MOORE: Mining Bond Beating the Moore's Law (Collecting Shareholder Data)

[BurtW]

I am trying to contact him to find out when he is going to issue the shares.

[guruvan]

Anything ever happen?

[BurtW]

He is still offline and no response to my skype.  You know as much as me now - not much.  I am assuming that either a) he got confused by the whole UTC versus China versus US versus GLBSE serve time thing or b) the Chineese government hauled him away.  I hope it is a)

[friedcat]

Update

I sincerely apologize for the confusion of time I made. I am online each day for a long time, but not from day to night. I couldn't get access to internet within a certain time interval every day. Very sorry for the late.

There are 20,000 shares for sale at the first round. 5,000 are for IPO sale and the rest are for bulk purchase.

I will be in no way hauled away by the Chinese government in a foreseeable time. It likes to intervene with everything, but there are much more things other than Bitcoin-related stuff that are interesting to them. Maybe 5 years later, the market cap of Bitcoin exceeds Apple and we finally catche its eyes, but not now.

[friedcat]

Are you a mining company who will utilize the funds directly, or are you using the proceeds to purchase other mining bonds?

As said in the OP, we will do both at the start, but quickly turn to a portfolio composed mainly by real hardware to reduce both my cost and my risk. Thanks.

The IPO has already been started. I'm very sorry for the delay.

[Sukrim]

Are you a mining company who will utilize the funds directly, or are you using the proceeds to purchase other mining bonds?

As said in the OP, we will do both at the start, but quickly turn to a portfolio composed mainly by real hardware to reduce both my cost and my risk. Thanks.

The IPO has already been started. I'm very sorry for the delay.

Paying out dividends/interest from deposits is also known as a "Ponzi" scheme. What fraction of initial deposits are we talking about and how "quickly" will you start real mining with at least the hash rate you are paying out? I won't touch a single share until then...

[friedcat]

Are you a mining company who will utilize the funds directly, or are you using the proceeds to purchase other mining bonds?

As said in the OP, we will do both at the start, but quickly turn to a portfolio composed mainly by real hardware to reduce both my cost and my risk. Thanks.

The IPO has already been started. I'm very sorry for the delay.

Paying out dividends/interest from deposits is also known as a "Ponzi" scheme. What fraction of initial deposits are we talking about and how "quickly" will you start real mining with at least the hash rate you are paying out? I won't touch a single share until then...

When I replied the question of BrightAnarchist, what "utilize the funds directly" in my mind was "using the funds to buy hardware", because the context was "a mining company". This is also our OP implied. Unfortunately it could also be read as "paying out from deposits", which I didn't realize before, and I will never do this.

So what I said "do both at the start" means that the coupons will initially come from the current hardware in my control, and the coupons from other mining bonds. But the portion of the latter will decrease as we get new hardware. Relying on too much other mining assets for too long a time increases my risks and reduces my potential profits.

Therefore the direct answers to your questions are:

1. What fraction of initial deposits are we talking about?
Answer: 0%. We will not pay the capital.

2. How "quickly" will you start real mining with at least the hash rate you are paying out?
Answer: I will start real mining immediately (in fact the current hardware already mined for a long time), but if the mining power in my control (10GH/s) at this moment couldn't support the coupons, I will invest on some other mining bonds. The expansion will be done in 4-6 weeks. After that, most capital from other mining assets will be switched to real hardware.

Thank you for your question and hope my answers could help clarify. Very sorry for the confusion I brought.

[brendio]

Paying out dividends/interest from deposits is also known as a "Ponzi" scheme.

I'd disagree.

In a Ponzi scheme the returns are fraudulently claimed to come from investment returns and used to induce others to invest. The returns on this bond contract are determined by a known formula. So long as the issuer pays out coupons according to that formula, the terms of the contract are fulfilled. How the issuer hedges its obligations with mining hardware or otherwise is a matter for the issuer.

[friedcat]

How the issuer hedges its obligations with mining hardware or otherwise is a matter for the issuer.

Well in fact it's not. It makes difference in risks, therefore the difference in the return rates.

One of the reasons why mining bonds (of which the return rate is lower than lending) are still interesting at this moment at all, is that the investors know that there are real hardware always working to produce Bitcoins and therefore more confident about investing.

[HorseRider]

Paying out dividends/interest from deposits is also known as a "Ponzi" scheme. What fraction of initial deposits are we talking about and how "quickly" will you start real mining with at least the hash rate you are paying out? I won't touch a single share until then...

Friedcat is living in China, he has been already contacting and negotiation with the hardware and mining power with the some influential Chinese miners right since this post started. He has reached me and that's how I know he is doing this.

