may be an accountant; he is definitely not a securities lawyer.

Here is a very, very brief summary of the laws in this area if you're in the US:

You made a public offer to sell shares in a corporation and took something very like legal tender in exchange.

You or the company you represent are officially a publicly traded corporation.

In the US, to get an exemption from this, you would typically do one of two things:

A) Issue a convertible note (e.g. debt, that can be converted to stock at a certain rate). This is fairly inexpensive to lawyer up properly.

B) Apply for an exemption under Reg. D; Reg. D makes a number of stipulations about how you conduct the business of fundraising and buying / selling shares, if you fit them all, you can be exempted.

You certainly would not qualify under Reg. D, since, for instance, there is  public market for your shares. Additionally, you haven't verified that all your investors are sophisticated investors per the SEC's perspective.

Functionally, in this case, (I'm not a lawyer), I believe you would likely need to pay everyone back whatever they'd lost investing if things went south; if you didn't, you would be looking at the wrong end of US securities law.

My own research here indicates that the best thing to do is probably incorporate somewhere that has flexible laws regarding public stock offerings; that company could then form a US subsidiary and do business in the states as a sub of a foreign (public) corporation.

Note that all this is going to take $10k at least. Again, I'm not a lawyer.

If you think you're unlikely to come under SEC investigation, (and really, generally, you should do this as a US citizen), do make sure you report and pay your income / taxes. The IRS has promised, vigorously, over the years that they DO NOT CARE where the money came from so long as you report and pay taxes on it. Read about Al Capone if you're curious what the US takes most seriously as far as crimes.

[Tawsix]

While the accountant may be an accountant; he is definitely not a securities lawyer.

Here is a very, very brief summary of the laws in this area if you're in the US:

You made a public offer to sell shares in a corporation and took something very like legal tender in exchange.

You or the company you represent are officially a publicly traded corporation.

In the US, to get an exemption from this, you would typically do one of two things:

A) Issue a convertible note (e.g. debt, that can be converted to stock at a certain rate). This is fairly inexpensive to lawyer up properly.

B) Apply for an exemption under Reg. D; Reg. D makes a number of stipulations about how you conduct the business of fundraising and buying / selling shares, if you fit them all, you can be exempted.

You certainly would not qualify under Reg. D, since, for instance, there is  public market for your shares. Additionally, you haven't verified that all your investors are sophisticated investors per the SEC's perspective.

Functionally, in this case, (I'm not a lawyer), I believe you would likely need to pay everyone back whatever they'd lost investing if things went south; if you didn't, you would be looking at the wrong end of US securities law.

My own research here indicates that the best thing to do is probably incorporate somewhere that has flexible laws regarding public stock offerings; that company could then form a US subsidiary and do business in the states as a sub of a foreign (public) corporation.

Note that all this is going to take $10k at least. Again, I'm not a lawyer.

If you think you're unlikely to come under SEC investigation, (and really, generally, you should do this as a US citizen), do make sure you report and pay your income / taxes. The IRS has promised, vigorously, over the years that they DO NOT CARE where the money came from so long as you report and pay taxes on it. Read about Al Capone if you're curious what the US takes most seriously as far as crimes.

This is more or less the conclusion that I've come to, which is why I said I think changing the language to selling percentages of hardware or computing power instead of shares in the company would be easier (i.e. not cost 10 grand.)  That way it isn't a stock, but a product.  I don't really think I'll be bumping heads with the SEC for a while, but I do understand the importance of paying taxes. 

[marcus_of_augustus]

sounds like the parasites showed up for their cut finally ... oh, well it was fun to be productive while it lasted.

[Tawsix]

sounds like the parasites showed up for their cut finally ... oh, well it was fun to be productive while it lasted.

You know you've got too many laws when you need a lawyer to figure them out for you.