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Author Topic: SkepsiDyne Integrated Node - A Bitcoin Mining Company  (Read 4269 times)
Tawsix
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May 13, 2011, 10:04:32 PM
 #1

The main thread is located here.  For the most up-to-date information on SIN, and to get your questions answered the quickest, post there.

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Tawsix
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May 14, 2011, 12:37:09 AM
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Decreasing revenue due to mining difficulty increases
Cost of space for rigs
Cost of cooling of room containing the rigs
Cost of fixing/replacing broken hardware
and possibly administration/maintenance time and costs (cost of your time)

The counter to decreasing revenue due to difficulty increases is hopefully going to be the percentage of profits reinvested in the company.  Obviously this won't be able to keep up indefinitely as difficulty becomes extremely high, but the worth of individual Bitcoins is appreciating, which needs to be taken into account, as well as the eventual significance of fees.

The space for the rigs is very elastic.  I am using a building I own to house them.  There is a lot of space for expansion, and I don't foresee a need to build another building in the near (read the next 5 years) future.

The cooling costs were factored in with the operating costs of the rigs.  700 watts/rig was a very gross overestimate, and I did that to factor in cooling because I'm not sure how much it will cost exactly.  I will be using an existing geothermal system to keep ambient temps low, and during winter I will just use the rigs to heat the building Wink.

As far as fixing and replacing hardware, that was factored into the growth percentage (currently an arbitrary number.)  I don't think that faulty hardware will be a significant cost, especially because I will be having many rigs operating, and if a few need to be taken down (or even partially taken down, as there will be 2 GPUs and both won't necessarily be inactive at the same time) it won't cut into output too greatly.

Administration and maintenance costs will be minimal after initial setup.  Once every few months the rigs might be cleaned, etc.  The initial setup costs (minimum wage, less than 1 BTC / hour now Shocked) would probably go into paying off my shares, in addition to my portion of dividend payouts.

I guess there is some number of rigs after which space and cooling becomes much more expensive. Can the power infrastructure of the storage space handle that many rigs? Otherwise investments are needed there too.

Currently, the building has a 200 A circuit breaker, which will sustain the rigs for at least a year, and will not pose a significant cost to upgrade.

Expected lifetime revenue per rig is also a good number to have. From that you can calculate expected average lifetime net profit per rig.

Some numbers can be hard to estimate. Sometimes conservative estimates helps to see if the investment makes sense.

I would estimate (read expect) that each rig would last at least one year.  If the average uptime of the rig is 80% (is this reasonable?) then that means that each rig will produce in its lifetime 16489267200 Mhashes.  I'm not really sure how to determine how many Bitcoins this will statistically generate while factoring in difficulty changes (which I am also unsure how to estimate).  My goal is that each rig will pay for itself within 8 months of purchase, preferably much less.

Thank you very much for your interest, I hope I helped clear some things up!

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May 14, 2011, 03:14:48 AM
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You do not even assume in the first month of your calculation, that the difficulty will most likely still increase.

By the time you have bought that hardware, difficulty could very well be in the 500.000 region or more.

Also I personally do not trust people who can't even use a calculator: 30*710 != 27690(!)

Payoff per day, if you have 30 rigs @ 710USD each running with 54USD/day electricity costs would be ~145USD per day that you NEED to earn, no matter what!
Also I don't know about the legal situation in your country, but the first thing I would do when starting a business like this would not be to issue shares but to get a lawyer and a startup consultant...

To me this whole stuff seems like a very rushed idea and hearing that you cannot prefinance even 5 rigs (~3500 USD!) on your own makes me as a potential investor extra nervous.

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May 14, 2011, 04:27:03 AM
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You do not even assume in the first month of your calculation, that the difficulty will most likely still increase.

By the time you have bought that hardware, difficulty could very well be in the 500.000 region or more.

Also I personally do not trust people who can't even use a calculator: 30*710 != 27690(!)