IMHO, this bond will be backed up by real mining power, there is bitcoin->mining rigs ->bitcoin circle which produce real net profit from the mining activities, it's not a ponzi scheme where "dividends" is paid from deposits of later people.

[jackmaninov]

Looks like some more investors need to be found...

[friedcat]

Looks like some more investors need to be found...

I have processed in total of more than 5,000 shares of bulk purchase till now. That's about 1/4 of the total IPO size.

But I agree with you. The amount of invested BTC so far is still far away from the capability I could handle. And I will need more investments to get enough funds to enjoy the wholesale price of FPGAs.

Thanks for your interest.

[friedcat]

1st Payment

Calculation time: May 30, 05:07:33 forum time

For compensation of my delay of IPO, the first coupon is calculated with a full week instead of six days.

Number of difficulty change: 1
Number of block reward change: 0

Time interval before difficulty change:
  Starting from: May 23, 05:07:33
  Ending at: May 24, 18:10:29
  Total time: 133754s
  Difficulty: 1,733,207.51

Time interval after difficulty change:
  Starting from: May 24, 18:10:29
  Ending at: May 30, 05:07:32
  Total time: 471046s
  Difficulty: 1,591,074.96

Hashrate of this week: 1MH/s

coupon/share = (1*10^6)/(2^32)*(133754*50/1733207.51+471046*50/1591074.96)=0.0043449

Number of Shares: 5437

Total Payment: 23.6232213

[friedcat]

Update

To reduce the "scary wall" and facilitate the discovering of a proper price. We changed the IPO offering from 5,000 shares to 1,000 shares.

The bulk purchase is still open at 0.45 BTC/share.

As the hash rate grows each week and so does our obligation of payment, both the IPO price and the private offering price are about to rise soon.

[friedcat]

Update

5,884 shares have been sold till now. It equals to about 5.936GH/s of hashrate this week (1.0089MH/s per share), which still does not exceed my current maximum capability of about 10GH/s.

The raised money will be used for buying ngzhang's mining FPGAs called Lancelot (https://bitcointalk.org/index.php?topic=79835.0).
BFLs and other FPGAs probably will not be an option in the short term, because the waiting cycle will be too long, and they might have trouble passing the border of mainland China without paying relatively heavy tariffs.

At the best scenario, we could get over 30 Lancelots at 400$ each for the first batch, which could be as fast as mid-June. Because I'm also in China, both the shipping time and the shipping price are almost negligible. If each Lancelot could mine at 500MH/s as said in the corresponding thread, It will push my mining capability from 10GH/s to more than 25GH/s within this month with the current sold bonds.

At the worst scenario, the first batch could be delayed for a while, and there might be some limitation on how many each person could buy for the first batch, then I can only get less than 30 Lancelots at 500$, so I would rather waiting for the next batch, which might take as long as 1-2 weeks for retail buying and about 4 weeks for wholesale buying. In this condition, my mining capability will be pushed from 10GH/s to more than 25GH/s before the end of July, but before that, I will have to pay coupons with the existing mining power.

Therefore if in the next few weeks, some sudden demands of MOORE rise, I might reduce the first round of offering from 20,000 shares to about 8,000 to 9,000 shares, and offer more after the first wave of hardware arrives.

[Jimmy2011]

MOORE is a formula bond, which is definitely win all other mining bonds for the issuer. I am wondering whether my following reasoning is right,

The great point is the IPO price, say 0.45 BTC or 0.5 BTC per share, which is about 1.5 times of the normal mining price.

So the issuer can get ~1.5X "hardware", or the simplest way is just to invest other normal mining bonds in GLBSE market to get the normal coupons, which is ~ 1.5X NORMAL coupons for the issued shares.

But the return is a "MOORE" formula, which is less than the NORMAL coupons in a large periods of more than one year, so the issuer can profit more than 0.5X NORMAL coupons.

The first cross point is the "MOORE" return equal to NORMAL return at the time frame more than 80 weeks according to the plots in this thread.

The second cross point is the "MOORE" return equal to ~1.5X NORMAL return, which is apparently at the time frame more than 2 years.

And the last point is from the profit during the above periods of more than 2 years. The profit during that period can also compensate the steeper "MOORE" return in a longer periods, and the profit can also get a normal profit, say the interest. So the issuer may have not any risk for this formula bond.

I didn't reason the details of the difficulty change, BITCOIN changes from 50 to 25 and all other factors. The reasoning is only from an intuitive viewpoint of a linear function that more Bitcoins can be mined if there are more mining power at any situation.

So now I will buy some shares if the price is 0.3 BTC per share as the usual mining bonds.