Payoff per day, if you have 30 rigs @ 710USD each running with 54USD/day electricity costs would be ~145USD per day that you NEED to earn, no matter what!
Also I don't know about the legal situation in your country, but the first thing I would do when starting a business like this would not be to issue shares but to get a lawyer and a startup consultant...

To me this whole stuff seems like a very rushed idea and hearing that you cannot prefinance even 5 rigs (~3500 USD!) on your own makes me as a potential investor extra nervous.

Yes, the difficulty will probably rise, though I doubt that high in that amount of time.  The exchange rate of USD/BTC will also continue to rise, look how much it has jumped since the last difficulty increase.

I was calculating 39*710 as per the new conversion rate and number of machines that will be able to be purchased and forgot to change that line.  I do know how to use a calculator, thank you.

Payoff per day of 39 rigs @ 710 USD TOTAL running at 54USD/day would generate 177 BTC/day, or 1451USD/day (after power consumption=1397USD/Day), more than enough to cover costs.

The idea has been thought out and planned, the math is sound, and nothing is needed except the money to purchase the rigs.  I currently am strapped for cash at this point, otherwise I would just go solo on this and keep everything to myself.  As it is I have promised to invest all of my dividends back into the business until I have paid off my shares, which I think is a fair alternative given the situation.

edit: The legal situation is also not a problem.  I set up a DBA, the business makes no money itself because of reinvestment and dividend payments, and I just report personal income tax when I begin collecting dividends.  Tax attorney fees may be something to factor in come tax time if it seems appropriate to hire one.  Other than that, there is nothing illegal about this operation, it is completely legitimate.

edit: Also, for those who are interested, 73 shares have sold so far, I'm very excited and thank you!

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May 14, 2011, 06:29:41 AM
 #5

Quote
buy:20@1500000000:SIN:1305343055

Ouch, someone just spent 300BTC instead of 15BTC if I'm reading this correctly...

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May 14, 2011, 11:48:54 AM
 #6

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buy:20@1500000000:SIN:1305343055

Ouch, someone just spent 300BTC instead of 15BTC if I'm reading this correctly...

Rest assured, only .75/BTC will be paid for each share, regardless of what is offered, until all of the shares I am selling are sold (unless someone puts theirs up for sale for less of course.)

In other news, as of right now, 199 shares have been sold (enough to almost buy two rigs, so we're slowly getting to the start line!)

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May 14, 2011, 11:52:17 AM
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buy:20@1500000000:SIN:1305343055

Ouch, someone just spent 300BTC instead of 15BTC if I'm reading this correctly...

crazy bid huh?  i wonder how bm executed that one?  does it just buy 20 sh @ .75 btc or 20 sh @ 15 btc?  or does it buy 300 btc worth of SIN @ .75 btc or @ 15 btc?  
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May 14, 2011, 11:59:11 AM
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Quote
buy:20@1500000000:SIN:1305343055

Ouch, someone just spent 300BTC instead of 15BTC if I'm reading this correctly...

Rest assured, only .75/BTC will be paid for each share, regardless of what is offered, until all of the shares I am selling are sold (unless someone puts theirs up for sale for less of course.)

In other news, as of right now, 199 shares have been sold (enough to almost buy two rigs, so we're slowly getting to the start line!)

Tawsix-u made an excellent video presentation.  i commend u.  u also sound like a straight shooter and ur posts are clear.  too bad ur rating is so immature at this pt otherwise i'd invest.  be careful about that dividend thing.  u might want to ask nefario what the real expectations are for distributing profits.  i thought that all profits HAD to be distributed to shareholders to get them their initial investment back asap since this is so speculative.  don't expect to run ur company like the stupid Wall Street companies that don't seem to think they have to pay dividends anymore.  investors will shy away when they hear u talk like them.  a good argument for dividend distribution is that look how easy ur able to print shares out of thin air and sell them with NO regulations or upfront costs.  all the advantages r tilted towards you.  don't even have to tell ur name.  this is the Wild West of stock trading.
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May 14, 2011, 12:02:33 PM
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Quote
buy:20@1500000000:SIN:1305343055

Ouch, someone just spent 300BTC instead of 15BTC if I'm reading this correctly...

crazy bid huh?  i wonder how bm executed that one?  does it just buy 20 sh @ .75 btc or 20 sh @ 15 btc?  or does it buy 300 btc worth of SIN @ .75 btc or @ 15 btc?  

If you look a the twitter feed there was a "trade" of 20@.75 right after that "buy" order went in, so it looks like it got filled at the best available price, not the price entered.

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May 14, 2011, 12:44:54 PM
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Yes, what counts is the amount of shares you want to buy, not the amount of money you are willing to invest max.

Similar to eBay maybe, where you set a maximum limit until where you want to bid - but if your max. is 100$ and your actual winning bid is 10$, it won't mean you will get 10 of the same item. Wink

I would be interested in a few shares too, but I'm (like cypherdoc) not really sure if I even get the invested money back.

Do you plan to have business reports (and if yes, how often?) etc.?


I would also recommend to get asap a test box with your desired configuration from the money you already have and report on your progress - it might give a bit more confidence that you really mean it!

After all, I could also make up a nice story, issue shares, open a thread here and collect the money for myself. It's not even clear if anyone could sue me for this, because then BTC would need to be accepted as real money. If they aren't, it's like sueing someone over monopoly money... Roll Eyes (besides that you would need to even find me in the first place!).

Edit:
I looked again through your presentation and proposal and there are 3 main questions arising for me:
* You stress transparency a lot, however in your share certificate (http://dev.glbse.com/cgi-bin/asset?id=4813709653f9d4b4060d045fb1ebef1ef1a1895cb585d076c9553955e1005399.xml) you only have a paste-html "website" that states you will not have a public website but give updates here in the forum and via pastehtml. To me this sounds a bit shady the least...
* You want to fund your 30 rigs ONLY from the 4999 shares, but yourself get 50,01% of all income (after you have "paid back" your shares to the company) - how would you make sure that you not just keep the rigs (that you got for free from others) as you have 0 investment money wise from your side? Especially since you are NOT liable for any dept that this "company" (= mining computers that you got donated) makes eventually. 100% of the risk lies at the shareholder in my opinion, so why then give them only 49,99% of power? which leads me to my last point:
* according to your terms, you need 51% of shareholders to agree if you want to change something. Currently you only hold 50,01% of shares though. Also the bylaws are not existant at the time I would buy these shares, so that means if you want to do something and the others don't, there won't be any decisions made! I would highlsy recommend you to buy at least another 1% of your own shares to make sure this doesn't happen.

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May 14, 2011, 05:45:28 PM
 #11

Well, the asking price is set low, because not all shares from the IPO were sold. If this was a saturated market you could easily spend more that you thought just due to own negligence. Which is acceptable for me, because "buyer beware" and quoting Dogbert - "Idiots should not have money"

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May 14, 2011, 07:39:00 PM
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Tawsix-u made an excellent video presentation.  i commend u.  u also sound like a straight shooter and ur posts are clear.  too bad ur rating is so immature at this pt otherwise i'd invest.  be careful about that dividend thing.  u might want to ask nefario what the real expectations are for distributing profits.  i thought that all profits HAD to be distributed to shareholders to get them their initial investment back asap since this is so speculative.  don't expect to run ur company like the stupid Wall Street companies that don't seem to think they have to pay dividends anymore.  investors will shy away when they hear u talk like them.  a good argument for dividend distribution is that look how easy ur able to print shares out of thin air and sell them with NO regulations or upfront costs.  all the advantages r tilted towards you.  don't even have to tell ur name.  this is the Wild West of stock trading.

Thank you very much for your kind words!  I feel like my lack of a reputation is the biggest hurtle this company will face, but when things get started, I think my reputation will improve and more people will invest.

Yes, what counts is the amount of shares you want to buy, not the amount of money you are willing to invest max.