[Sukrim]

I didn't reason the details of the difficulty change, BITCOIN changes from 50 to 25 and all other factors. The reasoning is only from an intuitive viewpoint of a linear function that more Bitcoins can be mined if there are more mining power at any situation.

So now I will buy some shares if the price is 0.3 BTC per share as the usual mining bonds.

I'm not sure if I get you correctly, but other mining bonds don't recalculate with higher hash rate each week, they stay at the same hash rate. Bitcoin itself has the so called "difficulty" that evens out any effort to mine more coins just by adding more/faster hardware to the cluster. On average in total there will be ~50 BTC per 10 minutes until December, no matter if the global hash rate triples until then or halves.

Why would you not pay a premium for a bond that grows automatically by 0.89% (compounded!) each week?

[friedcat]

MOORE is a formula bond, which is definitely win all other mining bonds for the issuer. I am wondering whether my following reasoning is right,

The great point is the IPO price, say 0.45 BTC or 0.5 BTC per share, which is about 1.5 times of the normal mining price.

So the issuer can get ~1.5X "hardware", or the simplest way is just to invest other normal mining bonds in GLBSE market to get the normal coupons, which is ~ 1.5X NORMAL coupons for the issued shares.

But the return is a "MOORE" formula, which is less than the NORMAL coupons in a large periods of more than one year, so the issuer can profit more than 0.5X NORMAL coupons.

The first cross point is the "MOORE" return equal to NORMAL return at the time frame more than 80 weeks according to the plots in this thread.

The second cross point is the "MOORE" return equal to ~1.5X NORMAL return, which is apparently at the time frame more than 2 years.

And the last point is from the profit during the above periods of more than 2 years. The profit during that period can also compensate the steeper "MOORE" return in a longer periods, and the profit can also get a normal profit, say the interest. So the issuer may have not any risk for this formula bond.

I didn't reason the details of the difficulty change, BITCOIN changes from 50 to 25 and all other factors. The reasoning is only from an intuitive viewpoint of a linear function that more Bitcoins can be mined if there are more mining power at any situation.

So now I will buy some shares if the price is 0.3 BTC per share as the usual mining bonds.

0.3 BTC per share for MOORE would be a devastating discount that makes me a net loss at all time. It means that I have to support 1MH/s from the very beginning, as other mining bond issuers do, and guarantee the 0.89% per week growth as an extra obligation, with only 0.3 BTC.

Only if I could get BFL Mini Rigs or ASIC miners today, and have free access to electricity, I might be able to make a little profits. But in this impossibly optimistic scenario, issuing normal bonds with 0.2BTC/MH or even 0.18 BTC/MH would also be profitable. But as far as I know, 0.2BTC/MH normal mining bonds are not that common in the market. Gigavps did this before, but the market pushed the price to nearly 0.3BTC/MH almost immediately after that.

[Jimmy2011]

I didn't reason the details of the difficulty change, BITCOIN changes from 50 to 25 and all other factors. The reasoning is only from an intuitive viewpoint of a linear function that more Bitcoins can be mined if there are more mining power at any situation.

So now I will buy some shares if the price is 0.3 BTC per share as the usual mining bonds.

I'm not sure if I get you correctly, but other mining bonds don't recalculate with higher hash rate each week, they stay at the same hash rate. Bitcoin itself has the so called "difficulty" that evens out any effort to mine more coins just by adding more/faster hardware to the cluster. On average in total there will be ~50 BTC per 10 minutes until December, no matter if the global hash rate triples until then or halves.

Why would you not pay a premium for a bond that grows automatically by 0.89% (compounded!) each week?

I am sorry that I misunderstood the contract. MOORE is a dynamic bond, which recalculates the base share.

At the moment, I am puzzled that how MOORE outperform the average profit from the mining, ~50 BTC per 10 minutes, in the long-term.

[Jimmy2011]

0.3 BTC per share for MOORE would be a devastating discount that makes me a net loss at all time. It means that I have to support 1MH/s from the very beginning, as other mining bond issuers do, and guarantee the 0.89% per week growth as an extra obligation, with only 0.3 BTC.

Only if I could get BFL Mini Rigs or ASIC miners today, and have free access to electricity, I might be able to make a little profits. But in this impossibly optimistic scenario, issuing normal bonds with 0.2BTC/MH or even 0.18 BTC/MH would also be profitable. But as far as I know, 0.2BTC/MH normal mining bonds are not that common in the market. Gigavps did this before, but the market pushed the price to nearly 0.3BTC/MH almost immediately after that.

Friedcat: I am sorry for my misunderstanding of your bond.

From a long term point of view, I am also worrying some risks in China. As you plan to install more miners, in China, I am wondering how will some governments or departments treat the equipment and electricity.