Similar to eBay maybe, where you set a maximum limit until where you want to bid - but if your max. is 100$ and your actual winning bid is 10$, it won't mean you will get 10 of the same item. Wink

I would be interested in a few shares too, but I'm (like cypherdoc) not really sure if I even get the invested money back.

Do you plan to have business reports (and if yes, how often?) etc.?


I would also recommend to get asap a test box with your desired configuration from the money you already have and report on your progress - it might give a bit more confidence that you really mean it!

After all, I could also make up a nice story, issue shares, open a thread here and collect the money for myself. It's not even clear if anyone could sue me for this, because then BTC would need to be accepted as real money. If they aren't, it's like sueing someone over monopoly money... Roll Eyes (besides that you would need to even find me in the first place!).

Edit:
I looked again through your presentation and proposal and there are 3 main questions arising for me:
* You stress transparency a lot, however in your share certificate (http://dev.glbse.com/cgi-bin/asset?id=4813709653f9d4b4060d045fb1ebef1ef1a1895cb585d076c9553955e1005399.xml) you only have a paste-html "website" that states you will not have a public website but give updates here in the forum and via pastehtml. To me this sounds a bit shady the least...
* You want to fund your 30 rigs ONLY from the 4999 shares, but yourself get 50,01% of all income (after you have "paid back" your shares to the company) - how would you make sure that you not just keep the rigs (that you got for free from others) as you have 0 investment money wise from your side? Especially since you are NOT liable for any dept that this "company" (= mining computers that you got donated) makes eventually. 100% of the risk lies at the shareholder in my opinion, so why then give them only 49,99% of power? which leads me to my last point:
* according to your terms, you need 51% of shareholders to agree if you want to change something. Currently you only hold 50,01% of shares though. Also the bylaws are not existant at the time I would buy these shares, so that means if you want to do something and the others don't, there won't be any decisions made! I would highlsy recommend you to buy at least another 1% of your own shares to make sure this doesn't happen.

I will be having business reports, most likely monthly when new capital is purchased, etc. but this could be changed to something more often if shareholders wished it.

The minimum number of shares requiring me to make a purchase is quickly being met, and I expect that in the next few days I will be making the first purchases of rigs.

I am still debating whether or not to make a website, mostly for reasons of staying anonymous.  This may change in the future, I am very much on the fence with this issue.

I think I stated my solution to this in the original post, which is that I will reinvest all dividends I receive back into the company until I have paid off my shares, at which point I will collect dividends as normal.

I will ask Nefario about the 51% issue, but as far as I know it is interpreted as any number greater than half the shares issued.  I will be purchasing 1% of the stock for sale if this is not the case, however.

edit: So far at least 399 shares have been sold!

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May 14, 2011, 10:58:57 PM
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I think I stated my solution to this in the original post, which is that I will reinvest all dividends I receive back into the company until I have paid off my shares, at which point I will collect dividends as normal.
So... I'd like to have 3000 of your shares and you can deduct their price from the first dividend(s) that roll in.

50%+1 share = 5001 shares, 51% = 5100 shares. Usually the former is usually used afaik.

With 400 shares (405 actually atm) you can already buy right now (@7,5 USD/BTC) 3 rigs as a starter and start to already set up one system properly so that later, when you do bigger orders in bulk with the rest of the money, you just have to assemble, clone an USB stick and mine away.
Time is now very much important, as difficulty increases are the biggest danger to your business.

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May 14, 2011, 11:23:02 PM
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Thank you very much for your kind words!  I feel like my lack of a reputation is the biggest hurtle this company will face, but when things get started, I think my reputation will improve and more people will invest.


The biggest hurdle is your lack of funds or unwillingness to commit own funds to run your mining. You want to spread your investment risk across parties yet you fail to make a complete and compelling business case. Why? Because there is no such business case as starting a mining company. If people want to dump 500$ into mining, they are better off mining themselves. If people have 50$ to spend, they are better off buying BTC.
The only advantage that exists in this endeavour is for you, you spread your investment risk across third parties who help you fund this operation with zero waterproof mechanism that ensures these parties any payout or even a return of their initial investment.

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May 15, 2011, 01:13:34 AM
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I think I stated my solution to this in the original post, which is that I will reinvest all dividends I receive back into the company until I have paid off my shares, at which point I will collect dividends as normal.
So... I'd like to have 3000 of your shares and you can deduct their price from the first dividend(s) that roll in.

50%+1 share = 5001 shares, 51% = 5100 shares. Usually the former is usually used afaik.

With 400 shares (405 actually atm) you can already buy right now (@7,5 USD/BTC) 3 rigs as a starter and start to already set up one system properly so that later, when you do bigger orders in bulk with the rest of the money, you just have to assemble, clone an USB stick and mine away.
Time is now very much important, as difficulty increases are the biggest danger to your business.

I'm trying to raise funds here, so giving away 3000 shares would sort of defeat that purpose...

I will be operating under the 50%+1 share definition.

I am strongly considering this option, I agree that the legitimacy of the business will increase once I show I'm following through.


Thank you very much for your kind words!  I feel like my lack of a reputation is the biggest hurtle this company will face, but when things get started, I think my reputation will improve and more people will invest.


The biggest hurdle is your lack of funds or unwillingness to commit own funds to run your mining. You want to spread your investment risk across parties yet you fail to make a complete and compelling business case. Why? Because there is no such business case as starting a mining company. If people want to dump 500$ into mining, they are better off mining themselves. If people have 50$ to spend, they are better off buying BTC.
The only advantage that exists in this endeavour is for you, you spread your investment risk across third parties who help you fund this operation with zero waterproof mechanism that ensures these parties any payout or even a return of their initial investment.

As stated, I will not collect any dividends (AKA I WILL NOT BE PROFITING) until I have paid off my shares.  I will also be supplying most of the overhead that ISN'T being paid for by the investors (space, network infrastructure, TIME)  I disagree very strongly with your statement that there is not a case for starting a Bitcoin mining company.  If someone goes out and buys a single $500 rig, they will NOT be able to make enough money to expand before difficulty overtakes them.  If enough people pool their money and not their computing power together, the money generated from the venture will be enough to stay competitive despite increases in difficulty.  If people want to buy $50 worth of BTC, that's fine, but they will be stuck with that amount of BTC and will be limited to appreciation of the money, never generating anything with that money.  I am not the only one to benefit, if you look at the numbers you'll see that initial investment will easily be repaid once the company is fully funded.  Your last point once again goes back to my credibility and the credibility of GLBSE, and once again, that is an excellent point, which is why I expect small investments by many people until things get rolling.

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May 15, 2011, 02:18:16 AM
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As stated, I will not collect any dividends (AKA I WILL NOT BE PROFITING) until I have paid off my shares.  I will also be supplying most of the overhead that ISN'T being paid for by the investors (space, network infrastructure, TIME)  I disagree very strongly with your statement that there is not a case for starting a Bitcoin mining company.  If someone goes out and buys a single $500 rig, they will NOT be able to make enough money to expand before difficulty overtakes them.

yes, a double 5850 rig is not much more than 500$ depending where you buy it. you yourself state its what you want to start with. considering you took in 150 btc you should already be mining and giving payouts. i am convinced that you either lack the business sense or you just keep promoting it to collect more btc and be off with them to anonymousland.

  If enough people pool their money and not their computing power together, the money generated from the venture will be enough to stay competitive despite increases in difficulty. 

thats called pooled mining. there are plenty of 0% pools out there.

If people want to buy $50 worth of BTC, that's fine, but they will be stuck with that amount of BTC and will be limited to appreciation of the money, never generating anything with that money. 

yes, btc they already have. its a moderate risk moderate payoff investment. investing into someone elses mining rig is a very high risk low payoff investment. there is ZERO mechanism that prevents you from "taking the btc and run with it". zero. for a benefit that is mathematically very dubious, lets not forget you havent even factored in diff increase etc into your initial proposal.

I am not the only one to benefit, if you look at the numbers you'll see that initial investment will easily be repaid once the company is fully funded.

in theory, according to numbers that are not sound in the first place.

 Your last point once again goes back to my credibility and the credibility of GLBSE, and once again, that is an excellent point, which is why I expect small investments by many people until things get rolling.

so why dont you roll off with a track record. i have the impression you dont even command a 1gh/s. i think you have no ressources "in real life" to start mining hence you use this to kick you off. or its a scam, the fact that you spam this proposal everywhere seems to indicate you really want this outside btc so badly, it cant be legit.
just my 2 cents

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May 15, 2011, 03:57:30 AM
 #17

You need to base your difficulty increase figures on 40% not 15%.

fwiw the next rise is about 50%.

There are not many companies that can sustain a 50% drop in profitability every 2 weeks or so.

Basically you need to add 40% mining capacity every 2 weeks to keep up with it.
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May 15, 2011, 10:03:40 AM
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I will be operating under the 50%+1 share definition.
Sorry but this is NOT in the terms that is in the shares contract/certificate/agreement (or however it is called).
If you want to have "at least" 51BTC for something and I would give you 50BTC + 1 Satoshi, you would also complain, right?

Also it still seems a bit wierd to me, that you on the one hand claim to have tons of networking equipment, racks, switches, kvm equipment..., are able to handle GPG on Linux + generate a certificate, want to stay highly anonymous but upload a video(!) with your vioce(!!) on youtube(!!!), don't disclose hardware specs and at the end of it all: do not even have the ~500€ it would cost you to build a test-rig yourself, make a picture of it and say "Hey, what would 30/50/100 of these roll in? Here's a picture of my equipment, give me money and I'll do it!"

And to the "3000 shares now, I'll pay later" --> That's exactly the same thing you yourself are doing! Besides, you already got some (actually quite a lot of) money - I really expect to see first results next week, in the form of hardware being bought + pictures to proove!

Btw. I even bought a share (more to test out GLBSE than because I trust the operations... .75 BTC is not so huge of an investment and imho better than the ponzi-bubbles or other weird/half legal stuff that is floating around atm.) so this comes from a shareholder. Wink

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May 15, 2011, 12:12:39 PM
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You seem to have done quite the effort to start with blank new accounts everywhere, including YouTube. The only thing known is your voice. You fail to make ANY point how your operation offers better ROI than using pooled mining, even the most "horrendous" 10% tax pool will offer a better ROI to "investors" or "miners" with the very cruicial point of adding security.

Usually "internet investment schemes" that usually have zero leverage by the investors to get their investment back heavily rely on social reputation juice. Your activities of heavy cross promotion along with brand new accounts on YouTube and here along with very flawed operation schemes that only look good to the naive, innocent investor and do not stand up against scrutiny further affirm my opinion.
I am 99% sure this is a scam. 1% this is a bad investment.

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May 16, 2011, 12:09:28 AM
 #20

You need to base your difficulty increase figures on 40% not 15%.

fwiw the next rise is about 50%.

There are not many companies that can sustain a 50% drop in profitability every 2 weeks or so.

Basically you need to add 40% mining capacity every 2 weeks to keep up with it.

As long as the worth of the Bitcoins being generated matches the difficulty, then profitability will not drop.  Even if I'm only mining .5 BTC per year, if .5 BTC can purchase $500,000 of equiptment and pay out $500,000 worth of dividends, then I'd say we're still profitable.  I realize that this can be applied to a smaller scale solo miner, but the point of this is to be able to grow on a much faster scale and allow people who don't have the money or the time to operate a larger setup on their own to benefit from mining.

Stock update: 496 shares have been sold so far, which means that only ~250 more are needed before operations begin.  I project that this will be met by the end of the week, especially if the current rate of selling continues.

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